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Talent retention in M&A: Insights from Deloitte Australia's March 2025 HR DealMakers Event

In March 2025, industry leaders gathered for Deloitte Australia’s inaugural HR DealMakers event to discuss one of the most pressing challenges in mergers and acquisitions (M&A): talent retention. 

A recent Deloitte study found that voluntary attrition increases by over 30% during M&A transactions1. With M&A activity expected to surge in the coming year, the ability to retain key employees is increasingly recognised as a crucial factor for deal success. 

For Buyers, retaining top talent in the acquired company is essential for preserving institutional knowledge and key relationships, and ensuring the organisation has right people it needs to run. At the same time, the Seller has a vital incentive to retain key staff to maintain operational stability and protect value before and during the transaction. 

How to Approach Retention in M&A 

The discussion at the event reinforced the importance of balancing both offensive and defensive retention strategies.

Defensive strategies (primarily financial incentives) are highly effective in the short to medium term, with less than 5% of recipients leaving before their awards vest2. However, their impact is inherently temporary, as employees may depart once the financial benefits are realised. 

On the other hand, offensive strategies (primarily non-financial incentives) focus more on long term retention by strengthening the intrinsic employee commitment. Examples include career progression, development opportunities, and increased benefits.

Retention bonuses and financial incentives remain a fundamental tool, but they should be designed within a broader total rewards strategy, and tailored to the workforce, context and market. Companies must determine:

  • Who receives retention incentives: While C-suite executives and high-performers are often the focus, one of the biggest misconceptions in retention strategy is assuming that only executives and high-performers needs attention. While it is certainly true that these groups are key, it is important to consider who from the broader employee population should be considered ‘critical talent’ – those who are central to deal execution and those who fall into a key workforce segment.
  • The structure of financial incentives: While cash and/or equity awards are the most common financial incentives, it is very important to consider how these incentives should be tailored to best achieve objectives and ‘lock in talent’. For example, cash and equity vs. cash or equity only; timing of payout (e.g., pre-closing, at closing, tied to the achievement of a transaction milestone).
  • The scale of financial incentives: How much is offered to critical employees varies across deals as it is often influenced by both the overall budget and individual employee remuneration. Whatever the amount provided to each employee, it is important that some of the retention budget is held back to address critical retention risks that emerge as the transaction unfolds.

Beyond financial incentives, employees stay when they feel valued, supported, and clearly understand the value proposition or ‘what’s in it for me’. Conducting a deep understanding of what matters to different employee segments—and clearly communicating it—can help create a more sustainable workforce, leading to greater long-term success in post-completion integration. Companies should consider:

  • How to balance engagement with Day 1 with the importance of minimising operational distraction and disruption before Day 1. While engaging employees early is crucial for maintaining morale, it’s important to minimise unnecessary distraction. A structured change and communications strategy should ensure employees receive the right information at the right time while supporting employees to remain focused on business priorities.
  • Investing in deeply understanding your unique employee segments. Not all employees will experience the transaction in the same way. Conducting detailed change impact analysis, identifying at-risk stakeholder groups, and personalising engagement strategies can help address concerns proactively and enhance retention.
  • Culture as an integral part of the deal thesis. Understanding how organisations operate, make decisions, and engage employees is critical. If employees feel disconnected from the new organisation’s culture, retention efforts—even those with strong financial incentives—can fall flat. Culture integration must go beyond words—it requires tangible actions supported by organisational structures like remuneration and performance frameworks. This will allow culture to be measured through real-time data (such as collaboration patterns, turnover rates, and employee sentiment) to track integration progress and make informed adjustments.
Lessons Learned and Advice for M&A Leaders

 

Reflecting on their experiences, panellists shared their lessons learned:

Lessons learned

Description

Retention starts early.

Companies should plan for retention from the due diligence phase, rather than treating it as a mid-transaction afterthought. Retention is not one-size-fits-all. A tailored approach is essential—invest time in understanding the employee base at a granular level and continuously iterate retention efforts to address unique needs. A broad, generic strategy risks missing critical motivators for different workforce groups.

Retention is for the long term.

Efforts to retain talent shouldn’t stop at Day 1; they must be embedded into the broader integration strategy. Sustainable retention comes from engagement, career opportunities, and cultural alignment well beyond the initial transition period.

Don’t plan for perfect.

No retention plan will be universally well received—there will always be noise and differing opinions. Start with a well-grounded strategy based on clear convictions and business priorities and be prepared to adjust as needed while staying focused on long-term objectives.

Empathy goes a long way.

Whether on the buy or sell side, leadership quality plays a critical role in successful transactions. The ability to listen, read the room, and navigate uncertainty with empathy fosters trust and engagement. Soft skills, such as emotional intelligence and active communication, should not be underestimated in driving a smooth transition.

Looking Ahead

The HR DealMakers event highlighted that successful talent retention in M&A is not just about keeping people—it’s about keeping the right people, in the right roles, with the right support. Organisations that approach retention holistically are best positioned to effectively navigate the road to completion and beyond.

To learn more about HR M&A best practices in our future HR DealMakers sessions, please submit your expressions of interest to attend via HRdealmakers@deloitte.com.au

Sources:
1. Deloitte. (2023). Playing for keeps: Retaining talent after a deal. 
2. Deloitte. (2022). M&A retention survey: Understanding the role of retention in deal success.

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