Annie Lamont, Co-Founder of Oak HC/FT: M&A Failures Due to Talent Being Set Aside

Annie Lamont, co-founder and managing partner of Oak HC/FT, pointed out in an interview at the New York Stock Exchange that the reasons for numerous M&A failures are not complex: buyers acquire talent but then set these individuals aside outside of the decision-making framework after the deal closes.

She illustrated this with a comparison of investment banking mechanisms. After integrating teams, JPMorgan compares its own people with those from the acquired company to determine who is stronger, placing the stronger individuals in the corresponding positions without regard to their original organizational affiliations. In contrast, Credit Suisse prioritizes retaining existing employees' positions and does not place the globally strongest individuals from the acquired company in senior roles in lending, debt, and credit.

Lamont questioned the motivation behind such transactions: if a buyer acquires a globally top team in a certain capability but does not allow them to manage that business, the purchase itself loses its rationale. She distinguished between two cultures: one that adjusts positions to build a stronger company, and another that is politically motivated, aiming to maintain the status quo and expand territory.

The interview covered the backdrop of widening M&A activity in healthcare and fintech. Historically, the main buyers have been about five payers, along with distributors like McKesson and Cardinal, with healthcare institutions rarely making moves. She mentioned Microsoft's acquisition of healthcare-focused Nuance and Oracle's acquisition of Cerner, suggesting that frontier labs may further enter the healthcare asset space. She also stated that success depends on whether the buyer retains and utilizes talent or merely acquires products and data.

A positive example she provided was CareBridge's continued expansion after merging with Elevance. Oak HC/FT was founded by her and Andrew Adams in 2014, with public materials stating that it manages over $7 billion and has just completed a $2 billion sixth fund; she has over 40 years of personal investment experience, corresponding to over 70 exits, 15 IPOs, and seven entries into the Midas List. Her exit paths include One Medical's $3.9 billion sale to Amazon and CareBridge's $2.7 billion sale to Elevance.

This judgment points to the internal labor market post-acquisition, rather than the stock price on the announcement day. If the buyer only pays for consolidation, clients, or data, the original team sells out, and the budget and positions during the integration period still flow to the acquirer's old guard, leaving the acquired team without pricing power. The beneficiaries are the insiders who retain their positions, while the burden falls on the acquired business's client retention and revenue synergy. The event itself does not constitute a single-day capital flow but will change subsequent buyers' bids on "buying teams or buying assets."

Oak embeds talent search into the investment process rather than placing it in a post-closing human resources appendix. Its talent team recruited former Amazon supply chain executive Dave Clark, who initially leaned towards private equity acquisitions but later shifted to building the AI supply chain company Auger from scratch, with Oak committing $100 million on the first day. Under the same logic, she believes that companies lacking their strongest internal talent will be pushed towards being acquired rather than building that capability themselves.

Source: Public Information