At THINK 2025, hosted by Cowan Benefits Ltd., industry leaders discussed the evolving landscape of benefits, retirement, and disability management. As in previous years, one of the highlights of this year’s conference was the panel discussion with an expert lineup. This year, the panel featured Cowan’s own Jacquie Fritsch, Saad Farooqi, and Michael Todic, as well as Sam Hussein from Alliant Insurance, one of our highly valued global network partners.
The discussion, Navigating Organizational Change: Cultivating Resilience in Mergers & Acquisitions, explored the impact of mergers & Acquisitions (M&As) on benefits and retirement plans, as well as how to foster a resilient culture throughout the transition period. Panelists also discussed practical strategies for retention and harmonization, alongside communication tools that can help organizations manage change and emerge stronger.
Impact of recession fears on M&A strategies in Canada
The panel noted there’s a shift away from aggressive growth and towards cost optimization, efficiency, and consolidation for Canadian firms, which they attribute to economic uncertainty and recession fears. Deals are still occurring, though they’re becoming increasingly defensive, have longer lead times, and are aimed more at stability and cost control rather than expansion. Benefits plans are seeing increased attention, especially if legacy programs could be causing duplication and therefore, increased expenses.
In their defensive strategies, Canadian firms are not only looking at consolidating operations, but also intellectual property and workforce integration. The panel also noted firms are eyeing strategic expansion to mitigate global risks.
Companies are seeing pressure come from three major areas regarding M&As:
- Canadian employees are under tremendous pressure with respect to the threat of a recession and the rising cost of living, making communication regarding M&A activity crucial. They need to know they’ll be taken care of and will be considered in the transaction.
- Canadian employers want to survive and save as much as possible from their bottom line so they can continue to compete.
- International companies are looking at Canadian firms with strong business fundamentals and knowing they’re going to acquire a great company.
The role of private equity in mergers and acquisitions
Private equity often excels at finding ways for an organization to remain lean, driving cost optimization in how they manage their portfolios and how business is done. However, their focus on financial metrics can sometimes make it difficult to have a detailed line of sight into employees, who are a big part of what makes a company great.
There are some improvements in this, the panel mentioned, as private equity firms are turning to HR experts to help ensure M&As are implemented effectively.
Due diligence in M&As
Before the merge occurs in an M&A, information can often trickle in, often due to non-disclosure agreements, and rarely provide the full picture. At this stage, leaders must make educated estimates regarding potential outcomes while simultaneously assessing whether the target company aligns with the buyer’s culture and strategic goals. In other words: Is the acquisition meant to be a quick buy-and-leave, or is there a plan to harmonize and integrate?
Private equity firms approach this stage with a sharp focus on risk, specifically in three key areas:
- Regulatory risk: Employment contracts, benefits, and compliance obligations can hide landmines. Firms want clarity on whether the acquisition could expose them to regulatory challenges that might derail or complicate the transaction.
- Benefits market practice: Acquirers need to know if the target company’s benefits are competitive or if costly upgrades will be required post-acquisition.
- Other workforce liabilities: Beyond contracts and benefits, firms examine unions, defined benefit plans, and other promises made to employees. These commitments can carry long-term obligations that must be honored.
Examining these risks helps form a complete review of employee benefits and workforce obligations. By identifying gaps early, buyers can avoid costly surprises and make informed decisions about whether to proceed, renegotiate, or walk away.
Key benefit and culture considerations
The panel also noted the importance of diving deep into the specifics of benefits and culture in the early stages of M&As:
- Employee cost & sustainability: Assess per-employee benefit costs to ensure they’ll remain viable long term.
- Legacy plans: Identify outdated benefit structures or renewal trends that could drive high claims and expenses.
- Culture: Benefits signal company values and ignoring them risks turnover and disengagement.
- Plan differences: Whether its pension or savings programs with voluntary vs. mandatory participation, all plans affect costs, timelines, and governance.
- Complex environments: Multi-employer pensions, unions, and cross-border cultural differences add negotiation and integration challenges.
Combining benefits and retirement plans is complex, which is why a phased plan supported by clear communication helps reduce anxiety and turnover.
The role of HR professionals in M&A activity
HR professionals are often brought into the conversation too late, even after the deal is signed in some cases. This delay can cause several issues, including communication gaps and inadequate consideration of compensation and benefits, which really matter to employees.
Instead, the panel recommends involving HR professionals early, as their knowledge of the company culture, employees, and the elements that truly matter to them is invaluable. They can help with insight into the benefits plans, including any potential compliance issues or risks. Ultimately, their early involvement can help smooth the transition and maintain trust.
Communication is the key to M&A success
The biggest obstacle during M&As, according to the panel, is the lack of timely, transparent communication. Employees will be worrying about losing their benefits, cultural identity, and financial security. A successful M&A is about more than just strategy; it’s about the people as well.
Clear communication, including frequent updates, education sessions, and honest messaging can ease employee concerns and maintain engagement. When employees feel informed and valued, organizations emerge stronger, more aligned, and ready for the future.
