Workforce in M&A - How is AI shaping your Talent game?

Artificial intelligence (AI) has the powerful potential to transform workforces and ways of working, especially in an M&A context. Dealmakers need to rethink the value of the talent they’re acquiring, divesting or transforming, and what skills offer the maximum return potential. Without this clear workforce focus, dealmakers risk misvaluing the target or leaving value on the table. So how can you as a dealmaker make the most of an AI-augmented workforce?

By Victoria McCullagh and Alex Murray

Strategic deal-making still offers a fast and effective way for acquiring key talent, and given 60% of UK businesses say they’ll use M&A to build future-ready skills in their organisation, AI and workforce transformation will become increasingly entwined.

It's clear that deal-makers are still using transactions to accelerate workforce transformation, but there remains uncertainty over the impact of AI and how to move forward. AI can attract as much confusion as excitement. And where there’s confusion, there is often fear, reluctance, or worse still, organisations freezing. But holding back only puts hesitant organisations at risk of falling behind, with potentially long lasting impacts. Successful dealmakers therefore need to be asking:

What skills are needed now versus the future?
How and where can value be created – and indeed lost?
How does an augmented workforce reshape deal strategies, targeting and valuations?

Businesses are embracing the transformative potential of AI – generative AI (GenAI) in particular. Nearly two-thirds of UK CEOs (64%) believe that GenAI will increase the efficiency of their workforce.

This human-led, tech-powered shift centres on augmentation, rather than automation. The transformative potential is the creation of a symbiotic relationship between humans and AI that empowers people to use their time and talent more efficiently and creatively. AI-enabled tools can help your business to map and optimise the skills within your workforce – matching capabilities with strategies, identifying gaps and providing a more informed and adaptable basis for training and development plans.

Crucially, however, the full potential of this AI-augmented workforce remains untapped. While nearly half of the UK workers (47%) taking part in PwC UK’s Hopes and Fears Survey say they’ve used GenAI at work in the past 12 months, far fewer are using it on a consistent basis. Only 18% have used it daily or weekly.

Consider augmented workforces in your deal strategy

Make sure talent, technology and business strategies are fully aligned when acquiring or transforming assets. In practice this means overlaying current AI capabilities onto the deal hypothesis and openings for value creation and growth.

You can then judge how to bridge current and future skills gaps. As the workforce becomes increasingly AI-savvy, you can also determine how to make the most of improved capabilities and time freed to enhance value for customers, carve out new revenue streams and sharpen your competitive edge.

Build AI capabilities into valuations

When incorporating AI capabilities into valuations, it’s crucial to assess the extent to which the target company has implemented the necessary expertise. This involves evaluating both the ‘sunrise’ skills that enhance competitiveness in a fast-changing market, and the obsolete ‘sunset’ skills.

This skills balance, alongside the cost of hiring and upskilling a future-ready workforce, and retaining top talent, need to be built into deal valuation and pricing.

Whilst retention is critical for buyers, it can also be expensive, so defining who is most valuable within the augmented workforce can help you to identify and incentivise the right people, at the right price. This may help challenge traditional or typical ‘talent’ definitions, with retention being targeted far wider than just leaders, and extending to tech-innovators and AI-proficient first-movers.

As sellers, AI maturity will help to attract buyers and premium prices in a tough deal market. Even if you’re not up to speed yet, you can highlight how reconfigured capabilities could drive improved competitiveness and commercial potential as part of a talent-and tech-focused turnaround plan.

Harness the potential of AI in due diligence

A new generation of AI tools can extend the boundaries of due diligence to be faster, deeper, and broader by providing more information in less time, analysing larger pools of data, and identifying both qualitative and quantitative patterns and trends.

For talent in deals, AI could prove especially valuable in understanding current talent capabilities and mapping this against future demand and potential. Rather than simply confirming the current position, the results would help assess and quantify the value hypothesis of an AI-enabled workforce.

Consider divestment as well as acquisition

You may not have the funds to upskill divisions with a high level of sunset skills, or skills that no longer fit your core portfolio. So divestment might be the best option. This would raise capital for reinvestment in sunrise skills, while opening up opportunities for buyers that can upskill, reskill and modernise capabilities on the other.

Build trust into the deal strategy and evaluation

With the value potential of AI comes new risks. Nearly half of UK CEOs (47%) are worried that GenAI will increase their susceptibility to legal liabilities and reputational risks. A third are concerned that GenAI will heighten the risk of bias towards specific customer or employee groups.

A part of due diligence is therefore assessing the effectiveness of the AI guardrails and governance in place within the workforce and leadership. These considerations could also affect deal strategy and valuation as any concerns over AI understanding, ethics and responsibility could delay or even derail roll-out of AI capabilities and the resulting returns.

Seizing the value potential

Talent strategy and workforce planning now need to go hand-in-hand with GenAI and tech deployment in a deal – the two are now inextricably linked. Human ingenuity remains paramount – the key question is how to harness the power of AI to augment your workforce and build a new set of talent priorities into acquisition targeting, valuation and integration. The ‘win-win-win’ is using GenAI in a deal to enhance human activity, deliver the mutual benefits for employers, employees and customers, and ultimately turn what could be a source of confusion and uncertainty into a crucial lever of value creation.

Let’s talk

If you would like to know more about how we’re helping dealmakers to identify and deliver the full value from AI-augmented and wider workforce transformation, please get in touch.