An interview with Jeff Black, Global and North America M&A Advisory Services Leader
A global leader in M&A advisory services, Mercer was recently named an Innovator in ALM | Law.com’s Compass Pacesetter Research M&A Services 2023 Report. This recognition reflects Mercer’s commitment to innovation in the field — and our fresh perspective on the central role of human capital in M&A success. In fact, Mercer was also honored in 2022 as an M&A Innovator and Pacesetter.
Following the publication of this year’s report, we sat down with Jeff Black, Global and North America M&A Advisory Services Leader at Mercer. Jeff shared some of his thoughts on the report, the critical role of human capital in M&A and why Mercer’s point of view stands out in this complex environment.
1. What exactly is the M&A Services 2023 Report? And what do you think are the most important takeaways from this year’s research?
Jeff Black: The M&A Services 2023 Report by ALM is a global market analysis of merger and acquisition activity. It’s important because compared to most analyses, it is a much more holistic overview that really reflects the multifaceted nature of today’s M&A activities.
What does that mean? It means this report doesn’t just look at tax or legal but at the whole ecosystem that supports M&A — including law, consulting, insurance, financial advisory and other advisors operating in the market. That is a much more comprehensive look at the reality of transactions and what ultimately must be present for them to work throughout the deal life cycle.
As for important takeaways, obviously, ALM noted the continued slowdown in the pace and scope of M&A activity this year. Deals are smaller and facing growing financing challenges. The report also shows an evolving perspective on what makes M&A successful. There’s a strong focus on optimizing deal outcomes, reducing risks and creative approaches like joint ventures.
A crucial point I was happy to see is increasing recognition of the critical role of human capital in M&As. The report notes that “the human capital factor has risen in prominence in deals (and is recognized as a major trigger for deal failures), making retention and workforce strategy a major service focus, and turning deals into workforce transformation events.”
ALM points out that neglecting human capital can be a major deal-breaker. I couldn’t agree more, and the clients we advise recognize the importance of considering the human capital risks throughout the deal life cycle. It’s a critical aspect of M&A that is often overlooked, but it’s the backbone that supports every successful deal — whether merger, divestiture, joint deal or acquisition.
2. Why is it so important to focus on human capital when considering a merger or acquisition?
Jeff Black: People are the lifeblood of any business, but this is especially true in an M&A context. The market is evolving, and deal success is about creating true operational excellence. That means a keen focus on critical people elements related to structure, leadership, workforce and culture.
For some, it’s always been tempting to prioritize legal and tax aspects and let the human element sort itself out — but that’s an incredibly risky approach. No one says, “Oh, I’m sure everything will work out on the tax and legal side — we can just leave that until we own the company.”
People not only help execute the deals, but they also bring invaluable expertise and knowledge along with them into the new company. Failing to understand, plan and attend to the human aspects exposes any deal to significant financial and operational risks.
And that’s even more true with the market trends going into 2024. We’re seeing more and more startups involved in M&As. Less developed companies mean a lot of focus on culture and the retention of founders and pivotal early talent — who carry a big part of your intellectual capital in their heads.
There is also more pressure on early deal stages — when most organizations typically aren’t yet thinking about people. We see the most successful companies looking at the people factors early on, throughout the M&A and well beyond close.
3. Why was Mercer chosen as an ALM Innovator? What is Mercer doing that is different to earn this designation?
Jeff Black: Mercer’s recognition as an ALM Innovator really comes from our unique approach to deals. We focus on the intersection of business and people. We don’t just develop strategies — we provide a holistic strategy grounded in executional reality.
Our methodology is focused on understanding talent and skills needs as well as risks and how these align with deal thesis viability. That involves three lenses: leadership, workforce and behavior/culture.
We are experts at being able to look at a deal thesis, map it to execution requirements and organizational goals, and define the critical few human elements that will make the strategy come to life. We also offer insights at every stage of the process, from strategy and diagnostics to acceleration and execution.
According to Mercer research, the three top drivers that business leaders believe deliver deal success are leadership alignment, culture alignment and talent identification/retention. So we consider skill set requirements, competitive landscape, local market scarcity, internal upskilling programs, talent development and more — offering a comprehensive view, early in the deal process, that might otherwise be completely missed. Our Talent Insights product, for example, is a powerful tool for assessing the human capital landscape in any deal to ensure leaders can understand where the value is and protect it.
This recognition by ALM reflects Mercer’s commitment to positioning talent and skills in M&A strategies. Our philosophy of putting people at the center of every deal is deeply rooted in operational reality. I think that’s what makes Mercer’s approach to M&A so innovative.
Our thanks to Jeff Black for his insightful thoughts on the evolution of M&A and Mercer’s unique perspective. As the landscape of mergers and acquisitions continues to change, Mercer’s focus remains on the intricate balance of business acumen and human capital strategy.
To learn more about how Mercer can assist in navigating the complexities of M&A, reach out to our team of experts for a personalized consultation here.
Global, US and Canada M&A Advisory Services Leader