Skadden Partners Explain the Legal and Strategic Future of Acquihiring in AI

Acquihiring once sounded like a Silicon Valley novelty. Today, it has become a practical mechanism for companies racing to secure artificial intelligence talent, offering a faster alternative to traditional mergers and acquisitions at a moment when engineers, data scientists and product architects are often more valuable than revenue lines or customer lists.

That shift was the focus of a recent TechREG Talks video interview hosted by Competition Policy International, a PYMNTS company featuring three partners from Skadden, Arps, Slate, Meagher & Flom: Christopher M. Barlow, a mergers and acquisitions partner; Kenneth B. Schwartz, an antitrust partner; and Ingrid Vandenborre, a partner focused on European competition law.

Their discussion traced how acquihiring works in practice, why AI has accelerated its use, and how regulators are beginning to test whether people-first transactions fit existing competition frameworks.

What Acquihiring Is

Barlow framed acquihiring in direct terms. “As its name implies, acquihire at its essence is really a play for the talent at a particular company,” he told CPI. Unlike conventional acquisitions, where buyers purchase an entire operating business through a stock deal, asset sale or merger, acquihires center on selectively bringing over key employees while leaving the rest of the company behind.

“In a normal or traditional acquisition of a company, that entire company would be purchased,” Barlow said. “But going back to the essence of this kind of transaction … there are some modifications to it.”

Those modifications usually involve licensing arrangements for intellectual property rather than outright ownership. The buyer hires the engineers or founders it wants and often receives broad rights to use or build on existing technology, while the legacy company may wind down after the transaction. Barlow said this structure also creates a path for venture investors to recover some value even when a startup does not mature into a standalone business.

Moving Into the Mainstream

Artificial intelligence has transformed acquihiring from an occasional tactic into a strategic tool. AI-related deal activity has climbed sharply over the past decade, with acquihires rising alongside that growth as companies compete for specialized teams and domain expertise, with growing demand for AI engineers and model developers.

Acquihiring allows acquirers to move from first contact to onboarded teams far faster than a traditional merger would permit, the panelists told CPI. Scarcity of talent is also a driver. Building in-house capabilities organically can take months, particularly when firms are competing for the same small pool of experienced specialists. Acquihiring offers a shortcut by bringing in intact teams with a shared operating rhythm and a proven track record.

That speed carries direct implications for shareholder value. Rather than assembling talent one hire at a time, companies can accelerate product development and deployment by absorbing entire teams at once, a critical advantage in markets where execution timelines often define competitive position.

Models, Data and Risk

Although people are the headline asset, acquihires introduce complex diligence questions around intellectual property, training data and development practices. Barlow said acquirers must understand how incoming teams built their prior systems, including whether code relies heavily on open-source components and how proprietary the underlying models truly are.

Barlow added that startups often take risks that larger organizations cannot, particularly around model training and data sourcing. When teams move into more regulated environments, buyers must assess how much of a target’s earlier momentum came from practices that may not carry over.

Compensation and Noncompetes

Retention sits at the center of every acquihire, which is why compensation packages and equity incentives are often substantial and acquirers use bonuses, vesting schedules and equity grants to align incoming talent with long-term objectives.

Noncompetes add another layer of complexity. Vandenborre noted that in Europe, restrictions tied to individuals typically fall outside classic competition enforcement. “Noncompetes with individuals fall more under solicitation issues and not really competition law,” she said, adding that there is limited precedent for addressing these arrangements specifically in the acquihire context.

Tax treatment introduces further tension. Because consideration is divided between compensation and deal-related payments, founders, buyers and tax authorities often disagree on classification. “To the extent that there are lots of things tied to compensation in the transaction, that puts pressure on it being viewed as compensation and therefore current income,” Barlow said. That uncertainty can lead sellers to seek protections such as tax gross-ups when negotiating terms.

The Regulatory Focus

From an antitrust perspective, Schwartz cautioned against reflexive skepticism. “There seems to be this knee-jerk reaction to acquihires that they must be nefarious,” he said. “I think that overlooks the benefits of moving fast, particularly in an incredibly dynamic AI space, brings.”

Schwartz said pairing human capital with broader platforms and deeper resources can accelerate innovation, and that regulators should weigh that factor alongside traditional measures such as market structure and competitive effects. At the same time, he acknowledged that agencies are increasingly examining whether acquihires could reduce future competition or consolidate labor markets.

Vandenborre described similar scrutiny in Europe, where authorities are testing whether small-scale talent transactions could eliminate future rivals even when current revenues are modest. “What regulators are really concerned about is that by having this very small-scale acquisition, it would still have a capability of eliminating future rivals,” she said, and regulators are looking for evidence of structural shifts in markets when teams and intellectual property move together.

Schwartz said recent debate in the U.S. reflects broader frustration with past merger review practices, particularly the routine use of expansive second requests. He noted that current leadership has acknowledged those processes often felt punitive, pushing companies toward faster structures that avoid pre-merger notification altogether.

An acquihire structure does not require an HSR filing, Schwartz said. “The government certainly has and always has the right to look at a transaction regardless of whether it’s reportable or not,” said Schwartz, who characterized the present moment as early days for policy development, adding, “We’re kind of at the first pitch of the first inning.”

Moving Toward Frameworks

Looking ahead, all three partners expect acquihiring to remain flexible in the near term, even as regulators work toward clearer frameworks. For acquirers, the message is practical: speed still matters, but so do models, data provenance and employment structures. For regulators, the challenge lies in distinguishing transactions that accelerate innovation from those that quietly foreclose competition.

Acquihiring now sits at the intersection of AI strategy, talent economics and competition policy. Whether it remains a shortcut to growth or becomes another regulated lane in tech dealmaking may depend on how that balance is struck.

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