M&A in the Age of AI: What Deals Mean for Talent and Pay

Mega M&A deals are making headlines again, and this year they’re being powered by two major forces: artificial intelligence and private equity. According to PwC, transactions of $5 billion or more are on the rise, with AI playing a starring role.

• Nearly a quarter of these megadeals involve AI—from data center infrastructure to the integration of AI capabilities into existing businesses.
• Year-to-date, 13 AI-related deals have been announced, compared to just five in 2024.

Private equity is also fueling activity, with most exits going to corporate buyers. The hottest targets are data-rich technologies like cybersecurity and recurring-revenue platforms.

• PE firms are racing to capture AI upside, doubling down on software with potential for AI-driven efficiencies.

But behind every deal, one question looms large: what happens to talent and compensation? As ClearBridge highlights in its new primer, managing people through a transaction can be as critical as structuring the deal itself.

Before the Close: Secure the Talent. The pre-close phase is all about alignment.

• Companies must identify and retain key players, using tools such as retention bonuses, long-vesting equity grants, and enhanced severance protections.
• Acquirers also need to evaluate change-in-control agreements, cash severance obligations, and how to treat outstanding incentive plans.
•  With transparency top of mind, disclosure of transaction-related compensation agreements is non-negotiable.

After the Close: Redefine the Future. Once the ink dries, the focus shifts to integration.

• Compensation committees should revisit pay philosophy and peer groups to reflect the new strategy.
• Incentive plans may need recalibration, with fresh metrics tied to post-close synergies or AI-driven performance.
• Equity grant levels, participation levels, ownership guidelines, and clawback policies should all be reassessed to ensure alignment with the go-forward business.

The Bottom Line: M&A in 2025 isn’t just about assets and technologies—it’s about people. With AI reshaping industries and private equity pushing innovation, retaining and motivating the right talent is critical. Companies that thoughtfully manage compensation before and after a transaction can reinforce shared goals and better position itself to realizing the full value of the deal.