Hypotenuse Enterprises, Inc.

THE CORPORATE DEVELOPMENT COMPANY


Corporate Development Practices Survey
Published 2003

Table of Contents

Executive Summary
I. Trends Analysis in Corporate Development
II. Company Size Contrast
III. Best Practices and Corporate Governance Implications
IV. New Data Since Prior Surveys
1.0 Corporate Development Organization
1.1 Fortune Ranking
1.2 Participation in Past Surveys
1.3 Title of Respondents and Department Heads
1.4 Tenure of Department Head
1.5 To Whom CD Head Reports
1.6 Department Organization
1.7 Strategic Plan Activities
1.8 Additional Responsibilities
2.0 Chief Executive Officer's Influence
2.1 CEO Support
2.2 CEO Involvement
2.3 CEO Effectiveness
2.4 Company's Risk Tolerance
3.0 Corporate Development Activity And Results
3.1 Time Allotment
3.2 Deal Structures - M&A and Other Deal Structures
3.3 Performance Assessments
3.4 Quantitative Assessment
3.5 Performance Appraisal Systems
3.6 Deals as a Percent of Sales
4.0 Interface To Operating Units
4.1 Department Size
4.2 Business Experience
4.3 Percentage of New Hires Recruited from Within
4.4 Key Attributes of Professional Staff
4.5 Personnel Training
4.6 Succession Planning
4.7 Professional Development - Head of CD
4.8 Professional Development - CD Staff
4.9 Perception of CD Assignment
5.0 Operating Units:  Interface and Policy
5.1 Operating Unit/Business Development Staffing
5.2 Centralization/Decentralization
5.3 CD/Operating Unit Relationship Characteristics
5.4 Formal M&A Policy
5.5 CD's Role
5.6 Operating Unit Professional Training Methods
6.0 Deal Sourcing
6.1 Intermediary Policy
6.2 Intermediary Contact System
6.3 Sources of Deal Flow
6.4 Role of the Intermediary
6.5 Intermediary Contacts
6.6 Outside Service Contacts
6.7 Acquisition Criteria List
6.8 Intermediary Services Used
6.9 Primary Contact
6.10 Deal Tracking System
6.11 Intermediary Compensation
6.12 Retainers, Up-Front Payments, Finder's and Licensing Fees
6.13 Success Fee Formula
6.14 Fee Agreement Term
6.15 Percentage of Deals with Fees
6.16 Average Deal Size with Fees
6.17 Indemnification
6.18 Dispute Occurrence
6.19 Dispute Resolution
6.20 Acquisitions Sourced from Intermediaries
7.0 Negotiation
7.1 Training
7.2 Empowerment
7.3 Flexibility
8.0 Valuation
8.1 Valuation by CD
8.2 CD Valuation Review
8.3 Emphasis
8.4 Criteria
8.5 Discounted Cash Flow Terminal Value Method
8.6 Discounted Cash Flow Time Period
8.7 Valuations
8.8 International Valuation
9.0 Contractualization And Confidentiality
9.1 Legal Support Systems
9.2 CD's Contract Involvement
9.3 Confidentiality Agreements
9.4 Letters of Intent
10.0 Due Diligence
10.1 CD's Responsibility in Due Diligence
10.2 CD's Role in Due Diligence
10.3 Responsibility for Existing Problems Overlooked
10.4 International Due Diligence
11.0 Approval Process
11.1 Deal Value Requiring Board Approval
11.2 Individual "Champion" Required
11.3 Operating "Champion" Responsibilities
12.0 Post-Deal Integration
12.1 CD's Involvement with PDI Planning
12.2 PDI Planning Initiation
12.3 Sign-off of PDI Plan
12.4 PDI Team Head
13.0 International Operations
13.1 Percentage of Cross-Border Deals
13.2 Cross-Cultural Training
14.0 Quality
14.1 Benchmarking
14.2 Areas for Benchmarking
14.3 "Best Practices" Companies
14.4 CD Mission/Value Statement
15.0 Resources
15.1 Funding
15.2 Gross Budget
15.3 Resource Database
15.4 Professional Societies
15.5 Survey Use
15.6 Survey Interest
16.0 Future Importance of Corporate Development
17.0 Prior Year Deal Data
Appendices
Appendix 1 Interpretation
Appendix 2 Titles of Survey Respondents
Appendix 3 Titles of Heads of Corporate Development
Appendix 4 Personnel Training Write-in Comments
Appendix 5 International Valuation Write-in Comments
Appendix 6 Total Deals:  Data Points

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