The Rise of Generative AI in Mergers and Acquisitions: A Look into the Future

Generative artificial intelligence is on the rise in the world of mergers and acquisitions, with a study by Bain & Co. predicting that it will be used in over 80 percent of deals within the next three years. While currently only 16 percent of mergers or acquisitions involve generative AI, early adopters are already utilizing proprietary models to streamline the deal-making process.

These in-house or contracted programmer-built models can sift through thousands of legal documents in minutes, providing sourcing companies with a list of potential targets for mergers or acquisitions. The models assign scores to companies based on their data, helping to determine the likelihood of a successful deal.

However, the use of generative AI in M&A comes with its own set of challenges, particularly in terms of regulation and confidentiality. As the technology continues to advance rapidly, there are concerns about how to responsibly use AI and ensure that it is not being misused.

Despite the potential benefits of generative AI in speeding up the deal process and reducing costs, there are also concerns about job displacement in industries like law. While AI can provide perfect recall and streamline tasks that would be time-consuming for humans, there are still risks involved in relying solely on technology for complex decision-making processes.

As the marketplace begins to see more of these generative AI tools emerge, the debate over their impact on the M&A landscape will continue. While some see them as a solution to accelerating deal activity, others are wary of the potential risks and uncertainties that come with relying on AI for critical business decisions.