Where M&A breaks down: the People side
Almost every M&A conversation starts with the numbers: price, multiple, structure, timeline. Then the deal closes, and attention shifts from the financials to the people inside the company. People start asking very human questions. Do I still have a job? Who do I report to? Can I trust what I'm being told?
The data shows how badly we tend to handle this moment. Consulting firms estimate that 50 to 70 percent of M&A deals fail to deliver on their promise, with a large share of those failures tracing back to people and culture issues. And 70 to 80 percent of founders regret their exit, often because of what happened to their people after the close rather than the price they secured.
The challenge here is that M&A processes were not built to address the human side of these transactions. The systems, timelines, and checklists that govern a typical transaction are designed around financial and legal close, leaving people as an afterthought. Building processes that account for the human side from the start is one of the most underleveraged opportunities in M&A today.
On a recent episode of Ethical Exits, Nikki Eaves, founder of Purpose and Impact Communications and a veteran of more than a dozen transactions, shared where the people side breaks down and how to fix it.
Why communication breaks down between announcement and day one
For most employees, deal announcement day arrives as a surprise, close-held until then among attorneys, advisors, and a small circle of leadership. And the dynamic Nikki sees over and over is that those leaders have been living with the decision for months. By announcement day, it’s old news. For everyone else, it's breaking news. Leaders get frustrated that employees "don't understand" something they've already explained, forgetting they need to bring everyone else along the curve they traveled months ago.
The window between announcement and day one is where business continuity gets built or lost. Employees need answers to a basic hierarchy of needs: benefits, approval authority, reporting lines, how to reach new colleagues. Customer-facing teams need to know what to tell clients, and leaders on both sides need resources to answer their teams' questions. Mishandle this period and the cost is disruption, disengagement, and eroded trust among the very people who made the company worth acquiring.
Telling people something is not the same as communicating with them
One of the most common failures is the confusion between announcing and communicating. A CEO email goes out, an all-hands happens, and leadership checks the box. That's transmission of information, and it's only the start.
Communicators call it the big C and the little C. The big C is the CEO email and the press release. The little C is the everyday conversations: team meetings, hallway check-ins, managers creating space for people to process. Most organizations invest heavily in the big C and almost nothing in the little C, which is where trust actually gets built. Building the little C means equipping the people bypassed by top-down communication, supervisors, people managers, HR, and IT, so employees have multiple paths to answers instead of a single bottleneck.
Culture vs. values: which one should you actually protect?
Nikki defines culture simply: the written and unwritten rules about how work gets done. How decisions are made, what gets rewarded, what gets punished.
Founders often enter a sale determined to preserve their culture at all costs, but no culture is perfect, and every culture evolves constantly with new leadership and changing conditions. Some things your company couldn't do under your ownership might actually become better under a new one.
Values are the better North Star. Culture is a set of practices, and practices should change with the times. Values are what's ingrained: how you make decisions when things get hard. A seller's real question is whether the buyer shares the same ethos, because that alignment predicts how decisions will be made long after the founder is gone.
That changes the diligence questions worth asking. "What's your culture like?" is superficial. Better: How are decisions made? How do people react to change? What happened to the businesses you acquired before this one? Past behavior gives you intel that a values statement never will.
What employees need when leaders don't have all the answers
After an announcement, employees want answers immediately, and leaders genuinely don't have them yet. Unfortunately, leaders without answers tend to go radio silent, and silence is exactly what employees fear most.
Nikki shared the story of an executive whose company was being acquired. He told his team: I know this is a tough time. Here's what I know, here's what I don't know, and here's when you'll hear back from me on your open questions. One employee later told him how much it meant, because the team could see he was going through it too.
That's the model. What employees need is honesty about what's known and unknown, a commitment to come back by a specific time, and constant communication even when the update is "no update yet."
Three things that should happen before day one
Nikki's full playbook has a hundred line items. The principles come down to three.
Talk about culture and values early, including in diligence. Nikki has never seen a deal room with an intentional process for understanding the culture of the company being acquired, largely because it slows down a deal. Understanding it early lets you build a real integration strategy. Skipping it is like planning the wedding and but not the marriage.
