The Growing Trend of Acquihiring in the Tech Industry Post-Layoffs
Future Outlook for Acquihiring and M&A The M&A market is forecasted to increase further in 2026, influenced by economic health and market conditions. Cybersecurity M&A is expected to dominate in the coming year, with over 5,000 cybersecurity firms worldwide vying for attention from bigger players seeking to enhance their security frameworks.
Acquihiring, a practice where companies acquire other firms primarily for their talent rather than their products or revenue, has seen a marked increase in activity during the first two quarters of 2025. This trend has emerged as a response to the increased availability of a skilled talent pool following widespread layoffs in the tech industry, particularly within the realms of artificial intelligence (AI) and cybersecurity.
Understanding Acquihiring: Talent Over Products
Acquihiring is characterized by a focus on securing and retaining top talent, often involving stock or asset sales. Unlike traditional mergers and acquisitions (M&A), where the emphasis might be on acquiring valuable products or substantial revenue streams, acquihires prioritize employee retention packages to ensure the acquired talent remains with the acquiring company.
This strategic shift is largely driven by the growing demand for skilled workers in AI, as companies seek to enhance their capabilities in this competitive area. Consequently, the valuation in such transactions is increasingly influenced by the quality of the talent and intellectual property (IP) being acquired, rather than the immediate financial performance of the target company.
Market Dynamics and Regulatory Considerations
Regulatory clarity regarding mergers and acquisitions has improved, contributing to a sharp rebound in M&A activity in 2025. This climate of enhanced certainty is encouraging more companies to engage in strategic acquisitions, moving away from the high-growth startup focus towards a phase of consolidation.
Europe's regulatory landscape is also evolving, with initiatives such as the EU's NIS2 and the Cyber Resilience Act impacting how companies approach acquisitions, particularly in the cybersecurity sector. These regulations emphasize the importance of trust and resilience in AI acquisitions, making them a focal point for companies looking to bolster their technological capabilities.
Catalysts of M&A Surge
The surge in M&A activity is primarily driven by strategic plays rather than distressed sales. Companies are leveraging digital transformation as a catalyst for strategic acquisitions, aiming to stay competitive in a rapidly evolving technological landscape. This is especially evident in sectors like AI and cybersecurity, where acquisitions are increasing in response to the growing need for advanced security measures and AI-driven solutions.
High interest rates pose a potential challenge to M&A activity, but the strategic imperatives of acquiring cutting-edge talent and technology continue to drive deals. The shift from capability M&A to sovereign M&A further highlights the strategic nature of current market activities.
Future Outlook for Acquihiring and M&A
The M&A market is forecasted to increase further in 2026, influenced by economic health and market conditions. Cybersecurity M&A is expected to dominate in the coming year, with over 5,000 cybersecurity firms worldwide vying for attention from bigger players seeking to enhance their security frameworks.
High-priority areas for future acquisitions include generative AI (GenAI) and operational technology (OT) security, as companies prioritize strengthening their technological infrastructure. In 2026, AI, OT, and identity sectors are anticipated to be particularly popular targets for M&A activities.
As the industry continues to navigate the complexities of digital transformation and regulatory requirements, the importance of strategic acquisitions in shaping the future of technology companies cannot be overstated. The ability to acquire and retain top talent through acquihiring will remain a crucial element of competitive strategy in the tech industry.