Doing more with talent in a deal

The risk of losing talent is significant, and even greater in a deals context. In times of uncertainty, especially when operating models and business cultures change, key talents are usually the first who find other opportunities. Talent (retention) and getting them in the right position should thus be on the forefront in any transaction to avoid leaving value on the table.

That loss of value should not be underestimated. 82 per cent of companies say that in their last acquisition, more than ten per cent of key employees left.

Move to a new employer

In addition, it seems that the 'great resignation' that surfaced during the corona pandemic, persists. In our global Workforce Hopes and Fears survey last year, one in five employees already said they were likely to move to a new employer in the following year. In May, the new edition of 'Hopes and Fears' will be released and this is expected to continue. Considerations for changing jobs are salary, a fulfilling job and really wanting to be themselves at work.

Therefore, in any deal, it is good to also prioritise retaining talents and placing them in the right positions. In order to avoid losing value.

Momentum for mergers and acquisitions remains good

Meanwhile, the momentum for mergers and acquisitions remains good. The M&A outlook 2023 shows that CEOs still recognise the importance of dealmaking as a fast and effective way to achieve strategic objectives. The key driver is the urgent need to transform business models and modernise operational capabilities in the face of accelerated digital transformation, shifting consumer expectations and net zero targets.

M&A will be more transformational to capture its full value, e.g. data-led customer transformation, supply chain decarbonisation, cyber resilience. Attracting and retaining talent will thus be crucial for the companies to achieve their goals of transformation and future-proofing their business.

Human Capital diligence should be part when executing a deal

Don't delay human capital diligence until a deal is signed. When evaluating a transaction ask questions like: who are the essential talents of the company to be acquired and how do they fit into the investment strategy? What skills are needed for the future and where are the deficiencies?

It is essential not only to look at the desired positions, but also at the people who will actually fill them. This does apply across all levels within an organisation. Employees who have real value in terms of their expertise, positive influence and importance in maintaining the culture of the target.

The most valuable capabilities often depend on a small but critical selection of key people. Even if the capability being targeted is a process or technology, the real value often lies in how the process was developed, how it’s operated and the people who make this possible. Map out carefully who these people are and how you ensure they stay.

Location matters

A part not to be forgotten here is location. Especially in this new world of flexible working, people value being able to choose where they work. The choice of location, or its flexibility, can therefore determine talent retention.

This in turn affects your company's tax profile. What does your talent strategy mean for your location? Where should you recruit staff? If you need to set up operations in a new country, do you have the people you need locally? If talent leaves a country, will exit sanctions apply? All questions you need to ask yourself.

After all, your company's tax profile is determined by the location of your people and the functions they perform. This goes beyond corporate tax. Location also determines things like VAT, labour costs, social security and pensions.

Realise the full potential of your deal

Talent is crucial to the value of any business. Loss of talent and hence loss of value is a real threat in M&A deals. Focus on human capital in every deal, including its financial and tax aspects. Both should go hand in hand from the start when evaluating a deal in order to realise the full potential of your deal.