Play 4: Securing talent and capabilities for transformation

In an age of continuous reinvention, M&A can be an effective and cost-efficient play to acquire the skills and capabilities needed to be future-fit and to fast-track transformation. 

In Play 4, transactions serve as talent accelerators, and talent is a value driver. This is especially the case for organisations seeking innovation and evolution, and/or for those faced with reskilling or upskilling their existing workforce (particularly around digital technology and AI). Think, for instance, about ‘acqui-hires’, which is a concept that’s on the rise. Acqui-hiring sees companies acquire a start-up to purchase its skills and capabilities to accelerate strategy. (That is, buying an entity primarily for its talent, rather than traditional assets or IP). Acqui-hiring gives PE and others a fast, cost-effective talent injection into their portfolio companies.

Securing talent and capabilities is a practical play when transacting to transform. As part of this play, consider the following strategies: 

Assess leadership capabilities

The success and value of any deal depends on obtaining valuable insights into leadership capabilities. Whether assessing a target executive team, or upskilling a leadership team prior to going to market, leadership assessments reveal which capabilities are needed pre and post deal.

These assessments cover everything from skills and attributes through to the context of a leader’s role. They also address leadership behaviours (including development areas) to proactively manage any deficits or gaps. And they promote leadership alignment. As part of your assessment, consider: Is the leadership or management team clear on where they’re going, and how they’re going to get there? Use tools like post-merger leadership off-sites and facilitated workshops to ensure all leaders are on the same page.

Leadership assessments can also occur anytime, ensuring alignment throughout the deal lifecycle. (Although, the earlier you start the better.) These assessments identify opportunities for enhancement, allowing for a bespoke development plan to maximise deal value. In fact, PwC research shows that capability-driven deals perform more than three times better than the leading local market index.  

Establish a proactive change management program

In 2024, companies are proving better at retaining and motivating talent during M&A. Our M&A Integration survey found more companies are launching change management programs earlier in the deal life cycle, and almost three quarters (71%) of survey respondents had launched change management initiatives prior to signing. 

There are many misconceptions about change management. Many believe that change will ‘just happen’ if the leader demands it, but proactive change management is crucial. Integration management offices need a tangible and pragmatic change plan, which supports employees to embrace new ways of working, processes and technology. Change management programs should go hand in glove with your broader integration strategy, to boost commitment and bolster productivity.