People First, Value Follows: HR at the heart of successful acquisitions

InterEdge Tech’s Acquisition of NanoMax Solutions - How ignoring HR can damage an acquisition
InterEdge Tech, a fast-growing enterprise software provider, acquired agile AI analytics startup NanoMax Solutions in a deal that appeared highly compatible. The acquisition was motivated by InterEdge Tech’s desire to purchase NanoMax Solutions’s cutting-edge data science team and product portfolio to expand its reach. NanoMax Solutions’s founders, meanwhile, saw InterEdge Tech as providing an ideal platform for scale. Financial assessments, growth prospects, and strategic goals all aligned.

However, during due diligence, negotiations and pre-integration planning focused almost exclusively on strategic and financial modelling, with only superficial attention to HR matters and HR leaders from both teams largely excluded from the majority of the process. Prior to the transaction closing, no cultural assessment or planning for talent retention was undertaken.

Immediately after the deal closed, several senior NanoMax Solutions leaders, including the CTO and Head of Data Science, were given vague assurances over their future roles, leaving them feeling uncertain and undervalued. Within a month, both resigned, citing “loss of autonomy” and “lack of communication” as reasons. Their departures shocked their teams, leading to further resignations among top developers and project leads.

Later on, cultural clashes and distrust began to foment as InterEdge Tech’s hierarchical management style clashed sharply with NanoMax Solutions’s flat, creative structure. InterEdge Tech’s processes and communications felt bureaucratic and dismissive to the startup’s passionate, collaborative employees, who struggled to adapt and were given little flexibility or encouragement to do so.

Ultimately, the innovation pipeline stalled, client relationships suffered and NanoMax Solutions’s signature product roadmap fell behind schedule. The financial and strategic rationale for the deal unraveled, culminating in InterEdge Tech discontinuing the NanoMax Solutions division just two years later.

The failure of this seemingly perfect match highlights that strategic fit alone is insufficient and that even deals that look good on paper can be undermined by ignoring HR, culture and failing to retain and integrate key talent.

While this is a fictional scenario, it mirrors real-world failures where inadequate attention to people-related integration causes otherwise promising M&A transactions to collapse.

Discussions of M&A typically focus on areas such as which sectors are seeing the most dealmaking, the headwinds and tailwinds that buyers are experiencing, valuation multiple trends, post-sale growth strategies and distressed opportunities.

However, one aspect of acquisitions that is often overlooked, or ignored, is how to effectively orchestrate the ‘people’ side of the deal. After all, HR will play an absolutely integral role in the personnel and cultural alignment side of the post-deal integration.

Their role isn’t simply confined to the post-deal period, either. As we’ve shown in previous insights, a successful integration is a process that begins well before a deal even completes, with the most effective integrations involving a major degree of advanced planning.

For businesses seeking to grow through acquisitions, particularly as the economic environment becomes more conducive to acquisitive growth, ensuring that HR teams are prepared for acquisitions is vital.

This means ensuring that HR departments have all the necessary resources and information at their disposal to effect a successful integration on a personnel level, that their skillset reflects an ability to successfully integrate new teams and align cultures and that they are kept in the loop during acquisitions.

Involving HR throughout the M&A process will not only lead to smoother acquisitions, but better results and improved selection of appropriate targets. According to a Mercer study, 30 per cent of M&A deals fail to meet their financial targets as a result of cultural issues.

In other words, the businesses weren’t necessarily a bad fit, but the two cultures were and, as a result, the deal failed to deliver. Centering HR in the M&A process can mean that such culturally mismatched businesses are not pursued and that, in cases where there are cultural differences, the right people are involved to ensure that the cultures are aligned post-acquisition.

Lack of preparedness risks failed acquisitions
Despite significant optimism at the start of the year, M&A activity has been slow so far in the UK during 2025, with dealmakers seemingly still wary of persistent economic uncertainty, high costs and resurgent geopolitical turmoil (including Donald Trump’s chaotic handling of trade tariffs).

However, there have been positive signs. According to recent White & Case study, there were 594 UK M&A deals completed during the first quarter of the year (up 12.5 per cent from Q4 2024) and a further 668 in Q2 (up by 16.5 per cent from Q1 2025).

