How Generative AI Could Revolutionize M&A

One key thing about generative AI is that it’s literally for everyone. Democratized access means that workforces at every level can use it to help with their day job whether it’s the summer intern or the CEO. In fact, our recent survey of over 3,400 C-suite leaders found that nearly 90% incorporate generative AI tools weekly and a quarter use them daily. It’s become a technology of mass acceptance -- and mass impact -- across all levels of an organization in many ways.  

And in the world of mergers and acquisitions, this is more visible than in other circles. 

With this pace of change and disruption today, dealmakers have told us they hope generative AI will help streamline and improve value in M&A. Our latest report, Reinventing M&A with generative AI, which surveyed 750 C-suite M&A executives found that 54% of executives say they are likely to acquire companies with AI capabilities in the next two years and 70% expect it to help yield higher returns on their transactions.  

However, our research also revealed a misalignment between high expectations for generative AI use cases and actual investments. Of the executives surveyed, a little more than half (57%) were selectively investing in generative AI for M&A processes and 8% said they weren’t investing at all. Only a third (35%) said they were investing heavily. 

But as executives hesitate to invest in and scale generative AI applications, they are simultaneously reacting to the rising rate of change that is confronting them today, according to Accenture’s Pulse of Change Index. Most (88%) executives expect an even faster rate of change in 2024, and more than half say they aren’t equipped to respond to all the changes. They also cited technology as the main cause of business change in 2023, which coincides with the rise of generative AI. 

GenAI’s Contribution to M&A Transactions 

M&A executives understand why generative AI could be truly helpful to their bottom lines -- 68% revealed that more than half of their transactions failed to achieve or exceed their synergy targets within their committed timeframes. And more proof: They ranked strategy and M&A as No. 3 on their priority list of functions to reinvent. 

Dealmaking is complex and dealmakers are big on process because they need to be. That’s likely why nearly two-thirds (64%) of M&A executives anticipate generative AI will help revolutionize deal processes, as compared to other technological advancements. With generative AI comes advanced capabilities such as automated document analysis, natural language processing, context and analysis interpretation, and decision support, leading to making more informed decisions. Currently, most dealmakers are focused on using generative AI for pre-deal activities, but we see dealmakers who expand its application beyond pre-deal stages throughout M&A deal cycles can significantly enhance deal value.   

Navigating AI Roadblocks and Opportunities

Despite signaling their readiness to adopt generative AI solutions for transaction efficiency and higher returns, executives are still figuring out how best to deploy M&A. What’s holding leaders back the most is a lack of a clear focus and challenges in executing a formal strategy. From our research, we know that executives are getting their feet wet using generative AI in pre-deal stages, but many have a lack of imagination across the full spectrum of deal activities.   

After a deal closes, generative AI could be helpful in a number of ways, including: 

To make the most of generative AI, executives should keep these five imperatives in mind when developing their strategy: 

With the pace of change and disruption today, dealmakers are seeing the potential for generative AI to help improve value in M&A. But right now, they’re lacking clarity on how to use it across the deal lifecycle. Until they figure it out, many will miss out on the efficiency and productivity benefits generative AI could bring -- not to mention potentially greater return. It’s time for more M&A leaders to refocus, rebalance and proportionately align their investments to the areas that bring value while embracing reinvention.