Technology Is Transforming Dealmaking Due Diligence

Dealmakers know all too well that due diligence is a crucial step during mergers and acquisitions (M&A) and strategic financing transactions. Dealmaking has evolved from paper-based manual processes of the past to teams utilizing transformative digital tools to streamline the process.

As digital tools like virtual data rooms (VDRs) and workflow software have replaced manual, error-prone processes, they’ve become key to speeding up deals by allowing virtual collaboration, reducing risk and helping buyers make informed decisions. VDRs ensure sensitive documents remain secure and easy to share while teams can seamlessly collaborate across a multitude of locations. VDRs are the single source of truth, ensuring that all parties are working from the same set of documents and data.

VDRs and workflow software tools are only the beginning. Mainstream generative AI technologies like ChatGPT are now consistently releasing new versions that are exponentially better than the last at lightning speed, as demonstrated by the latest release of ChatGPT 4.0. As technologies like artificial intelligence (AI) and machine learning (ML) continue to improve, they offer ever-increasing opportunities for further digital transformation and added VDR functionalities, opening a conversation for dealmakers around what to expect next in dealmaking technology.

As part of this transformation, SS&C Intralinks recently released DealCentre AI™, an all-new AI-powered dealmaking platform that incorporates powerful tools that save time, provide unmatched intelligence to streamline deals and offering access to unparalleled insights that make deals smarter. Technologies harnessing AI like DealCentre are revolutionizing every step of the deal lifecycle.

In this blog, we outline key points from our comprehensive report, produced in partnership with Reuters, Transformation in Dealmaking: Unlocking the Power of Digital Due Diligence, which includes insights from leaders at Volvo Cars, food producer Mars and steelmaker ArcelorMittal.

The evolving role of AI

Although dealmakers have been cautious and gradual in adopting AI, especially when dealing with sensitive information, its potential to elevate due diligence is impressive. AI has the capability to improve efficiency and minimize errors in tedious processes such as redaction. While it hasn't been fully integrated into all due diligence operations, the technology proves valuable for risk management and data sourcing, showing promise in expediting processes that require the evaluation of large volumes of data. Additionally, AI can monitor deal pipelines and enhance information scraping for reputation analysis.

Some dealmakers have expressed concerns around data transparency and security with AI, especially around handling sensitive and confidential dealmaking information that would be detrimental to a deal. With the awareness of AI is the early stage in most organizations, it’s ideal to seek out trusted technology partners who can allay any worries with a solid reputation and security.

All of this suggests there is significant potential for AI's role in dealmaking operations and strategic decision-making. 

Cybersecurity risk mitigation

Cyber risks are a concern in all areas of business, especially dealmaking. Since the announcement of a deal can elevate the threat of a cyberattack, organizations are prioritizing data security. For a deal team in the middle of negotiating a transaction, a data breach can negatively impact a deal or end a limited partner’s interest causing severe repercussions to a firm’s overall reputation.

For these reasons, cybersecurity assessments are now a routine part of the investment process, influencing not only the due diligence but also the success or valuation of a deal due to a tarnished reputation and high-risk status. The results of a comprehensive assessment can have significant implications, such as adjustments in the purchase price, highlighting cybersecurity’s key role in business transactions when gaps are found that pose implied future risks, or a breach reveals current security weaknesses.

Technology is transforming due diligence

Digital due diligence has revolutionized dealmaking, making it more efficient, cost-effective and less resource intensive. Digital tools powered by AI, like Intralinks’ DealCentre, are indispensable in modern dealmaking, shaping not only the present but also the future of strategic financing and M&A.

As AI technology continues to develop, tools that streamline and speed the dealmaking process will continue to evolve and take over tedious processes that previously distracted dealmakers from focusing on what they do best.

To find out more about how technology is changing due diligence in dealmaking, read the complete report: Transformation in Dealmaking: Unlocking the Power of Digital Due Diligence.