Looking ahead, White & Case reported that dealmakers were optimistic about further M&A, with the economic backdrop remaining “supportive” in spite of significant challenges and the UK’s continued status as a hub for inbound M&A providing a major boost.

Good news, it would seem, for companies hoping to boost their expansion through M&A in what remains a tough environment for organic growth. However, another recent report highlighted a worrying trend that could spell trouble for some would-be acquirers.

In a recent WTW study of 80 HR leaders involved in M&A and based in Europe, North America, the Middle East and Asia Pacific, 54 per cent of respondents said that they expected an increase in M&A before the end of the year - but the report also highlighted the increasing pressure HR teams are under.

65 per cent of respondents felt that their HR teams were less than fully prepared to handle their deal portfolio. Jim Plomer, senior director for integrated global solutions in M&A at WTW, said that “a majority of companies have expressed concern about their level of preparedness for future transactions, exacerbated by the possibility that timelines will need to be accelerated if the objective is to complete by year-end.”

Among the key challenges cited by HR leaders polled in the survey were data completeness, quality and integrity during due diligence (66 per cent) and aligning cultures (74 per cent of non-US respondents, 54 per cent of US leaders).

Interestingly, 78 per cent of respondents stated that identifying key talent below executive level with unique or special skill sets was their highest due diligence priority. Half of respondents said non-executive talent retention was the key sign of integration success, compared to just 29 per cent who cited leadership retention.

Plomer states unequivocally that “the role of HR should already be in full swing even before M&A discussions take shape, looking at the culture, the people, their values and whether they will fit. Proactively assessing people-related challenges and opportunities is critical to enhancing deal value and easing integration.”


HR in M&A - A quick-fire rundown of the key responsibilities
1. Pre-Merger / Pre-Acquisition Phase (Due Diligence)

Assist in formation of the deal team and provide input from an HR perspective when defining target profile and reviewing potential acquisition targets. Ensure strong collaboration and communication with the deal team throughout.

Liaise with HR at the target company, inventory all executive and key employee contracts, compensation, and benefits. Analyse employee demographics, titles, locations, tenure, salaries, turnover rates, and skills.

Review HR policies, handbooks, onboarding, performance management, discipline, and training programs. Evaluate labour contracts, union agreements, collective bargaining agreements, non-competes and confidentiality statements.

Examine compliance history: litigation, harassment claims, regulatory investigations, disciplinary actions, labour law compliance, equal employment, discrimination, and health/safety issues. Review compensation plans, bonus structures, severance, pension, health insurance, retirement benefits etc.

Identify high-value talent, critical skill gaps, redundancies, and dependencies on key individuals. Assess company culture, leadership styles, communication patterns, and employee engagement. Look for areas of friction and cultural mismatch or potential synergies.

Begin planning for key employee retention, cultural alignment and onboarding.

2. Merger Strategy and Planning
Map out cultural differences and plan for cultural integration.

Identify and plan retention strategies for top talent and key roles.

Forecast workforce planning needs -including redundancies and redeployment.

Design change management and employee transition support strategies.

Outline integration plans for HR processes and systems.

3. Communication and Engagement
Develop a structured communications strategy for employees, including Q&A forums, feedback channels, welcome letters and tailored messaging for different groups.

Engage actively with leadership and stakeholders to keep communication open and transparent. Deploy surveys and feedback sessions to gauge morale and address concerns.

Ensure strong communication with key employees (whether executive or non-executive), including recognition of importance, outlining career map and incentives.

4. Implementation and Integration
Finalise employment arrangements, contracts and reporting structures for the combined organisation.

Execute workforce adjustments, manage layoffs or reassignments empathetically and lawfully. Provide outplacement support for affected employees.

Integrate payroll, HRIS, benefit systems, and operational HR policies. Ensure legal compliance throughout all transition actions.

5. Post-Merger / Integration
Track progress of HR integration and address issues as they arise.

Monitor ongoing employee engagement, retention, and performance.

