How to Secure and Retain Top Talent in Asset Purchases

Recent research shows that acquired workers are nearly twice as likely to leave post-deal, with attrition increasing significantly during the first 12 months post-buyout,¹ underscoring the critical and often underestimated risks in workforce transitions during asset purchases.

According to Crunchbase data, there were 427 reported M&A deals globally in the first half of the year compared to 362 in the same period of 2024, representing an 18% increase. In a transaction in which the primary value lies in human capital, the challenge isn’t just completing the deal, it’s also ensuring that critical talent remains engaged and committed post-acquisition. Given the rise in M&A activity and the known risks regarding attrition following a deal, dealmakers and industry leaders across the world have been keen to discuss one of the most pressing issues in M&A: talent retention.²

Most buyers carefully strategize when it comes to financial due diligence and operational synergies in asset purchases, yet many underestimate the complexity of transferring human capital. People-related issues can present significant challenges with respect to the integration and operation of the go-forward business. In an asset purchase, specifically when continuing employees generally must be legally rehired by the buyer, the risk of talent flight increases considerably.

Unlike stock deals in which employment relationships remain intact, asset purchases inevitably necessitate a little more friction in the entire employer–employee framework, a process that demands both legal precision and cultural intelligence. In some cases, especially when the target’s workforce is central to the deal rationale, the transaction may resemble an acquihire even if structured as a traditional asset purchase. An “acquihire” refers to a transaction in which the emphasis is on human capital acquisition rather than strategic motives like products, revenue, or other assets. In such a situation, retaining talent is not just a goal but a core driver of the deal’s value.

Crucially, employee-related activities must run parallel to, not after, other closing preparations, requiring the coordination of legal, human resources, and communications teams from the outset. In asset purchases, employees are not automatically transferred. They must be selectively rehired by the buyer. This creates both opportunity and risk. Buyers can choose their workforce but must navigate antidiscrimination laws and manage the optics of selective retention. These are often also associated with closing conditions for the deal. Every rehired employee becomes a “new hire” for legal and benefits purposes, requiring fresh Form I-9 verifications and employment agreements.

Consider the cascade effect: When key employees leave, institutional knowledge walks out the door, customer relationships suffer, and remaining staff become increasingly anxious about their own futures. Unless carefully planned and managed, a deal that began as a value-creating transaction can quickly become a value-destroying exercise.

Buyers that approach workforce transitions with strategic rigor, clear communication, and cultural sensitivity achieve measurably better outcomes. They retain critical talent, maintain operational continuity, and establish trust that facilitates broader integration efforts.

Conversely, buyers that treat an employee transition as a back-office function often find themselves managing a crisis of confidence that undermines the entire transaction’s value proposition.

A Framework for Success

Leading buyers have developed a systematic approach to employee transitions that treats human capital as strategically as financial capital. This framework rests on these critical pillars:

1. Conduct Comprehensive Workforce Due Diligence

Before any deal closes, buyers must forensically examine their target’s employment landscape. This goes beyond head count and compensation data to include employment agreements, restrictive covenants, union relationships, and accrued liabilities. Understanding which employees are at will versus contractually protected, and identifying any collective bargaining obligations, provides the foundation for all subsequent decisions.

2. Master the Art of Communication

How a buyer communicates the transition often matters more than what they communicate. Successful buyers develop joint communication plans with sellers that acknowledge uncertainty while emphasizing continuity. The messaging should be clear about timelines, transparent about the next steps, and specific about whom employees can contact if they have questions. Ambiguity breeds anxiety, and anxiety drives attrition.

3. Determine Whether to Honor Previous Service and Seniority

One of the most consequential decisions a buyer faces is whether to credit employees for their prior service with the seller. While not legally required, honoring previous tenure for benefits eligibility, vacation accrual, and seniority rights can dramatically improve retention. This decision should be made strategically, considering both the cost implications and the signal it sends about the buyer’s values.

4. Eliminate Benefits Gaps

The termination–rehire process creates inevitable gaps in benefits coverage. Sophisticated buyers anticipate this by ensuring their health plans can immediately enroll transferred employees, waiving waiting periods when possible and coordinating continuation of health coverage notices with the seller. These operational details may seem mundane, but they directly impact employee experience and retention.

5. Align Incentives

Equity and incentive plans rarely survive asset purchases, creating potential retention risks among high performers. Buyers must decide whether to replicate, replace, or redesign these programs. The most successful approaches involve negotiating retention packages during the deal process while simultaneously designing new incentive structures that align with the buyer’s strategic objectives.

6. Navigate Jurisdictional Complexities

Employment law varies significantly by jurisdiction, creating compliance traps for unwary buyers. For example, in the US alone, California’s strict final pay requirements, New York’s Worker Adjustment and Retraining Notification Act obligations, and Massachusetts’ restrictive covenant limitations all require specialized attention, and if the target’s operations span multiple countries, the complexity is even greater. Engaging local counsel early prevents costly mistakes and ensures smooth transitions across all jurisdictions.

7. Assess Successor Liability Risks

While asset purchases typically limit buyer liability, certain circumstances can expose buyers to successor liability for unpaid wages, discrimination claims, or union obligations. This risk makes thorough due diligence essential and should inform the representations, warranties, and indemnities negotiated in the purchase agreement.

The Bottom Line

In an era in which human capital drives competitive advantage, the ability to successfully transition employees in asset purchases has become a core M&A competency. Buyers that master this capability will not only avoid the value destruction that plagues so many deals but also unlock the full potential of their acquisitions.

The most successful buyers understand that behind every asset purchase are real people with real concerns about their futures. By addressing those concerns strategically, buyers can effectively lay the foundations for building stronger organizations.

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1. ^[1] “Revelio: Buyouts followed by higher staff turnover,” The Star Online (February 27, 2025). ↩

2. ^[2] “Talent retention in M&A: Insights from Deloitte Australia’s March 2025 HR DealMakers Event,” Deloitte (April 14, 2025). ↩ 

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.