The AI / M&A Synergy! Got to love it!

Artificial intelligence (#AI) is quickly changing the game in the world of mergers and acquisitions (#M&A), making the whole process faster, smarter, and more efficient. Whether it’s finding the right companies to buy or streamlining the nitty-gritty of deal-making, AI is proving to be a real game-changer.

Smarter Deal Sourcing

Traditionally, finding potential companies to acquire was like searching for a needle in a haystack. You’d have to go through tons of data to figure out which companies might be a good fit. Now, AI, especially generative AI, is doing the heavy lifting. It can analyze massive amounts of information to pinpoint the best targets, even finding opportunities that would have been missed by the human eye. This not only speeds up the process but also helps companies stay ahead of the competition by spotting deals they wouldn’t have noticed otherwise.

I had the pleasure of meeting both Dr. Mai Anh Dao and Florian Bauer at MADiscover . IMO, they nailed it with their tech. It offers exactly what needs to be done, i.e. an AI-driven M&A target screening process, designed to streamline the identification and evaluation of potential acquisition targets. It automates the creation of dynamic and customized shortlists, reducing time and effort; as required when doing it manually.

Revolutionizing Due Diligence

Due diligence is a crucial part of any M&A deal, but it’s also one of the most - if not THE most - tedious. AI is changing that by automating the review of contracts, financial reports, and other key documents. Instead of spending weeks poring over paperwork, AI can quickly highlight risks and inconsistencies, helping deal teams make faster, more informed decisions. This doesn’t just save time—it can also catch issues that might slip through the cracks with manual review.

Granted, I work for SS&C Intralinks and the company recently launched DealCentreAI , which is taking things to an entirely new level - so I might be a bit biased here ??. But, we really are changing the way diligence is done; especially how we're tackling the data privacy topic when leveraging LLM's - check it out. With that said, I'm moving over to neutral ground again....??

Marc Vogelsang at 安永 published an interesting article "How AI will impact due diligence in M&A transactions " a few months ago. IMO, it accurately describes where and how AI will support the due diligence. Automating data analysis, identifying risks, and enhancing efficiency will be the immediate areas where AI will augment the process. However, challenges include interpreting complex data and maintaining human oversight to validate AI-driven insights - highlighting the need for a balanced approach combining AI tools with expert judgment to navigate the intricacies of transactions.

Dr. Karl-Michael Popp published a great book called "Automation of the M&A process: due diligence tasks and automation ", which is available on Amazon - if you're interested. The book goes deep (way deep) into end-to-end automation of M&A processes. It identifies/determines which tasks can be automated, i.e. it includes descriptions all tasks in due diligence and more importantly, which tasks are relevant.

Smoother Post-Merger Integration

Deal closed. SPA signed. Work done! Ha, if it were only that simple.

After a deal is done, the real work begins — bringing two companies together. This is often where deals falter, but AI can help here too. It can assist with everything from aligning company policies to managing financial systems, making sure that the integration goes off without a hitch. By automating these tasks, AI helps maintain the momentum of the deal, ensuring that the value promised by the merger is actually realized.

In a nutshell, you need to identify synergies ASAP. And, this is where technologies like Modelyzr GmbH come into action. Nils Nieh?rster and his team founded the company to help companies shift from a retrospective decision-making process to a more sustainable potential-oriented decision-making process. For example, their AI supports strategic decisions by analyzing both CRMs to identify market potentials, i.e. it gives you the lowest common denominator across the client-base within both organizations. And, with that you know who to target to drive immediate growth after the merger. Hard to imagine doing this analysis without AI.

Looking Ahead

Of course, using AI in M&A isn’t without its challenges. There are still concerns about the accuracy of AI tools, data security, and the need for human oversight. Plus, getting the most out of AI requires significant investment and training. But as the technology evolves, more and more companies are expected to adopt AI in their M&A processes. In fact, it’s predicted that by 2027, around 80% of M&A activities will involve AI in some way. This is not me talking! This is based on 贝恩公司 's "Generative AI in M&A: Where Hope Meets Hype " report. According to them, early adopters (mainly in tech, healthcare, and finance) will use AI for target identification and document review, seeing benefits in efficiency and cost reduction.

Whether you're on board or not, AI is already playing a part in the M&A process and its part will become more and more significant as we go along. IMO, it's a matter of 24-36 months until the M&A process is completely revolutionized. The demand (or the necessity for that matter) to become more efficient in order to handle more deals is just too strong. This is where I typically recite my Quantity, Capacity & Quality story....

Quantity - there're more and more deals with more and more data. Capacity - there're less and less people available within the entire deal team. Quality - despite high quantity and low capacity, everybody within the deal team is geared to deliver a high quality transaction/outcome.

In short, AI is making M&A smarter and faster, and companies that embrace these tools are likely to see a real competitive edge in their deal-making efforts.

Please comment! Eager to hear your perspective.