Continue medium-long-term cultural alignment activities and re-evaluate processes as necessary.

Support development and career paths for retained talent.

Overcoming the key challenges facing HR in M&A

Due diligence
In the WTW survey, tightening deal timeframes was cited as a major challenge facing HR teams working on M&A deals, particularly with regards to identifying key talent and data, completeness, quality and integrity.

Simply put, as deal times accelerate amid a greater desire to complete acquisitions, HR teams may find they have less time to complete the due diligence tasks they need to spot risks, identify opportunities and priorities and, ultimately, help them contribute to an effective integration if a deal is completed.

In order to ensure HR teams are able to effectively perform their responsibilities during a due diligence period, a strong deal team is vital. A deal team that combines expertise across the key areas required during the due diligence process and that is able to work collaboratively will mean that HR have the support structure in place to perform their role.

HR teams should also seek to foster a strong working relationship with their counterparts at target companies, as this will help to ensure that they work effectively together to gain the necessary information they need.

During the due diligence process, HR teams should ensure that they are rigorously organised and highly proactive. Prioritisation of key areas, such as high-value talent identification, potential cultural mismatches or synergy opportunities and major red flags, will be critical in ensuring that the most relevant information is gleaned early on.

Structured checklists are also useful, helping to break critical points down into related groups, e.g., talent identification, cultural alignment, legal risks, red flags etc. Along with prioritising critical areas, this will provide structure and method to the due diligence process, as well as rapid diagnosis of major problems, plus points and critical actions to perform during integration if the deal goes through.

Proactivity will also be important. One of the biggest upsides of rapidly establishing a strong working relationship with counterparts at target companies is being in a position to request key data and documents early (potentially even before the formal due diligence process has begun). This can help HR teams to address the data challenges cited by numerous WTW respondents.

Another factor that should be discussed is the role technology can play in due diligence. Tools such as Virtual Data Rooms (VDRs) are now extremely common in many transactions and can be extremely useful in making due diligence more precise and methodical and ensure quicker, safer communication.

However, a more contentious issue is the role of Artificial Intelligence in due diligence. AI is an increasingly common part of M&A transactions, with uses ranging from automating menial tasks to spotting compliance risks and even providing deep insights on potential future risks or opportunities.

The WTW survey showed that 65 per cent of respondents believe generative AI will play a significant role in dealmaking within the next two years. But some skepticism was apparent, with most respondents saying they had a “wait and see” attitude regarding the technology.

Despite these reservations, though, it seems a fair bet that,as HR teams come under greater pressure, AI will become an important part of their M&A processes, during due diligence and beyond.

Retain key talent
The WTW survey also showed that for most HR leaders, retention of key talent with unique or special skills below the executive level was their top priority during an acquisition. As well as being a major priority, it is also one of the biggest challenges that HR teams face during acquisitions.

According to a US EY study from 2024, 47 per cent of employees tend to leave within a year following an acquisition, with 75 per cent ultimately leaving within three years. If one of the major motivators behind an acquisition is to acquire the skills and expertise of the target company’s workforce, this is clearly a major problem.

In order to avoid a post-deal exodus of top talent, HR teams need to bake talent retention into the very earliest stages of their work on a deal. Identifying key talent - those with skills, knowledge or leadership talents that are important to the running of the business and would be challenging to replace - should be a core component of the due diligence process.

Once talent has been identified, HR teams should proactively plan for how they can be retained. Many employees feel vulnerable after their company has been acquired, so early efforts should be focused around making key staff feel valued.

Recognition of key staff, knowing the role they perform and acknowledging their contribution to the company’s previous success can establish a positive relationship early on. Welcome letters from the CEO of the buying company are commonly used to create a more inviting culture.

Of course, it will also be important to incentivise key staff to stay, so perks such as bonuses should be explored. More than simply feeling valued, though, staff will also want to know that there is room to progress within the company. For staff with unique or special skillsets that would not be easily replaced, providing role mapping and clear signs that they can develop their career by staying with the company will be key.

Crucially, HR will need to work alongside other leadership figures, as well as the staff themselves, to work out how they will be able to get the best out of these key employees and keep them engaged with their role.

