While digital transformation is now a common practice, it is not always an easy feat to achieve.
Developing and implementing technology-driven strategies can often take years. Yet, the global pandemic dramatically accelerated the rate of digitalisation and adoption by companies.
In fact, executives at a record 110 S&P 500 companies discussed artificial intelligence in the most recent season of earnings calls and the AI market size is expected to reach $407bn by 2027.
AI has already been having an impact on several industries, including in mergers and acquisitions.
From automating manual and repetitive tasks, such as organising and categorising files in preparation of due diligence, to powering data analysis to increase value and accelerate M&A integration, AI has been reshaping various phases of the deal-making process to be more effective and efficient.
Generative AI is set to revolutionise M&A again.
For example, global dealmakers expect GenAI’s key benefit to be increased productivity in the way of streamlining processes, rather than driving outcomes, in their business.
Despite the teething problems associated with GenAI, buyers and sellers cannot ignore the potential of it to help get deals done. More than half of the 500 dealmakers surveyed by Datasite said the technology could speed up their M&A deals by 26 per cent to 50 per cent. This will prove crucial, given that dealmakers are taking longer to prep assets and err on the side of caution in a riskier global economy.
Dealmakers also expect GenAI-based analysis to help identify and engage potential buyers, understand buyer history, and assist with general deal research.
Still, there are concerns about using GenAI, notably when it comes to data security and privacy, which dealmakers identified as the biggest obstacle to incorporating the technology in their business.
This was ahead of other barriers, such as a lack of competence and expertise, GenAI’s immaturity or the need for more validation, and unclear application use case.
Also, while 90 per cent of dealmakers said they have moderate to extensive familiarity with AI, more than 60 per cent said adoption of GenAI at their own organisations was low or that they were using it experimentally. This suggests personal familiarity has yet to translate into their work.
Undoubtedly, for smaller to medium-sized organisations in particular, there is also the question of costs to consider. GenAI is generally expensive to implement, so larger firms may be more likely to take advantage of it, at least initially.
However, to gain the full benefit of GenAI, M&A practitioners need to be comfortable using the technology despite some AI anxiety. For example, while nearly half of dealmakers anticipate that GenAI will increase their daily workload, a similar portion expressed concerns about its impact on their employment.
One leading cause of AI anxiety may be the lack of regulation. Three in four global dealmakers said they want the government to regulate the technology.
To be sure, the EU has introduced the AI Act and the US White House has published a blueprint for an AI bill of rights, so the pressure is on in the UK to introduce its own AI regulations or face falling behind the world.
Next month's AI Safety Summit in Bletchley Park may provide some insights on how the UK expects to tackle AI risks, especially data security and privacy concerns.
Ultimately, however, M&A is a relationships business, built on networks, connections and people driving deals forward. This means GenAI cannot survive solely in the M&A sector without the people around it making it happen.
Equally so, despite the teething problems associated with GenAI, buyers and sellers cannot ignore the potential of it to help get deals done.
And as the business environment is more complex and less predictable than ever, anticipating and adapting quickly to the latest innovations will hold the keys to successful deal-making.
Merlin Piscitelli is chief revenue officer, EMEA for Datasite
