Labor shortages are colliding with the M&A boom to create a newfound focus on retaining talent post closing. The concern is in second place for respondents reporting drivers of deal success in Bain & Co.’s 2022 M&A Practitioners Survey, trailing only having a clear deal thesis. A retrospective look at executives’ best practices over the past three years points to important considerations.
“M&A is an effective way,” says Deloitte Corporate Finance CEO Phil Colaco, “Especially with a death of talent, acquiring is like hiring a bunch of people.”
Efforts to keep key personnel hinge on several factors, and likely in combination, but the top two methods focus on non-financial incentives. Developing a “strong and compelling vision for the future of the combined company,” as well as “defining clear roles for employees in the new organization” were top scorers earning 43 percent and 42 percent of respondents’ endorsements.
Money isn’t everything, but it does matter. Third on the list of effective talent retention levers is a financial incentive to stay, followed by engagement in decision making, developing personal rapport, and increasing pay or benefits.
Sounds like a lot to consider? It is. Bain recommends acquirers appoint a retention quarterback for each critical employee to oversee the integration process to streamline communication, relationship building, and the still important compensation package.
Dealmakers are focusing on more than talent, of course, in executing on increasingly costly acquisitions. Other runners up executives’ perceived deal success drivers were the evaluation of complementary culture (25 percent), revenue (20 percent) and cost synergies (19 percent), and having an integration playbook (17 percent).
