Introduction  

Mergers and acquisitions (M&A) typically begin with numbers: scaling up, expanding market reach, integrating value chain or boosting revenue. However, data suggests that around 70% of M&A deals fail to achieve their expected value creation objectives. The reasons? Unclear strategic objectives, overpricing, underestimation of integration importance, you name it.

It’s been more than 15 years that we know that cultural clashes represent 30% of M&A integration failures . Thus, challenges related to people such as cultural clashes, key talent loss, and lack of engagement are key pivot that will influence the success of your integration. Financials may drive the initial decision, but lasting success in M&A requires a strong human focus as well.

This article explores HR’s critical role in every phase, with practical strategies for smoother integration, higher engagement, and ultimately, a stronger organization and value creation.

M&A begins with numbers, but ends with people delivering value

While M&A decisions are typically based on financial and operational synergies, their success can take an even higher cap depending on how effectively people are managed. Research by Deloitte shows that almost 30% of failed M&As cite cultural integration issues as a root cause.

We find that early HR involvement plays a critical role in increasing the likelihood of successful integration. Securing key talent, aligning corporate cultures, and implementing regulatory compliance frameworks early in the process is essential. HR can help protect goodwill, stabilize the workforce, and ensure a smoother transition for employees.

Beyond retention, HR’s role extends to managing compensation structures, ensuring compliance with employment regulations, and fostering a culture of transparency. These efforts all contribute to minimizing disruption and maximizing deal success.

The importance of early talent assessment

HR’s role in early talent mapping is foundational. Our experiences demonstrate that organizations should proactively address talent retention in M&A deals to reduce workforce disruption and improve integration outcomes. To meet this challenge, HR professionals should:

• Identify key influencers who can champion the transition.
• Retain high performers critical to the organization’s future.
• Highlight cultural ambassadors to bridge organizational differences.

Success trigger: Conducting talent assessments as early as possible ensures the integration is led by those committed to the company’s evolving goals.

Tackling unspoken cultural differences

Cultural misalignment is often a silent threat to M&A success. Most executives see cultural fit as crucial, yet only part of them address it thoroughly. HR can mitigate cultural risks by:

• Conducting in-depth cultural due diligence.
• Performing cultural audits to reveal both alignment and potential conflicts.
• Organizing workshops to foster open discussions on values and expectations.

Expert insight: Cultural integration isn’t about imposing one culture over another; it’s about building a shared culture that reflects the strengths of both organizations.

Let’s change the narrative and make HR the storyteller!

If not properly managed, M&A processes can bring uncertainty and reduce employee morale. Research from CultureAmp  found that employees in organizations undergoing M&A, experience a decline in perceived transparency, alignment, and engagement, impacting overall productivity and integration success.

However, past projects have shown that HR has the power to shift this narrative through a well-crafted, strategic communication plan that helps employees understand not only what is changing, but also why it matters to them.

HR can transform any fear into engagement and the possible uncertainty into alignment by presenting a clear and inspiring integration journey, highlighting opportunities for career growth, skill development, and internal mobility.

Success key: When HR showcases the M&A’s career growth and development opportunities, employees become more willing participants in the change.

What about emotions? 

During M&A, like any major transformation, employees experience a range of emotions, from uncertainty and resistance to optimism about new opportunities. Transparency plays a critical role in shaping employee perceptions and engagement.

According to Deloitte's Global Human Capital Trends Report 2024, 86% of workers and 74% of leaders consider trust and transparency between employees and their organization to be very or critically important. In fact, this trend was ranked as the most influential factor impacting organizational success over the next three years.

This underscores HR’s crucial role in fostering an open dialogue throughout the integration process. Acknowledging uncertainties and openly communicating with employees can increase engagement. Sometimes, simply saying “we’re in this together” can strengthen morale.

Integration as a central HR mission

Once the deal closes, integration is the ultimate test. Over 60% of failed M&A deals cite integration issues as a primary reason, according to Forbes, and Financier Worldwide. HR’s role is to build cohesion and clarity. From townhall to facilitating team-building initiatives to bridge gaps between employees from both organizations, HR must be the link between the organizations during this intense discovery period between the employees.

Another approach would be to organize cross-functional projects and mentorship programs to promote collaboration and establish mutual understanding between employees from each entity.

Success trigger: Forming integration teams from both entities helps ensure a collaborative approach to integration, avoiding a top-down mandate.

The social journey of employees and HR’s role in ensuring compliance and buy-in

The social journey of employees during an M&A can be transformative yet fraught with uncertainty. For many employees, M&A leads to a shift in work culture, new roles, and often, concerns about job security and benefits.

In this context, HR’s responsibility is twofold: to ensure compliance with protective measures and to build employee trust through transparent communication.

HR plays a critical role in managing workforce transitions across different types of M&A transactions. In asset deals, the Transfer of Undertakings (Protection of Employment) (TUPE¹) regulation provides a structured framework to preserve employee rights. However, TUPE is not the only mechanism for employee transfers. Depending on the type of M&A deal, companies may also explore:

• Collective negotiations with trade unions or employee representatives to tailor workforce transitions.
• Contractual transfers, where employees sign new agreements with the acquiring company while maintaining prior service recognition.
• Rehiring strategies, where employees are offered new contracts with adjusted conditions.

While each transaction structure varies, the key HR priorities remain the same, ensuring compliance, protecting employee rights, and maintaining workforce stability.

When M&A transactions extend to regions with distinct labor protections, like Luxembourg, HR must also ensure compliance with local laws that reinforce these employee rights. HR can further enhance employee buy-in and commitment by implementing benefits and compensation safeguarding mechanisms.

HR can secure agreements to retain or mirror the employees' existing benefit structures, ensuring that essential aspects of their compensation package, such as health insurance, pensions, and other perks, remain intact.

From there, HR must engage with employee representatives, unions, or workers’ councils ensures employee voices are part of decision-making and supports compliance with regulations, particularly in regions with active labor laws, such as Luxembourg.

Conclusion

HR’s role in M&A: driving integration with strategy and people

M&A success is not solely determined by financial projections and operational synergies, it also depends on how effectively organizations integrate and engage their workforce. HR’s role extends beyond compliance; it involves ensuring that employees understand the transition, feel supported, and are aligned with the company’s strategic direction.

Companies that embed HR strategies early in the M&A process can reduce cultural resistance, retain key talent, and facilitate a structured, people-focused integration. By proactively managing workforce challenges, HR helps transform M&A from a transactional event into a well-executed transition that supports long-term growth and stability.

When employees trust the leadership, understand their role in the new organization, and see clear opportunities for career development, they become active participants in post-merger success. With HR acting as a strategic enabler, organizations can achieve a  financially sound deal and build a sustainable and engaged workforce for the future.

¹ While TUPE is a commonly applied frameworks for employee transfers in asset deals, it is not the only approach. Depending on the transaction structure, companies may also explore alternatives such as contractual transfers, rehiring with past service recognition, or collective negotiations with employee representatives. However, the key HR considerations—ensuring compliance, protecting employee rights, and maintaining workforce stability—remain the same across all methods. TUPE serves as a strong reference point for understanding how HR can navigate workforce transitions, making it a relevant example for our discussion.