According to EY, “highly talented employees who are not engaged [...] will be the first to leave during a M&A transaction”. Ensure that their role remains challenging and that their workload is managed so that they are kept busy and can fully show their talents, without getting burnt out.

Cultural alignment
Cultural alignment is one of the most important, and delicate, matters in an M&A deal and arguably the one that HR involvement is most critical for. In a report on HR in M&A, PwC emphasised that establishing “an understanding of a target’s culture [...] should be a critical step in the due diligence for any deal.”

PwC cautions that, when two distinct companies unite, cultural differences can be exposed in everything from work-style differences, to geographic and ethnic differences and that, in order for an effective integration to take place, “those differences must be addressed.”

A fatal mistake for a company to make when conducting acquisitions is to assume that its culture will simply be adopted wholesale by the target firm following the takeover. A failure to plan out a cultural integration or to address cultural mismatches will have a hugely damaging effect, not just on the integration, but on the success of the acquisition as a whole.

One of the best ways to ensure a successful alignment is to put HR at the centre of the process. According to a study from EY and Oxford Said Business School, organisations that use a human-centred approach during post-deal transformation are nearly three times more likely to succeed than those that don’t.

From an HR perspective, there will obviously be the practical tasks, such as integrating payroll, benefits systems and HR policies, but the responsibilities here also run deeper in many ways.

As indicated by the WTW study, which showed that 74 per cent of HR leaders from non-US companies considered aligning cultures to be their top overall challenge, successful cultural alignment is a complex and incredibly challenging task.

HR’s role in this alignment will, initially, be to identify potential synergies or friction points between the companies at the due diligence stage, using these to prepare a roadmap for sensitively aligning the two cultures during the post-deal transition period.

While there are, of course, groundworks to lay early on and practical steps that will need to be taken during the initial stages of the post-deal integration period, HR leaders should also recognise that alignment is a long-term process that shouldn’t be rushed.

In a recent EY report, the firm writes that cultural differences between companies “should not necessarily be seen as a negative within an M&A” and that effectively embracing these differences over the long-term “can create increased value and enhanced performance.”

A failure to appreciate what can be learned from the target company’s culture (which may, after all, have been an attractive factor in the acquisition) can lead to potential value-creating synergies being missed.

Furthermore, if the buyer simply seeks to immediately stamp their culture on the company, this can result in a culture shock - particularly if the two firms have extremely distinct ways of working. This could lead to employees becoming demoralised and the integration becoming more difficult.

Ultimately, a successful cultural alignment is perhaps less about sticking to a prescribed plan and looking to implement one singular model across all acquisitions. Rather it is about creating the conditions for the cultures to successfully align.

In an analysis of what drives successful post-M&A cultural integration, Aon boiled the process down to three key areas: Direction, relationships and environment.

Direction refers to where the companies are aiming to get to and the overall vision for the acquisition and ensuring that is shared between buyer and target company. Factors that can aid the direction of a cultural alignment include ensuring employees have a sense of purpose, that personal and professional development opportunities are available, a strong work/life balance and a proactive approach to employee wellbeing.

Relationships refers to how the team can work collaboratively to achieve the aims of the deal. Key factors here include accountability, transparency and a sense of trust, strong collaboration and clearly defined task allocation reflecting a shared effort over the course of an integration period.

Environment, finally, refers to the context in which the combined business operates. For example, are employees encouraged to switch between jobs and tasks? Is the company able to anticipate and address risks before they become problematic? Are leaders aware of when to change their approach in order to improve results? If these things are not occurring, then it is unlikely that the right conditions are in place to enable successful cultural alignment.

Cultural alignment is a sensitive stage of the M&A process, requiring planning that begins at the earliest stages of the deal, the awareness to not automatically seek to override the target company’s culture, strong change management and employee retention and, crucially, the ability to create the right conditions to enable the cultures to align successfully.

What all of these factors have in common is that they depend heavily on the people perspective, rather than simply depending on financial performance or growth. Simply put, the best way to ensure a strong cultural alignment post-acquisition, is to put HR at the centre of the process.

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