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AI accelerates M&A into the future

By John M. Bremen | June 26, 2024

Effective leaders are already using AI to streamline deal processes, freeing them to focus on relationship management, negotiation and strategic decision making.
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While it is still early in the timeline of artificial intelligence (AI) adoption for many companies, effective leaders have already adopted new technologies and practices to enhance efficiency, drive value and streamline mergers and acquisitions (M&A) processes. These leaders know that AI will have a substantial impact on the deal process, potentially creating greater value. 

With thanks to a recent collaboration with WTW’s Steven Rosenberg and discussion at an M&A roundtable facilitated by WTW and attended by Fortune 500 organizations, effective leaders identified the following actions relative to AI in M&A situations:

  • Understand the trajectory. Effective leaders understand that while the use of generative AI in M&A deal processes is currently at a modest 16% prevalence, according to a recent BCG survey, expert M&A practitioners predict this figure will increase to 80% within the next three years. These leaders recognize AI’s potential to improve deal-making processes and unlock new possibilities.
  • Enhance efficiency and drive innovation across all deal stages. Effective leaders are beginning to introduce AI in all stages of the M&A process: from assisting sell-side bankers preparing an asset for sale, to buy-side target identification and valuation, to due diligence and integration management. Experts use AI-powered tools to automate tasks, provide more valuable insights and accelerate the overall deal timeline. By automating document review, data analysis and risk assessment, practitioners can focus on critical strategic decision making and creative problem solving, fostering a culture of innovation. 
  • Mitigate deal risks. Effective leaders are mindful of the many high-profile deal failures that can be traced back to poor due diligence, hasty decision making and critical financial mistakes. They deploy AI into the M&A process to ensure all diligence is conducted appropriately, data are analyzed, synergy models are confirmed and critical issues are flagged before deal sign off. They also have become sophisticated in AI prompt engineering to enhance efficiency, focus on key risks, detect unique patterns or discrepancies and identify opportunities to reduce risks.
  • Track deals, queries and data analytics. Effective leaders use AI to improve deal tracking and automate responses to common deal queries. By leveraging AI, dealmakers efficiently manage multiple workstreams, track progress and ensure seamless communication between all parties involved in a deal. This level of automation not only enhances efficiency but also identifies actionable deal steps and reduces the risk of errors and delays. 
  • Practice responsible governance. Effective leaders practice good governance and manage risk when it comes to AI and other emerging technologies through the following components:
    • Understand how AI and other technologies work, not only focusing on the purpose of technologies, but also on how they operate and what they can and can't do
    • Educate users and other leaders on AI’s benefits, risks and how to use tools responsibly
    • Establish ethical usage standards by facilitating users’ ability to respect privacy and copyrights, cite sources and use information responsibly
    • Keep confidential information safe by establishing guidelines and procedures to keep confidential data from being exposed to the public (including policies and processes to prevent proprietary information from being released through AI learning and training) and ensuring legal and security reviews of AI services
    • Address bias by taking steps to ensure objectivity and fairness on data input and output
    • Understand rules and where liability sits across widely varied country- and regulatory-specific regulations with protocols to prevent and quickly address issues
  • Address concerns about the elimination of jobs. Effective leaders counter concerns about job displacement due to AI with research and data, demonstrating that AI enhances collective intelligence and is more likely a productivity enhancer than a job replacer. In many cases, it complements business functions, makes employees more effective and productive and leads to job-role shifts rather than job elimination.

    According to a report by Evercore ISI and Professor David Shrier, almost every job will be impacted by AI in some way, but only partially in most cases. As AI replaces repetitive and mundane tasks, effective leaders deploy dealmakers to focus on higher-value activities that require human expertise, such as relationship management, negotiation and strategic decision making.

  • Keep abreast of M&A tools and platforms in the market. Effective leaders are active in a market burgeoning with AI-powered tools and platforms designed specifically for the M&A process. Additionally, the most ubiquitous AI tools (large language models [LLMs] such as ChatGPT) enable practitioners to incorporate AI tools into everyday tasks.
  • Think ahead and embrace the future of M&A. Effective leaders don’t wait for opportunities and problems to manifest before addressing them. For example, understanding the implications of AI on target identification, assessment, deal flow, quality, risk, jobs, workers and skill availability long before changes occur can give companies a competitive advantage and create constructive usage scenarios for technologies. The same is true for data security and programming issues, and other potential pitfalls.
    Effective leaders began investing in AI, implementing skills training and data safeguards immediately when the use of generative AI proliferated.

When it comes to AI in M&A, effective leaders know they don’t need to go first, but they know they shouldn’t go last.

A version of this article originally appeared on Forbes on May 31, 2024.


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