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.