Impact of overlooking people risks
When people risks are overlooked or not mitigated during an M&A transaction—either before Day 1 or in the critical months that follow—the deal almost immediately starts to lose value. Leadership teams that haven’t aligned on purpose, priorities and decision rights create confusion that cascades through the organisation. Employees receive mixed messages, collaboration stalls and legacy ways of working persist far longer than intended. This slows execution, delays synergies and erodes the energy needed to bring two companies together with confidence and momentum.
Just as damaging is the impact on culture and talent. Unaddressed cultural differences quickly turn into “us versus them” behaviours, while uncertainty drives high-performers and client-facing talent to leave. Without clarity on roles, accountability and the new operating model, productivity drops, customer relationships are disrupted and operational risks increase. Ultimately, failing to proactively manage people risks leads to value leakage, slower transformation and a combined business that struggles to realise the strategic intent of the deal.
Top 3 tips for people risk mitigation in M&A deals
Practical early action is critical to manage people risks and ensure a smooth transaction.
- Critical role of Chief People Officer: Remember that the Chief People Officer is also the Chief Value Preservation Officer. The CPO should sit alongside the CEO and deal leads from the earliest planning phase to oversee retention strategies, organisation design and culture integration.
- Conduct early HR and culture diagnostics: Use interviews to support HR due diligence (employment contracts, payroll, policies), culture heatmaps, skills mapping, organisational structures, RACIs and leadership assessments to identify critical roles, retention risks and cultural friction points.
- Plan, communicate and execute: In the face of uncertainty and unknown people risks, develop scenario plans to identify key risks and mitigation strategies, e.g. for retention, redundancy and leadership blends. Open and timely communication is essential to facilitating a smooth transition and preserve institutional knowledge.
The current M&A market activity indicates that scale matters, but so does execution. Buyers and sellers must adapt: deploy disciplined pricing, embed deeper diligence, front‑load financing and make people and regulatory workstreams central to deal planning. These strategies can enhance deal resilience and help convert transactions into sustainable value — protecting returns not just at signing, but well into long‑term integration.
Learn more
Whether you’re a buyer or seller, about to enter into or considering an M&A transaction, working with the right experts can help you derisk and stay ahead of the game. If you’d like to learn more about your transactional risks or have questions about any of the above, please contact a Marsh Private Equity and M&A Services specialist.