Why HR Must Translate Its Expertise in M&A?

For years, I worked hard to secure a seat at the board table.

When I finally had it, I realised something quietly uncomfortable: I was speaking a language the rest of the room did not translate.

The CEO spoke of enterprise value.
The CFO spoke of EBITDA and margin protection.
Corporate advisers spoke of multiples, risk exposure and deal structure.

I was still presenting engagement scores and cultural pillars.

None of those metrics were irrelevant. But in a transaction environment, they were not decisive.

That distinction matters.

The Reinterpretation of HR in a Transaction

Research from EY continues to show that a significant proportion of mergers and acquisitions fail to deliver their anticipated value. Deloitte’s analysis has repeatedly highlighted cultural and people factors as primary contributors to integration failure. Bain’s work on post-merger integration reinforces the same message: even when culture is addressed early, stabilising performance remains difficult. Mercer’s long-standing research into people risk in transactions shows that buyers consistently identify talent fragility as a material concern.

In other words, people risk is not peripheral.

It is priced.

But here is the nuance: buyers do not evaluate HR metrics in the same way HR leaders do.

Engagement data is not read as a wellbeing indicator. It is interpreted as a signal of retention stability.
Succession planning is not viewed as development. It is assessed as concentration risk.
Training budgets are not treated as cost lines. They are examined for evidence of knowledge transfer.

To be credible support in a transaction, HR must develop what I call Commercial People Intelligence.

From HR Competence to Commercial Acumen

There is a distinction between being a capable HR leader and being commercially credible in a deal process.

The former understands policy, compliance, engagement and performance frameworks.
The latter understands how people architecture influences earnings certainty and has a rough understanding of deal mechanics.

In a sale process, HR competence is assumed. Commercial acumen is not.

Developing Commercial People Intelligence means learning to see the organisation through a valuation lens.

It is the difference between reporting headcount and explaining value dependency.

Understanding Concentration Risk

One of the most important concepts in transaction environments is concentration risk.

Concentration risk arises when revenue, authority, knowledge or client relationships are disproportionately dependent on a small number of individuals.

This might include:

• A founder who personally manages the top five client relationships.

• A technical specialist who alone understands a legacy system.

• A sales leader responsible for a large share of recurring revenue.

• A managing director who signs off every strategic decision.

From an internal perspective, this may look like strong leadership.

From a buyer’s perspective, it looks like fragility.

If one person leaves, becomes disengaged or underperforms, earnings are exposed. Buyers price that exposure through reduced multiples, escrow provisions or earn-out mechanisms.

Concentration risk is not about competence. It is about resilience.

Cost Reduction Is Not Structural Strength

Traditional HR thinking often centres on cost management. Reducing salary budgets, improving workforce efficiency and controlling headcount are all legitimate operational goals.

However, cost reduction alone rarely improves valuation unless it strengthens sustainable profitability.

A business that cuts headcount but remains dependent on a single decision-maker has not reduced structural risk. It has simply narrowed its margin for error.

By contrast, distributing authority, formalising processes and strengthening succession depth increases buyer confidence that earnings will continue post-transaction.

Valuation is not only a function of cost. It is a function of confidence.

The Language of the Boardroom

Commercial acumen begins with vocabulary.

When HR reframes its language, perception shifts.

Instead of speaking only about retention, articulate asset stability.
Which roles, if lost, would materially affect revenue?

Instead of discussing training budgets, describe knowledge transfer.
Where does founder instinct need to become documented institutional capability?

Instead of presenting headcount growth, explain revenue capacity.
Does leadership depth support the growth assumptions embedded in the valuation model?

Balanced language does not exaggerate risk. It clarifies financial consequence.

It allows HR to contribute to valuation conversations without abandoning professional integrity.

Operating at Floor and Ceiling

Most HR frameworks are designed to protect the floor of the business — compliance, fairness and operational discipline.

A transaction tests the ceiling — scalability, governance robustness and earnings certainty.

Commercial People Intelligence requires HR leaders to operate comfortably at both levels.

Ensuring compliance is necessary.
Ensuring structural resilience is decisive.

A Practical Self-Test

Before your next board meeting, ask yourself:

• Can I clearly explain where earnings are concentrated across individuals?

• Can I describe leadership depth in terms of continuity risk?

• Can I quantify the exposure if a key revenue contributor left tomorrow?

• Can I translate engagement data into revenue protection terms?

• Can I articulate how our people architecture influences deal structure?

If you can answer these questions fluently, you are not simply reporting on the organisation — you are protecting its value.

If not, the development of Commercial People Intelligence begins now.

HR does not need to become financial.

But it does need to become commercially articulate.

In transactions, confidence commands a premium.
And confidence is built on structural clarity.