WTW report: Dealmakers expect M&A rebound

Mergers and acquisitions are expected to rebound in the second half of 2025 despite a sluggish start to the year, but many HR teams are ill-prepared to support that recovery, according to a new survey from WTW.

More than half (54%) of respondents to WTW’s latest M&A Barometer Survey said they expect deal activity to increase once market conditions stabilise. Just 19% anticipate a further decline.

Despite this, some 65% of HR professionals surveyed said they feel less than fully prepared to manage their current and upcoming deal portfolios.

Jim Plomer, senior director for integrated global solutions – M&A at WTW, said: “Low deal volumes during the first half of 2025 suggest pent-up demand fuelling a new wave of deals when market stability improves. However, a majority of companies have expressed concern about their level of preparedness for future transactions, exacerbated by the possibility that timelines will need to be accelerated if the objective is to complete by year-end.”

HR due diligence (HRDD) is emerging as a critical factor, with 66% citing data quality and completeness as their biggest challenge. This issue is compounded by the compressed timeframes many deals now face and the difficulty HR teams experience in being properly included in preliminary negotiations—something fewer than one in five respondents said is happening.

“The role of HR should already be in full swing even before M&A discussions take shape, looking at the culture, the people, their values and whether they will fit,” Plomer added. “Proactively assessing people-related challenges and opportunities is critical to enhancing deal value and easing integration.”

Retention of key personnel below the executive level was identified as the highest priority for due diligence by 78% of those surveyed. Non-executive talent was also rated as the top integration metric by half of respondents, compared to just 29% who cited leadership retention. Culture alignment was considered the most difficult challenge by 74% of non-US companies and 54% of US firms.

Generative AI is on the radar for many dealmakers, with 65% believing it will impact the M&A process in the next two years.

However, the survey found most firms remain in a “wait and see” phase rather than adopting early. Promising use cases include legal analysis and employee communications, but broader integration of Gen AI remains limited.

While the use of virtual data rooms has made it easier to share documentation, WTW warned they can also serve to obscure risks by overwhelming buyers with excessive information—especially where data integrity is already questionable and due diligence timelines are tight.

The expected uptick in transactions will also have implications for the M&A insurance market, which provides risk protection through representations and warranties (R&W) insurance, tax indemnity policies, and contingent risk solutions.

These products have become increasingly mainstream over the past decade, enabling sellers to reduce escrows and buyers to gain protection against unknown liabilities.

Insurers in the transactional risk space will be watching the market closely. If the volume of mid-market and cross-border deals returns to pre-pandemic levels, it may drive increased demand for bespoke coverages and further competition on pricing and terms.

However, underwriting discipline remains essential, particularly in sectors facing volatility or where due diligence may be abbreviated, the report suggested.

The role of specialist brokers has grown in tandem, helping clients to structure and place complex policies within tight timelines. With heightened focus on human capital issues and talent retention, underwriters are also paying closer attention to cultural alignment and post-deal integration as part of their risk assessments.

Plomer said the success of these deals, whether insured or not, will ultimately depend on early alignment between business strategy and people strategy.

“HR needs to be embedded from the outset, not brought in at the eleventh hour. If companies want to capture value and avoid costly surprises, that integration must begin well before the ink is dry,” he added.