Rethinking human capital: The untapped driver of M&A related growth 

In the face of a rapidly changing economic and geopolitical landscape, business leaders are increasingly challenged to balance their growth strategies with operational needs, focusing on deal-making that fosters sustainable growth through portfolio optimisation and the acquisition of assets that support scale and expansion.

New research from the Transaction Advisers Institute and Mercer, The Say Versus Do Divide in M&A: How Ignoring the Impact of People in Deal Planning and Synergy Delivery Destroys Deal Value, reveals a glaring disconnect. Nearly all M&A leaders say human capital is critical to deal success, yet fewer than half actually factor it into their deal strategies. The result? Missed opportunities, misaligned teams and underdelivered value. As acquirers push for smarter synergy plays, the pressure is on to close the gap between intention and execution — and make talent (skills, key people, culture, retention, etc.) a real driver of deal performance.

For many, it comes down to habit. Deal teams are used to focusing on financials and operational synergies, and old habits die hard. Human capital can also feel abstract and intangible compared to hard numbers, making it easier to deprioritize. In addition, most M&A advisers aren’t equipped to handle the people side of deals, leaving acquirers without the guidance they need to get it right. The result? A critical driver of value creation is overlooked or sidelined when it matters most.

As dealmakers shift from a narrow cost-optimisation mindset to a more balanced view of both cost and revenue synergy, the spotlight is turning to human capital, focusing on when and how it’s prioritised throughout the M&A life cycle. Most teams are well versed in driving cost synergies: eliminating role redundancies, consolidating vendor contracts, optimising benefits through scale and streamlining shared services. These are familiar moves and are typically easier to execute.

But in today’s high-pressure environment, where finance is expensive, focusing solely on cost isn’t enough. Revenue synergies are becoming essential for justifying the deal thesis and unlocking long-term value creation. The challenge? Revenue synergy requires far more intentionality to be successful. Revenue opportunities must be identified and tested during diligence and continuously refined throughout integration.

As with launching a new product across multiple markets, success hinges on more than just strategy. Sales teams must be trained, incentive plans must be aligned, reporting structures must be clarified and key performance indicators must be embedded across the organisation. Or consider when an acquirer gains critical new workforce capabilities: It may look great on paper, but without clear planning around retention and integration, those skills won’t translate into revenue growth.

The bottom line is that realising revenue synergies is complex, people dependent and deeply tied to organisational readiness. Without clear accountability, aligned leadership and a comprehensive integration plan, deals quickly lose momentum — and the value they were meant to create.

We approach cost and revenue synergies through the lens of seven key human capital value drivers at three critical milestones that enable deal value creation.

Drawing on Mercer’s deep experience in helping organisations unlock deal value through human capital, here are three critical steps for successfully integrating human capital into the M&A process:

• Start with intent — and stay consistent. Human capital considerations should be built into the deal from day one, not treated as an afterthought. The most successful acquirers understand the critical workforce requirements during targeting. They incorporate the human capital strategy into the deal thesis when it’s first being developed and refine the deal thesis throughout the life cycle to ensure alignment with the value creation plan.

• Test revenue synergy assumptions early and often. Don’t wait until day one to figure out how people impact performance. Begin validating human capital requirements and integration needs during diligence. Define how value will be delivered through people, and pressure-test those assumptions throughout planning and execution.

• Bring in the right expertise. Human capital is complex and deeply nuanced. It requires advisers that understand the strategy and also have a track record of execution. Partners that can translate insight into action and work alongside deal teams, from diligence through integration, to ensure human capital strategies are practical and measurable and deliver results.

In today’s M&A landscape, it’s clear that real value is created through people. Human capital can’t be an afterthought. It must be embedded in strategy from day one and executed with discipline.

At Mercer, we bring tested frameworks, deep expertise and practical support to help you align talent, culture and structure with your deal goals — so you don’t just close the deal, you capture its full value.