Develop a new breed of leaders. Leaders who treat people as a source of value rather than a line item to be optimized, who notice which informal people are the glue of the business and which relationships hold the customers, and who make sure that value doesn't walk out the door after close.
More transparency and humanity, before and after the deal. Sellers can do their own diligence on a buyer's track record, hold period, and intentions. Buyers can't promise every job will be preserved, and shouldn't pretend otherwise. What they can promise is transparency and respect: naming what won't change as early as possible, and when difficult decisions must be made, going beyond a severance check by actively helping affected people find new opportunities.
The bottom line
Unlike a job someone applied for and excitedly accepted, the people who go through an acquisition didn't choose to be there. That puts a deep responsibility on the acquirer to go far beyond standard onboarding and make people feel welcomed, respected, included, and ideally, genuinely excited to join.
The acquirer didn't just buy revenue and reach. They bought the people who built it. The deals that succeed are the ones that act like it, starting well before day one.
Frequently Asked Questions
Why do most M&A deals fail?
Major consulting firms estimate that 50 to 70 percent of M&A deals fail to deliver on their intended value. A large share of those failures trace back to people and culture issues, including poor communication during the transition, loss of key employees and institutional knowledge, eroded trust, and culture clashes between the two organizations. The financial and legal mechanics of a deal can be executed perfectly while the integration still fails because the human side was treated as an afterthought.
What is the "people side" of M&A?
The people side of M&A covers everything that happens to employees, leaders, and culture during a transaction: how the deal is communicated, how employees are supported through uncertainty, how the two cultures are integrated, how key talent and institutional knowledge are retained, and how trust is built or lost between announcement and day one. It includes change management, internal communications, leadership engagement, and HR readiness.
What happens between deal announcement and day one?
This is the period when the acquirer and seller prepare for legal close and the first day of combined operations. Key workstreams include answering employees' most urgent questions (jobs, benefits, reporting lines, approval authority), establishing interim reporting structures, connecting systems so new colleagues can communicate, preparing customer-facing teams for client questions, and equipping leaders and managers on both sides to answer questions from their teams. When this period is mishandled, the result is business disruption, disengagement, and lost trust.
What is the difference between announcing and communicating in M&A?
Announcing is a one-time transmission of information: the CEO email, the press release, the all-hands meeting. Communicating is the ongoing, two-way work that follows: everyday conversations in team meetings, managers creating space for employees to process the change, regular updates even when there's nothing new to report, and listening to what employees are actually worried about. Communicators often call this the big C (the announcement) and the little C (the daily conversations), and the little C is where trust is built.
Should you protect culture or values in an acquisition?
Values are the better North Star. Culture, defined as the written and unwritten rules of how work gets done, naturally evolves with new leadership, new people, and changing business conditions, and no culture is perfect enough to preserve at all costs. Values are more fixed: they govern how decisions get made when things are hard. Sellers who want to protect what they built should focus on finding a values-aligned buyer who shares their ethos about business, people, and society.
What questions should a seller ask a potential buyer?
Go deeper than "what's your culture like?" Useful diligence questions include: How are decisions made in your company? How do your people respond to change? What happened to the businesses you acquired before this one, and did their brands and teams survive? What is your intended hold period? Where does your capital come from, and what does it incentivize? Past acquisition behavior is one of the best predictors of how a buyer will treat your company and your people.
How should leaders communicate when they don't have all the answers?
Don't go silent. Employees can handle uncertainty far better than they can handle silence. The model that works: acknowledge that it's a tough time, state clearly what you know and what you don't know, commit to finding answers to open questions, give a specific time when people will hear back, and keep communicating regularly even when the update is "no update yet." Shared empathy and a predictable communication rhythm build trust even in the absence of answers.
How early should people planning start in an M&A deal?
As early as possible, ideally during due diligence. Culture and values assessment should be part of the diligence process itself, alongside the financial and legal review, so the acquirer enters day one with a real integration strategy for people and culture rather than just a checklist for systems and legal close.
