This study explores the link between employment risks and mergers and acquisitions (M&As). It utilizes labor market density as a measure of employment risks and finds that these risks make firms less attractive as targets but more likely to engage in acquisitions, particularly when acquiring firms face financial constraints. Firms tend to acquire targets in non-local labor markets, especially when they lack political ties. Moreover, employment risk's impact on M&A likelihood is stronger for human capital-intensive firms facing labor market friction. Additionally, we show that these acquiring firms perform well post-M&A and improve firms’ total factor productivity, indicating that acquisitions help mitigate employment risks and enhance corporate competitiveness, especially in emerging markets.