Let’s face it: AI is everywhere. If you haven’t started utilizing it yet, you’re behind the times. AI has worked its way into nearly every industry, especially healthcare, finance, and retail. By extension, the rise of AI impacts mergers and acquisitions in more ways than one. M&A is already indirectly affected by this shift, but what would you do if we said mergers and acquisitions can take advantage of artificial intelligence to streamline due diligence, identify potential targets, and assist in post-merger integration?

Due Diligence

• AI can be employed to search through legal documents because of their precise language and logical structure. Due to the nature of standardized language within legal documents, AI can search for critical phrases such as “non-compete” in a target’s contract.
• AI can be utilized to discover known risks and trained to determine how much impact the potential risk could have. While AI will not know this implicitly, it is possible to feed it “soft” information from human experience so it can build a risk assessment.
• Generative AI can be used to write a plethora of reports, from basic financial reports to a full draft of a due diligence report. Generative AI can quickly “read” information supplied to it and compile it into a manageable format for users to utilize.

Identifying Potential Targets

• AI can effectively identify patterns from past mergers and acquisitions data to determine characteristics of desirable companies. This targeted acquisition process is informed by successful deals.
• Similar to how AI can be utilized to write reports, AI can be fed reports, news, and other hard data to detect signs of potential growth.
• In tandem with the prior two points, AI can take a large list and whittle it down to something manageable for a human to look through. AI will utilize the information you give it to create a list of the best potential targets based on past successes. 

Post-Merger Integration

• To aid in post-merger integration, AI can “read” and analyze contracts from both companies to pinpoint differences between them and propose methods of standardization.
• AI can rapidly combine files and data to reduce the time that would be spent manually organizing and merging data. 
• AI can also be utilized to accelerate the harmonization and integration of vendor names, spend categories, etc., from disparate systems and formats. This acceleration can be a true money saver– the faster things are integrated, the sooner you can identify duplicate costs that can be reduced.

Conclusion

AI is transforming the M&A landscape in more ways than one. Due diligence, target identification, and post-merger integration can all be made easier and more efficient through the use of language models, generative AI, and machine learning. However, AI alone isn’t enough. Humans are integral to the process of training AI, utilizing “soft” information from previous experiences, and discerning how accurate their results are. Contact Stony Hill Advisors for the human touch M&A needs.