As 2025 quickly approaches, many organizations are gearing up for growth. According to recent Gartner research, more than 60% of C-suite execs surveyed say business growth is their top priority, a marked increase from last year—and the highest percentage invested in growth in a decade. For some of these organizations, growth will be found through mergers and acquisitions, which are predicted to rise around the globe.
One component of M&A activity that organizations need to examine in the coming year, experts say, is how they pay employees who work on mergers, acquisitions and divestitures. A new WTW survey of 160 organizations has found that organizations with M&A activity increasingly use special incentives to acknowledge the executives and non-executives who get those deals done.
According to Scott Oberstaedt, senior director, Executive Compensation & Board Advisory, WTW, strategic approaches to compensation for M&A work can make the difference between transformations that succeed and those that fail.
“Both acquisitions and divestitures are expected to increase in 2025, and parent company employees will be asked to do more than ever on these deals,” Oberstaedt says. “A thoughtful, proactive approach to rewarding those employees can help recruit more employees to work on deals, and work harder to execute them.”
Mergers and acquisitions are a major part of most companies’ growth strategies, and those deals are increasingly complicated, Oberstaedt says, which necessitates additional compensation for employees who work on such transactions.
“The workload associated with completing deals is increasing, and employees working on them are often stressed by both the complexity and demands,” he says. “Therefore, a plan that recognizes the additional workload and rewards employees who complete these deals successfully is increasingly important.”
Just over half of executives surveyed said they provide one-time compensation for those who work on mergers, acquisitions and divestitures, yet only 16% of respondents said they have a formal transaction incentive policy for employees.
“Companies that standardize their deal-related incentives with a policy can align their goals with best practices and maximize the retentive/motivating value of their plans,” Oberstaedt says, adding that these incentives are primarily for non-executives, not C-suite.
“Top executives are typically motivated to work on deals through their regular compensation packages and equity holdings,” he notes.
Just over half of respondents that offered incentives for M&A activity work said they communicated those incentives to employees only after the deal had closed. To be more proactive, Oberstaedt says, HR should help leaders identify key employees and budget for incentives earlier in the process, which he says could motivate employees and boost retention.
Of those organizations that offer special incentives for such work, 84% do so through a fixed cash bonus; yet, Oberstaedt notes, there are many ways to recognize these contributions, including through higher annual bonuses, spot bonus plans, in-kind rewards or additional PTO.
“Employers should use every tool at their disposal to identify and recognize above-and-beyond efforts in situations like M&A deals,” Oberstaedt says.
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