How are talent shortages driving M&A?
A recent EY Global Capital Confidence Barometer report found that 52 per cent of the businesses they spoke to said they were planning to actively pursue M&A in the coming months. The survey found that motivations for deal activity centred around the desire to boost their transitional capabilities. In other words, businesses need to be highly adaptable and flexible in order to compete in an increasingly tech-driven world.
Agility is the new must-have capability for businesses that want to survive, let alone grow, and M&A is still the easiest and quickest way to gain this attribute.
The EY researchers talked to businesses about the challenges they were facing going into 2020 and 61 per cent admitted to having ‘difficulties hiring or retaining staff’. A lack of skills was being cited as a barrier to growth. EY explained: “as more jobs are automated in routine tasks, companies are finding it more difficult to attract and retain talent with the right technical and digital skills to benefit from these efficiencies.” As a result, M&A is now being seen as a route to boosting a talent pool.
How can analytics help businesses find and retain talent during M&A?
In light of the above, buyers are increasingly keen to ensure they target acquisition prospects that offer a major talent boost directly as a result of the deal. In addition, buyers are also keen to ensure that there is enough talent in the local area to fulfil later requirements post-deal. Without these assurances, there is limited scope for growth off the back of acquisitions.
Many businesses are now catching onto the fact that the best way to maximize the talent boost from a deal is to use advanced analytics. Analysing data, some of which is available on an open source basis through tools like LinkedIn; and some of which is commercially available through business intelligence services, can bring about serious benefits and minimise the risks involved in making a talent-focused acquisition.
One example of how analytics can be deployed in this way is in the purchase of a technology firm by a conglomerate who wanted to find a business with the talent needed to build its Internet of Things (IoT) products. The buyer used analytics, first to track down a target with an exceptional talent pool of professionals with particular experience in IoT. It then used the same techniques to ensure that there was enough talent in the local area to fill the roles that were likely to be created from the deal. There was then a third analytics process deployed in order to check that there was enough relevant talent likely to come out of top universities in the region to fill any other gaps.
A recent example of a business that has based a purchase decision partly, if not entirely, on talent acquisition is Elastic Path and its deal to buy ecommerce leader, Moltin, which was based in Newcastle before moving to Boston in the US, although it retains a base in the North East.
Vancouver-based Elastic Path says that the acquisition created what it sees as a unique offering within its marketplace. This is business transformation in action and illustrates how acquiring talent and technology as part of a deal can help a business to compete more effectively.
Co-founder and CEO of Elastic Path, Harry Chemko, explained: “We have been committed to leading the charge in commerce innovation since our founding, and with the talent and technology Moltin brings to the table, Elastic Path enables every business to deploy revolutionary commerce experiences faster, easier and at greater scale than any other solution in the market.”
As part of the deal, every single member of Moltin’s global staff has joined Elastic Path, and this includes sales, marketing, operations, engineering and customer support specialists.
Another, more high profile deal, that illustrates this latest trend for talent acquisition is payment giant Visa’s purchase of fintech start-up Plaid for $5.3bn. Visa stated: "Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent.” It added that the purchase “enhances the growth trajectory” of its business.
In conclusion, businesses can invest in R&D, acquire new technological capabilities and modernise their business models all they like, but if they don’t have employees with the right skills, they will fail. These deals show that businesses of all sizes see M&A as a fast route to acquiring the vital talent needed to actually grow and compete within fast-moving industries. And a data-centric approach is required to find those target businesses with the right talent.
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