Human Capital Is the Deal. Winning M&A in 2026 

While overall deal volume will finish the year relatively flat,^[1] the market saw a concentration of larger, more complex transactions, each carrying heightened expectations for delivery of promised revenue and cost synergies.

Against this backdrop, one lesson became increasingly clear: organizations that do not intentionally align the human capital platform with the deal thesis are missing out on value. Even with strong strategic rationale, transaction logic, and financial modeling, outcomes will fall short when leadership alignment, workforce planning, culture integration, and organizational clarity are treated as secondary considerations.

As we close 2025 and look toward a more selective, scrutiny-intensive 2026, the opportunity ahead is not simply to execute more deals, but to execute them better. And that means proactively aligning the human capital platform to effectively support the deal strategy.

Overall, global M&A activity in 2025 did not meet the “animal spirits” expectations held in late 2024. Increasing and shifting tariffs slowed cross-border transactions and added friction in industries long dependent on global supply chains. Hopes for a rate-driven rebound never fully took hold. Deal volume declined, but deal value remained resilient^[2] as organizations concentrated spending on fewer, higher-stakes transactions.

Mega-deals defined the year. Driven by consolidation pressures, cost-of-capital realities, and the need to reposition for an AI-enabled economy, these transactions carried higher expectations and narrower margins for error. With so much value concentrated in fewer deals, the weight placed on people-related execution grew significantly. Leadership misalignment, talent flight, cultural missteps, or unclear operating models could jeopardize billions in expected value. In 2025, “bigger bets” meant bigger consequences for human capital mismanagement.

One of the most notable shifts this year was the surge in AI-related capital deployment. Companies prioritized strategic investments, partnerships, and equity stakes in AI innovators and AI-adjacent elements such as data centers. According to Mergermarket,^[3] AI-funded deals are up 322% year-over-year to US$104.8 billion. An example of this is Microsoft’s high-profile multibillion-dollar position in OpenAI. According to a recent IDC study, global enterprises will invest a staggering $307 billion on AI solutions in 2025, a number expected to soar to $632 billion by 2028.^[4] Regions varied in risk appetite and focus: the US invested beyond data centers into supportive energy infrastructure, Europe leaned into regulatory-aligned AI investments, and Asia accelerated investments in data centers and chip capabilities.

The changing investment landscape has created a new dilemma for leadership teams: growth still matters, but capital is more constrained, and expectations are higher. You cannot simply “buy growth” the way you once could. The math of deal value is harder, and the margin for error is shrinking.

As companies free up capital and refocus portfolios, carve-outs are expected to accelerate. These transactions are operationally complex and heavily dependent on workforce stability, leadership clarity, and the employee experience during separation.

Over the past decade, many conglomerates have expanded margins by consolidating key business functions. Shared service centers for HR, IT, and finance became the norm, and some organizations went further by unifying sales, account management, or even production operations. Now, as these companies prepare for divestitures, the ability to cleanly disentangle these integrated functions will be essential to preserving and maximizing deal value.

Partnership-driven growth strategies are expected to increase. These models require far less upfront capital, but they introduce significant ambiguity around governance, operating models, and, most critically, how people work together across organizational boundaries.

Joint ventures succeed or fail based on decision-making clarity, leadership alignment, cultural compatibility, and talent-sharing structures. This is exactly where many organizations underestimate the people risks.

With tighter capital and higher scrutiny, investment committees are expected to be far more discerning in 2026, particularly for non-AI-related investments. Leaders no longer have a wide margin for underperformance. Any investment outside AI must withstand heightened justification. Deals must demonstrate clear, well-planned human capital readiness from strategy through integration. Organizations that cannot articulate how the workforce strategy enables the deal thesis will be deprioritized.

Private equity faced a bifurcated environment in 2025. The top global PE firms are well-positioned to raise capital and deploy it, benefiting from brand strength, global reach, proven track records, and their entry into private credit. But for the rest of the industry, raising new funds and exiting existing investments has grown more difficult.

The dynamics of the financing lifecycle have shifted dramatically. A deal originally underwritten with a four-year hold and 2% financing may now be entering its sixth or seventh year of ownership, and during that time, rates have ranged from 3% to 6%. The math is harder, the expectations are higher, and the window to deliver value is longer. That makes relying solely on traditional cost takeout insufficient.

To hit return targets, private equity firms must find new sources of value creation, and that starts with human capital. Revenue acceleration through strong leadership, workforce optimization, clearer role design, better incentives, and smarter talent deployment often produces more durable value than efficiency gains alone. Yet many private equity operators still over-index on costs. In 2026, firms that prioritize human capital as a core operating lever are expected to stand out both in deal execution and exit readiness.

Across industries, geographies, and deal structures, one theme cuts through 2025 and sets the stage for 2026: you can still extract more value from every deal by focusing on the human capital engine behind it.

Too many organizations rely on cost synergies, integration checklists, or technology investments, while overlooking the most powerful and predictive variables:

• Align leaders early and explicitly around the deal thesis
• Map workforce strategy directly to revenue growth
• Diagnose cultural and operating model differences before integration
• Identify retention risks and capability gaps pre–day 1
• Build synergy models that prioritize people, not just costs

When human capital becomes the core framework for delivering value, deals tend to outperform. When it becomes an afterthought, deals often underperform. 

The outlook for 2026 is one of cautious optimism. Deal activity will continue, but with tighter capital, more creative structures and far more emphasis on value realization. AI will continue to shape M&A strategy, but human capital will determine whether those investments pay off.

The winners will be the organizations that understand one truth: technology can accelerate strategy and capital can fund it, but only people can deliver it.