Indonesia is the largest and fastest-growing digital economy in the ASEAN region. Arguably there are more tech unicorn companies in ASEAN than other regions. The majority of these can be found in Indonesia, with five technology companies worth over US$1 billion – Gojek, Bukalapak, Tokopedia, OVO and Traveloka.

This analyzes the aspect of people and talent during and after the M&A deal of technology companies. I believe this topic is important to discuss, considering the many rumors about potential M&A deals among Indonesian large technology unicorns.

Many businesses are still maintaining a view that M&A deals are an essential key in their growth strategy. M&A deals are still seen as a quick path to increase business value, extend and build capability, acquire highly skilled talent and much more. However, great challenges remain to achieve a successful M&A deal in today's business environment.

Throughout 2020, on home turf, rumors about a merger between Grab and Gojek intensified. However, this potential deal reached a dead end. Then, in 2021, analysts claimed that tech M&A deals in ASEAN could pick up, driven by more recent rumors that two Indonesian tech unicorns, Gojek and Tokopedia, were in advanced discussions to form a more than $18 billion merger.

In today's situation, the growing number of technology companies, coupled with a critical skills shortage among a limited talent pool, has resulted in heightened competition for talent across all sectors. A rather aggressive terminology has been widely used to depict these talent problems, the "talent war".

The tech organizations are on the frontlines, ready to charge toward their rivals when it comes to battling for talent. Technology companies are vying for the same talent pool.

It is quite clear to many that talent remains a primary issue that all organizations must continue to keep working on to ensure company growth is sustained. Talent shortage is also identified as one of the six key barriers to growth, according to the 2019 and 2020 Google Temasek report.

The imperatives to accelerate business and to win the talent war are compelling for technology companies to buy rather than focusing on organic growth or building. This year's survey from EY claimed that 67 percent of executives identified talent as one of the top drivers of acquisitions.

When a company chooses to merge with another company or be bought by it, the results often have an effect on the combined talent pools. Regardless of the size of the merger deal or how the M&A is viewed, it is rational to expect the organization and talent pool to undergo change. The M&A processes usually involve organization restructuring, changing operating models and streamlining business lines that create different sets of HR issues.

During and after the M&A processes, the general trend is that voluntary turnover can increase dramatically due to behavioral issues like uncertainty, increased stress, role conflicts and less clear career development. Another risk is talent's inability to embrace change and manage uncertainty, which can lead to a significant impact on the business' declining performance.

One of the many secret recipes for merger deals to go through successfully is to also focus on people and culture. We have heard many times about finance or legal due diligence. There is also cultural due diligence that is part of the M&A process, which some companies neglect to perform.

Cultural due diligence includes understanding the cultural dynamics, people strategy and talent development of both companies in the M&A process. Culture clashes between two organizations can cause talent defection and business stagnation, as reported by Bain & Company.

The key is to identify the best highly skilled talent and ensure they will stay during and after the M&A and, for the employees who have promising potential and skills to be developed, to ensure they will remain with the combined business.

In addition, a merger can provide an opportunity to upgrade the talent pool across the organization, whereby the employer can acquire new skill sets and instant access to highly skilled employees, especially in emerging areas such as machine learning, data engineering and AI, among other fields. Hence, many technology firms think of M&A as a quick route to win the battle in a fierce talent war.

The recent trends in India show there are many Indian tech giants that are acquiring tech start-ups. The Indian tech scene is growing at an exponential rate, and analysts consider it to be quite similar to Indonesia's emerging tech industry.

Another example, in 2018, Grab acquired its close rival Uber's Southeast Asia businesses. The merger benefitted Grab in removing its biggest direct competitor at that time. Another crucial part of the proposed merger agreement is Grab's acquisition of Uber's existing 500 employees.

As planned, Uber restricted its existing employees so that they would not be eligible for a severance package if they joined any company other than Grab. This allowed Grab to recruit more than 500 key openings instantly and avoid a major migration of personnel to its competitors, such as Gojek and other ride-hailing or online delivery companies.

There is no doubt that when a potential merger is between arguably two of the largest technology companies in the country, then the war for talent is as intense as ever. Thus, both companies involved in the merger must have a clear retention strategy and ensure a consistent communication plan to minimize employees' uncertainty and stress.

Integrating and retaining talent is fundamental, but it costs money and is a time-consuming and complex process.

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The writer is a talent acquisition professional in a leading e-commerce company and a graduate of the University of Manchester in the United Kingdom.

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