Firms are always looking to maximize their human capital and to develop teams that are built for long-term success and value creation. Today, in the IT and business services sectors, companies are seeing a shortage of IT workers, creating a substantial amount of unfilled jobs in the space. As a result, a unique type of M&A is developing some momentum to satisfy labor shortages.

Acqui-Hire deals are transactions in which a buyer essentially acquires a firm for the purpose of adding the professionals, teams and human capital rather than the product or service the firm produces. The purpose of these deals is to add employees that have a certain level of expertise or skill set. These deals have been focused on the technology industry and can apply to any subsection within the umbrella of technology.

“Commonly, targets of acqui-hires have employee teams that have been together for a long time – whether with the existing employer or at a series of prior companies,” explains Jane Ross, office managing partner with Hogan Lovells‘ Silicon Valley group. “The proven track record of working well together and over an extended period of time makes them a very attractive asset in an environment of fierce competition for technical expertise and talent. Targets of these types of acquisitions are commonly consulting or similar companies, where the buyer has already worked with the team on projects and is familiar with the team’s expertise and talent.”

Commonly these deals are being conducted by buyers with a significant cash balance that are looking to boost growth through the acquisition of human capital. In 2021, Accenture PLC, an IT consulting firm spent around $4.2 billion through 46 acquisitions with a focus on adding skills and capabilities across growth areas.

The continuous need for talent in the tech industry with specific skillsets has Ross believing that “acqui-hires will continue to happen as opportunities present themselves.”

-Cole Lipsky