Unleashing Innovation: What Will AI's Impact Be on M&A Dealmaking in 2024?

During a recent interview with CNBC, Anu Aiyengar, JPMorgan’s global head of M&A, was asked about artificial intelligence’s (AI) role in dealmaking. “Sometimes I feel like AI is the topic about which we know the least and talk the most,” she said. “We don’t truly understand it, but it’s going to affect pretty much every part of our life and every part of business.”

Indeed, ChatGPT’s debut in November 2022 was nothing short of historic. In the realm of AI, two ideological camps have emerged: the “AI boomers,” characterized by techno optimism and a fervent desire to accelerate the anticipated benefits of advanced AI, and the “AI doomers,” who harbor concerns about the potentially catastrophic risks that advanced AI may pose to humanity's survival.

During a recent roundtable event in New York City, SS&C Intralinks brought together 30 senior dealmakers representing investment banks, corporates and private equity (PE) firms to check the M&A industry’s pulse on AI. The engaging conversation delved into how AI could mold the future of dealmaking and impact deal sourcing to due diligence processes, reshape deal team structures and redefine the competitive landscape. Here are some key takeaways from the discussion.

AI to boost efficiency, speed due diligence and (eventually) improve accuracy

The transformative potential of AI is already apparent for many dealmakers and their deal teams. AI-powered data collection and analysis tools are enabling the organization and review of large volumes of data while reducing manual, time-consuming work and opening the door to more value-added tasks. One roundtable participant reported a nearly 50 percent increase in efficiency that led to greater job satisfaction across their team and the successful execution of a larger number of deals in a shorter period.

Furthermore, a resounding 92 percent of the dealmakers we polled expressed confidence AI will notably expedite the due diligence process, accelerating the time it takes to close a transaction by streamlining deal tracking and automating responses to common questions.

Deriving valuable insights from unstructured data remains somewhat unpredictable as AI models and systems continue to improve. Sixty-four percent of roundtable attendees pointed to accuracy as their top concern when it comes to AI data analysis, followed by subsequent reservations about security (50 percent) and privacy (41 percent). Dealmakers emphasized the importance of choosing a reliable AI tool from a trusted vendor with a proven track record of data privacy and security. Additionally, they stressed the importance of mitigating the margin of error by requiring the validation of a team member.

Fear not the job elimination factor

Echoing sentiments heard before, our poll confirmed that despite the human inclination to worry about AI displacing workers across various sectors, only 23 percent of surveyed dealmakers expressed concern about the issue. Consensus among industry leaders suggests that AI is more likely to lead to alternate job descriptions rather than job losses. While AI tools are poised to automate clerical work, they will still require trained professionals to creatively prompt and validate the models’ output. The human touch will remain essential for managing the flow of the M&A due diligence process and verifying the accurate completion of all tasks on the due diligence checklist.

AI could speed up market research and unlock new possibilities

Identifying market trends and extracting insights into growth opportunities and the competitive landscape stand as pivotal factors contributing to the success of an M&A transaction. Sixty-three percent of event attendees expressed that AI holds the potential to deliver significant time and resource savings by handling laborious tasks such as researching the total available market (TAM) of a specific industry.

Overall, as dealmakers begin to embrace AI, a host of entirely new possibilities and opportunities are likely to emerge. The rapidly evolving impact of AI on dealmaking is expected to transform the industry significantly, although experts have yet to agree on the ways this will happen.

Change is near…but the implications are unclear

While much has been said, little is known about AI’s growing implications for M&A dealmaking. As the future unfolds before our eyes, it’s important to continue the conversation, learning as much as possible about the phenomenon while utilizing and enjoying its incredible novel capabilities.

JPMorgan’s Aiyengar encapsulated the sentiment with these wise words on AI: “Change will happen. Disruption will happen in almost any business you’re in. Embrace it as much as you can, use it as much as you can, protect yourself as much as you can and also be willing to evolve because as people understand how to use AI better, some people will figure it out and that will be to the advantage of their business.”

To gain additional insights into the sentiments of leading U.S. dealmakers on artificial intelligence in dealmaking, read our white paper, Charting the AI Course.

To learn more about SS&C Intralinks’ AI capabilities, click here.