Impact of Artificial Intelligence on Mergers and Acquisitions – Business Dealings with a Strategic Approach
Artificial Intelligence (AI) is transforming the landscape of mergers and acquisitions, revolutionizing the efficiency and accuracy of deal processes from start to finish. AI plays a crucial role in every stage of a deal, with its key strengths shining in target sourcing, due diligence, and data analysis.
In the competitive M&A market, identifying the most suitable acquisition targets is vital. With a plethora of potential partners and opportunities available, it may not always be easy to pinpoint the right match. M&A professionals are adept at navigating this complex terrain, but the industry demands tools that can swiftly analyze large volumes of data. AI supplements traditional deal scanning by expanding the scope of analysis to encompass both structured data, like numbers and lists, and unstructured data, such as complex text. By doing so, AI generates valuable insights and uncovers high-quality opportunities that align with strategic, financial, and cultural criteria. The synergy of AI and M&A professionals’ expertise enables teams to make swift decisions with confidence, gaining a competitive edge in the process.
AI has now become a valuable asset in the due diligence phase of M&A transactions, simplifying document review and management of data rooms. Some data room providers are integrating advanced AI features into their platforms, revolutionizing the due diligence process. These tools automate repetitive tasks, identify potential risks, and extract meaningful conclusions from extensive documents.
Although the potential of AI in M&A is immense, its integration is not without risks. While AI improves efficiency, it does not guarantee better deal outcomes by default. To fully utilize its benefits, individuals and organizations must focus on leveraging the time saved for value-added activities that enhance decision-making processes. Additionally, AI cannot replace human judgment entirely; prudent M&A advisors must discern where AI can be applied effectively and where human expertise remains indispensable. Establishing clear guidelines for AI usage, including measures to safeguard confidentiality and prevent bias, is essential to mitigate risks. With strategic planning and robust protocols, AI can substantially enhance the efficiency and accuracy of the M&A process.
The adoption of AI in M&A workflows represents a fundamental shift in the sourcing and execution of deals. By improving target identification, streamlining due diligence, and enhancing data analysis, AI empowers firms to navigate the complexities of M&A more effectively. This enables transaction advisors to save time and concentrate on optimizing deal outcomes.
Market data from December 2024 indicates a decline in U.S. deal volume compared to the same period in 2023, attributed to various factors. However, M&A activity is projected to rise, driven by stable financing, reduced recession risks, and heightened strategic needs. Federal Reserve rate cuts are expected to lower capital costs, bolster confidence, and support the M&A market by making investments more appealing.
The Pittsburgh M&A market witnessed consistent deal volume in December 2024, with several notable transactions completed by strategic acquirers and private equity firms. Noteworthy acquisitions included those by Westinghouse Air Brake Technologies Corporation (Wabtec), Sharp Therapeutics Corp., and Riverarch Equity Partners.
The Deal of the Month in December 2024 involved Bloom Engineering Company acquiring Wabtec, a move set to enhance Wabtec’s energy solutions portfolio and capabilities in industrial systems. Bloom Engineering’s advanced technologies will be integrated into Wabtec’s operations, driving growth in the critical industrial systems segment.
