Embracing A.I. in M&A

Delivering better quality results, faster, more efficiently, and at a lower cost

by Serge Jonnaert – Managing Director

It’s May 2024, and the conversation around AI, particularly in M&A has never been more pertinent. Some people recoil at the thought, harboring an ‘Ex Machina’ fear of AI’s potential to take over the world. This technophobia is not new; history is replete with initial resistance to groundbreaking technologies like the telegraph, telephone, and personal computer, each of which eventually transformed society profoundly. AI will be no different. We need to get over this fear… As Seth Godin rightly pointed out, “If you wait until the fear is gone, you will never start, and you will rarely do anything that matters.”

The excitement surrounding AI and RPA in the world of M&A isn’t just about adopting new technologies—it’s about reshaping the very landscape of how deals are done and managed. My own experience has shown that embracing AI is not a choice but a necessity to stay relevant and effective in today’s market environment. My journey with AI began two years ago with the realization that the traditional methods of handling M&A activities were becoming too slow and cumbersome in a world where a sense of urgency and accuracy are paramount. At THE.MERGER.COMPANY® we adopted a purpose-built AI platform that reduces research that traditionally took over five man-weeks of intense work to mere minutes… Our platform’s powerful contextual and temporal engine aggregates data from multiple sources, covering over 14 million tech-related companies across 147 countries. The results are astounding and something (a team of) humans just can’t do. Our use of AI extends beyond research. We use it to develop launch materials, conduct preliminary valuation analyses, and explore and validate strategic options. We’re also exploring how AI can automate compliance checks and regulatory reporting. As to Robotic Process Automation (RPA), they are not just futuristic concepts but mostly existing commercial tools that have already transformed how we operate. We saw an opportunity to not only improve operational efficiency but also provide better quality and faster results, all at a significantly lower cost. The savings we can ultimately pass on to our clients.

Sure, AI is still maturing and the media often sensationalizes incidents involving AI, such as data hallucinations where AI generates false or misleading information, or data leakage issues even when data is anonymized. In the same way you wouldn’t share every detail to get a random person’s advice, or take the advice given at face value, A.I. should be treated no different. The magic however lies in refining the AI results through what we call ‘prompt engineering’, essentially asking the right, properly structured, and complete questions to yield quality answers.

Using both AI and RPA has enabled us to automate many, mostly time consuming and repetitive tasks, thereby freeing up valuable quality time for what still remain ‘human’ dimensions of M&A. AI may be able to parse through masses of data and provide insights at lightspeed, but it cannot replace the nuanced conversations that occur in an M&A process, the strategic negotiations that require a human, or the empathetic connections that build trust between humans. The human ‘touches’ such as relationship building, that ‘aha’ moment of insight and inspiration you wake up with in the morning and is often termed the ‘Divine Spark’, negotiation agility, emotional intelligence, and cultural affinity are all aspects where AI lacks the ability to fully grasp or respond to the nuances of real human interaction.

AI can actually bring tangible benefits to all parties involved in the M&A process. For the advisors involved in the process (investment banker, financial, tax, legal,…) it augments their capabilities, allows for higher deal volumes, and reduces the need for costly infrastructure and back-office functions. It also allows smaller, independent firms to compete more effectively, offering more affordable retainers and success fees. On the other side of the table, prospective buyers benefit from better-targeted opportunities, quicker and more advanced valuations analysis, and more efficient due diligence processes. Sellers can engage with M&A advisors earlier, increasing their options and reducing the cost of running a process.

As we look to the future, the integration of AI in M&A is not just about keeping up with technology—it’s about being a pioneer in a new era of business where digital transformation is inevitable. For our clients, this means that they can expect better quality, faster, more efficient, and less costly processes, that are more attuned to the complexities of today’s M&A market.

As technology advances, the role of AI in M&A will continue to grow, shaping the industry in ways we are just beginning to understand. Embracing AI does not mean a wholesale replacement of human capabilities but rather an enhancement of them, allowing professionals to tackle more strategic aspects of deals while AI handles the voluminous data intensive tasks. The future is undeniably hybrid, blending AI’s computational power with the inimitable dimensions of true human interaction. For those looking to navigate the complexities of M&A, working with an investment banker that not only embraces AI and RPA, but also understands the irreplaceable value of human insight is essential.

At THE.MERGER.COMPANY®, we are excited to be at the forefront of this transformation, offering real value and savings to companies exploring M&A, and we are eager to demonstrate how this powerful combination of human and artificial intelligence can achieve unprecedented results.

For more information, contact us at info@the.merger.company