Efficiency of AI in M&A

Any M&A deal is a long process which includes analysing thousands of documents and checking the financial and legal health of a company, which takes up a lot of time.

One of the most time consuming processes in any m&a deal is due diligence. Due diligence basically means studying every aspect of the company you are about to buy. It includes financials, accounts, legal documents, and many other documents which help purchasers identify whether the company is worth buying. It is a process which helps identify growth potential of the business and its ability to attract new consumers. It is a safecheck so that the buyer does not incur undue losses after the deal, so it aids in saving the buyer company from risky corporate agreements during an M&A deal.???

According to a recent study, the average time to complete an m&a deal has increased by 30% over the past decade.

Due to the complexity of the work, highly trained professionals from different fields are required to work on M&A deals. Moreover, it is a time consuming and recurrent task. This is one of the reasons that many law firms have started using AI in due diligence. Apart from efficiency in the process, AI also allows the process to become relatively cheaper than before. According to a study, with the help of AI, we can now analyse more than three thousand documents in an hour, as compared to around hundred documents, when they were being examined manually. Tools such as Kira, Seal, and eBrevia work exclusively in M&A contract analysis for analysis of legal documents and highlight areas of bothering the buyer.?

Advantages of using AI:

AI and machine learning technologies tend to be more accurate than humans. AI due diligence is more accurate, and capable of providing foresight.?

• AI technology can successfully analyze millions of data points in a few seconds, which leads to cost saving and employees can devote their time to higher value tasks.
• AI eliminates the risk of human mistakes and fatigue. It is accurate and can churn out analysis of the data continuously.?
• By studying various contracts, the complicated algorithms of AI improve themselves and become stronger than before.?
• It provides a predictive analysis about what can happen in the future, using all the data, with a high level of accuracy. This becomes important information to form relevant judgements.

Barriers to using AI:

One of the major drawbacks could be an increased chance of data leakage. During an M&A process, the information held is very important for any firm. Moreover it is extremely market sensitive information, and any sort of cyber security violation could lead to major losses. Then there is the issue of acceptance of AI in the M&A space, or for that matter in any field where humans have been doing the majority of tasks since years. M&A is a field which values personal expertise, or to simplify it, gut-feeling, while making a final decision. Though an emotional reason, the gut-feeling formula has worked well for years before we started using AI.?????

As we saw, the advantages are many but the disadvantages are few and far between.? Eventually, AI is the future, but that does not mean there will be an end to human involvement in the M & A process. We will need increased skills to work in the M&A space now, which will include having a working knowledge of AI, and performing higher value tasks which the algorithms cannot perform. All in all the technology increases the efficiency of the process, which is the best for the buyers and the dealmakers.