Leading Off: What’s the CEO’s role in M&A? A leader’s guide

ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

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Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

—Alex and Axel

Will 2025 bring a resurgence in M&A after three years of sluggish dealmaking? These days, uncertainty is the new normal in M&A. New McKinsey analysis finds that most companies are being cautious, as geopolitical tensions and postpandemic economic shocks continue to reverberate across sectors and regions. Yet there are also some signs that M&A activity may accelerate soon. As the year in dealmaking begins to take shape, we look at the most important roles leaders can play in the M&A process to create value and growth at their companies.

AN IDEA

An image linking to the web page “CEOs in M&A: Five actions only the chief executive can take” on McKinsey.com.

Do what only the CEO can do

The question of which tasks CEOs and senior leaders should do themselves and which to delegate to others is age-old—and depends on the area of the business. When it comes to M&A, there are some duties that only the top boss can fulfill. McKinsey’s Anna Mattsson and Mieke Van Oostende have identified five “must do” activities for CEOs to manage before, during, and after a deal to improve the odds of success. These include defining M&A priorities while establishing the overall long-term corporate strategy and spearheading large, transformational deals while assigning other leaders to oversee smaller deals. “This will mean leaning in at all phases—for instance, helping to convince the target company to enter the deal, defining the integration strategy and the pace and degree of change, and taking any other steps required to get the deal over the line,” the authors say.

A BIG NUMBER

12%

That’s the percent increase in the value of global deals over $25 million from 2023 to 2024; the total value rose to $3.4 trillion, up from $3.1 trillion the year before. The number of companies changing hands also increased (by 8 percent, from 7,206 in 2023 to 7,784 last year), and the average global deal value rose 4 percent (to $443 million, up from $424 million). McKinsey’s Jake Henry and Mieke Van Oostende observe that more favorable macroeconomic conditions and the financial strength of corporations in the market for deals could lead to sharply accelerated M&A activity in 2025. But they caution that fresh geopolitical, trade, or other policy-related changes could slow dealmaking momentum, “like an unseasonable frost landing on a green shoot.”

A QUOTE

“Culture is everyone’s business, and getting full commitment from across the organizations involved in the deal is the only way to achieve sustained value creation and transformation through M&A.”

That’s McKinsey’s Emily O’Loughlin, Kameron Kordestani, and Rebecca Kaetzler on why managing culture is critical in dealmaking. McKinsey research indicates that to do this well, leaders should focus on three steps in their deal discussions: diagnosing how work gets done, setting cultural priorities, and hard-wiring and supporting cultural change. The authors say it’s important for leaders to take these actions early in the process and involve key stakeholders from both the parent and target companies, including employees, HR leaders, senior executives, and boards of directors.

A SPOTLIGHT INTERVIEW

An image linking to the web page “XPO’s Brad Jacobs on building businesses through M&A” on McKinsey.com.

Acquiring companies is not such a difficult task in its own right—for leaders, the bigger challenge is in bringing two organizations together. That’s the view of Brad Jacobs, CEO of the technology company QXO and executive chairman of the logistics company XPO, who has built several billion-dollar companies and led some 500 deals over four decades. “The real work starts after you own the business: integrating the companies, harmonizing the cultures, merging the technology and shared services, and getting the customers and employees of the business you acquired to buy into your vision,” Jacobs says in an interview with McKinsey Senior Partner Andy West . Jacobs also emphasizes that communication is key to successful integration. “You have to communicate through many channels: digitally, live, on Zoom calls, in town halls, in writing. And the communication must be precise,” he says. “If you have a large organization with thousands of employees, it’s a tall order to get everyone to understand where we’re going and how we’re going to get there.”

HOLD ON TIGHT

An image linking to the web page “Retain, integrate, thrive: A strategy for managing talent during M&A transactions” on McKinsey.com.

Employees generate value for an organization in so many different ways—from those who are in charge of critical processes and important initiatives to the influencers who motivate others to do their best. They can also be hard to keep once a merger closes, which is why retaining valuable employees after an acquisition is an essential responsibility for leaders. McKinsey’s Emily O’Loughlin and John Chartier say that leaders can retain top talent during all phases of dealmaking by actively identifying high-potential performers, keeping employees focused before and during integration of the companies, and continuing to engage high performers after the deal closes. “When looking at talent in both the parent and target companies, they should consider employees at all levels, not just in the first few management layers,” the authors say. “We all know people who play vital organizational roles without lofty titles or dozens of direct reports.”

Lead by leaning into dealmaking.

— Edited by Eric Quiñones, senior editor, New York

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