Acquired employees may have significantly higher turnover rates than regular hires, with over 33% leaving after an acquisition.

M&A activity in the UK increased by 7% in Q1 2024 compared with the quarter before - World Construction Network.

The UK real estate industry is witnessing an uptick in mergers and acquisitions (M&A), driven by various factors reshaping the market landscape. Whether expanding market reach, gaining a competitive edge, or navigating economic challenges, companies are increasingly looking to M&A as a strategic tool to bolster their positions in the sector.

Although M&A’s can bring an abundance of opportunities, it’s important to think about how this can impact the people who contribute to the success of your business - your greatest asset.

Retaining and hiring employees during an M&A is crucial to the overall success of the transaction and the future stability of the business.

This article will dive into the reasons behind the increase in M&A deals and how you as a business can ensure you retain your top talent.

What is driving mergers and acquisitions in the UK real estate market?

Stabilisation of UK inflation and interest rates

The sharp increase in interest rates in early 2023 led to higher debt costs, coupled with wider uncertainty around global inflation, which contributed to the recent slowdown in the UK M&A market.

However, in 2024, inflation and interest rates in the UK seem to be stabilising.

In March, the Bank of England held interest rates at 5.25% and suggested that rate cuts might occur within the next 12 months. This trend points to more predictable M&A financing costs, enabling more acquires to better estimate the cost of debt when financing transactions.

Market consolidation and strategic positioning

One of the primary drivers of the M&A surge is the push for market consolidation.

As competition intensifies, firms are merging or acquiring others to gain a larger market share and increase their influence. This consolidation helps companies achieve economies of scale, streamline operations and reduce overhead costs.

For many, merging with or acquiring another firm provides a fast track to growth and market dominance that organic expansion simply can’t match.

Access to capital and investment opportunities

Another significant factor fueling M&A activity is the influx of capital from private equity and institutional investors seeking stable, long-term returns.

Real estate remains a preferred asset class for many investors, and with abundant capital available, companies are more inclined to pursue acquisitions. Additionally, low borrowing costs have made financing these deals more attractive, further stimulating M&A activity.

As well as this, speculation is increasing about whether the new government will raise capital gains tax in next month’s budget. This uncertainty is prompting many UK business owners to accelerate their sale plans to avoid the risk of higher tax liabilities.

This will also have an impact on the type of deal, and potentially the purchase price that they are willing to accept.

Hiring and retaining top property professionals during M&As

Now we have an understanding of the drivers behind the increase in mergers and acquisitions, how can you ensure your business retains its employees, as well as hiring the best in market talent?

Navigating this can be a challenging time for any organisation, but keeping your top talent engaged and attracting new talent is crucial for ensuring a smooth transition.

Below are some key strategies to help retain and hire top talent during these transformative periods.

Communicate transparently

Open and honest communication is vital. Keep employees informed about the changes and how these will impact them. Be sure to address their concerns promptly and clearly to reduce anxiety and build trust. Regular updates and opportunities for feedback can help employees feel valued and secure.

Engage your leadership team

Before undertaking M&A activities, it is essential for business leaders to receive training in effective change management. Leaders from both organisations involved should actively show their commitment to the merger’s success and lead by example, embracing change wholeheartedly.

Provide clear career paths and development opportunities

Top talent often seeks growth and advancement within a business. Offering career development programmes, mentorship opportunities, and clear paths for progression can help to retain valuable employees and attract ambitious new hires.

Streamline your hiring process

During an acquisition or merger, streamline your hiring process to quickly identify and onboard top talent. A well-defined recruitment strategy, coupled with efficient interviewing and onboarding processes, can help you secure high-quality candidates swiftly.

deverellsmith’s sister company, Hintel, is a specialist in recruitment outsourcing dedicated to the property industry and supports businesses to improve talent attraction and retention.

As the UK real estate industry experiences a rise in M&A activity, driven by factors like market consolidation, stabilised interest rates, and increased investment, businesses must not overlook the importance of their people. While mergers and acquisitions can offer significant growth opportunities, the success of these transactions heavily relies on retaining existing talent and attracting new, skilled professionals.

By prioritising transparent communication, engaging leadership, offering clear career development paths, and streamlining hiring processes, companies can navigate the complexities of M&As more effectively. Ensuring that employees feel valued and supported during this period of change is crucial for maintaining stability and achieving long-term success. Now is an ideal time for acquirers to leverage these strategies to build strong, resilient teams that will drive their business forward in the evolving market landscape.