Struggling to Hire Needed Talent? Think About Buying It
Key Highlights
- Acquihiring has become a key strategy for some companies seeking to quickly access specialized talent.
- Successful integration of acquihired teams depends on strategic decisions about whether to keep teams intact or disperse talent to enhance existing operations.
The market for many skilled workers, be it vehicle technicians or electrical contractors or good old-fashioned accountants, remains very tight. Encouraging recent jobs reports from the U.S. Bureau of Labor Statistics will add more pressure on firms short of talent and full of ambition to grow.
Meanwhile, we’ve all likely read dozens of articles and social-media posts about how the traditional hiring process is breaking or already broken for both employers and candidates. Artificial intelligence tools are swamping job postings, candidates can’t find a way to break through the noise and hiring managers can’t figure out just how real the applications they’re getting actually are.
How to more efficiently solve this puzzle? You could shop in bulk by acquihiring, or scooping up companies mainly — in many cases, exclusively — for the talent that works there.
As they were booming in the 2000s, internet giants such as Google and Facebook regularly adopted the acquihiring tactic to beef up their ranks of software engineers in the fiercely competitive Silicon Valley market. In many instances, such acquisitions didn’t care for the products those teams were building; they’d be shut down shortly after the papers were signed.
The tech sector’s battle for talent hasn’t abated since, but Anuj Bahal, deal advisory and strategy leader for technology, media and telecom at KPMG US, said: “The battlefield has shifted.”
“The well-established practice of acquihiring, once focused on general engineering, is now zeroed in on AI,” Bahal said. “Buying a small company for its people is sometimes the only way to get hold of key talent, and right now, that focus is on AI talent.”
How big the market for acquihires? Clera, an AI-focused talent matching venture, says acquihire deals in 2024 and 2025 were worth a total of $40 billion. And while Silicon Valley is the spiritual home of the acquihire model and still accounts for most deals, companies in other industries have been increasingly relying on the strategy.
In the pharmaceutical sector, some big names have bought startups not just for their product pipelines but also for their research talent. And banks and other financial services firms have long lifted out teams from competitors to build share in existing markets or set up beachheads in new territories.
GE Vernova provided a prime recent example of what a type of acquihiring can look like far east of Palo Alto and the surrounding area (and without the rapid elimination of the acquired company’s products). During his time on the microphone at the Bernstein 42nd Annual Strategic Decisions Conference in late May, President and CEO Scott Strazik discussed his team’s recent acquisition of Robotech, a robotics and automation systems integrator in Montreal that has been a GE Vernova supplier.
The deal, which was worth less than $10 million, brought to GE Vernova 35 engineers who can help automate more machines in plants making the gas turbines and other energy equipment that has GE Vernova booming. The Robotech team will soon wind up its work with other customers, Strazik said, and then fully focus on GE Vernova, which is betting big on automation.
Then came the talent angle.
“We like Montreal. We like McGill University. We think it’s a platform that we can invest in a lot of young talent to have an automation [center of excellence] that can allow us to continue to transform how we operate in our factories,” Strazik said. “Not to make light of some of the supply-chain dynamics, but very authentically, a big part of this is about talent. And you’re going to acquire talent to meet this moment in different ways. That’s a very small, humble way that we’re doing it in robotics in Montreal.”
Management questions to chew on
If Strazik’s approach sounds like a promising tactic for you, an important next step is to think about how you’d look to position your new talent in your organization. A 2023 paper by Beril Bakir and Mahmut Özdemir of Koç University and Samina Karim of Northeastern University helps frame that decision by identifying acquihire transactions as being of disruptive and nondisruptive know-how. Are you bringing in a team to shake up your status quo and catalyze potentially major changes or, as GE Vernova is doing with Robotech, incrementally improve operations and not be a threat of sorts?
Decision makers should keep in mind that retention of the acquihired talent may depend on the extent of fit between the type of acquired know-how and post-acquihire integration decisions.
- Beril Bakir and Mahmut Özdemir of Koç University and Samina Karim of Northeastern University
Answering that question leads pretty directly to another decision, which is how to integrate your new employees, here the paper’s authors outline approaches that keep those teams together so they can most effectively deploy their shared knowledge or that disperse them across the acquiring company to upgrade its existing processes.
“Further, executives should consider these decisions on two fronts: the team as well as the founder,” Bakir, Özdemir and Karim wrote. “Decision makers should keep in mind that retention of the acquihired talent may depend on the extent of fit between the type of acquired know-how and post-acquihire integration decisions; misfit may result in founders prematurely leaving the acquiring firms.”
At the core of all those decisions remains the need for talent. And that’s something that Strazik returned to as he wrapped up his Robotech comments at the Bernstein conference. He linked the growing need for skilled labor to the decision to base GE Vernova in university-blessed Cambridge, Massachusetts, after its spinoff from General Electric.
“The reality is, if we’re going to recreate ourselves for this moment, we’re going to need a whole another level of talent to do it with — things other than more capex,” Strazik said. “We’ve got 79 kids from MIT that are starting on payroll at GE Vernova between June and July. Those are the resources that, frankly, I think are going to be the most important for us to continue to build a business and a company that meets its potential. [That’s] what really is on my mind for what we have to continue to invest into if we’re going to serve the world with its expectations.”
About the Author
Geert De Lombaerde
Contributor
A native of Belgium, Geert De Lombaerde joined EndeavorB2B in September 2021 to cover public companies, markets, and economic trends primarily for IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World, and Healthcare Innovation. His work focuses on strategy, leadership, capital spending, and mergers and acquisitions, and he also works with Endeavor Business Intelligence on surveys and data projects.
Geert has been in business journalism since the mid-1990s. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati, initially covering retail and the courts before shifting to banking, insurance, and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in 2008. He led a team that helped grow the Post's online traffic by an average of more than 15% annually before joining Endeavor.
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