HR underprepared for likely increase in M&A activity

Two-thirds of HR professionals say they are not fully prepared for an expected increase in merger and acquisition (M&A) activity.

Despite a record slow start for 2025, more than half of companies (54%) expect M&A activity to increase, according to a survey of senior HR professionals by WTW, the global advisory, broking and solutions company. Only a fifth (19%) anticipate deal activity to decrease.

HR teams state that they are under increasing pressure, however, with 65% feeling less than fully prepared to handle their potential M&A deals. Respondents acknowledged significant challenges in executing HR due diligence, which typically includes a thorough review of a target company’s HR policies and practices to assess potential liabilities, synergies and risks related to the workforce.

Survey respondents viewed data completeness, quality and integrity as their top due diligence challenges (66%). Escalating data demands as the time allowed to complete due diligence tightens reinforces the need for sellers to be prepared if they are to maximise deal value.

Also, less than one in five survey respondents believe their HR teams have been properly included in preliminary negotiations.

Jim Plomer, WTW’s senior director, integrated global solutions for M&A, said: “Low deal volumes during the first half of 2025 suggest pent-up demand fuelling a new wave of deals when market stability improves.

“However, 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.

“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.”

The survey also found that 78% of HR professional respondents identified key talent with unique or special skill sets – below executive level – as their highest due diligence priority.

The leading metric for integration success was retention of non-executive talent (50%). This was 21% higher than leadership retention (29%). However, resource constraints are rising at a greater rate than culture and technology challenges, with 74% of non-US and 54% of US companies stating that aligning cultures remains the overall top challenge.

Meanwhile, 65% believe generative AI will affect the deal-making process within the next two years. But full buy-in to gen AI’s value is not there yet, with most in “wait and see” mode rather than being early adopters.

WTW’s Barometer Survey is conducted globally every two years to gauge current and future trends in the M&A and divestiture space. For the 2025 survey, WTW surveyed over 80 HR leaders based in North America, Europe, the Middle East and Asia-Pacific, who are involved in their organisation’s deal-making.

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