The key thing about generative AI is that it's available to literally everyone. Democratized access means that employees at all levels, from summer interns to CEOs, can benefit from it in their daily work. In fact, a recent survey of more than 3,400 C-level leaders found that nearly 90% incorporate generative AI tools on a weekly basis, and a quarter use them daily. Generative AI is becoming a technology that is gaining widespread acceptance and making a big impact at all levels of an organization in a variety of ways.
And in the world of mergers and acquisitions, this is more pronounced than in other areas.
Given today's speed of change and disruption, dealmakers say they expect generative AI to help make M&A more efficient and valuable. In our latest report, Reforming M&A with Generative AIA survey of 750 executives found that 54% of executives said they were likely to acquire a company with AI capabilities within the next two years, and 70% expected AI to make deals more profitable.
But our research also reveals a mismatch between high expectations and actual investments in generative AI use cases: Just over half (57%) of the executives surveyed are selectively investing in generative AI for M&A processes, and 8% are not investing at all. Only a third (35%) say they are investing significantly.
But while executives are hesitant to invest in and scale generative AI applications, Accenture research shows they are also reacting to the increased pace of change they currently face. Pulse Index of ChangeThe majority of executives (88%) expect the pace of change to accelerate even more in 2024, and more than half say they are not prepared for all of the change. They also cite technology as the primary driver 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 can truly help their bottom line: 68% of executives reveal that more than half of their deals fail to meet or exceed synergy targets within the promised timeframe. As further evidence, they rank strategy and M&A third on their priority list of functions to reinvent.
Dealmaking is complex, and dealmakers focus on the process because they have to. That's why nearly two-thirds (64%) of M&A executives expect generative AI to revolutionize the deal process, compared to any other technological advancement. Generative AI has advanced capabilities, including automated document analysis, natural language processing, context and analytics interpretation, and decision support, to enable more informed decisions. While most dealmakers today are focused on using generative AI for pre-deal activities, we believe that dealmakers who expand its scope beyond the pre-deal stage throughout the M&A deal cycle can significantly increase deal value.
Overcoming AI obstacles and opportunities
While demonstrating readiness to adopt generative AI solutions to improve deal efficiency and margins, executives are still figuring out how to deploy them most effectively in M&A. Leaders are held back by a lack of clear focus and challenges in executing on a formal strategy. Our research shows that while executives are beginning to use generative AI in the pre-deal stage, many are still lacking imagination across the full range of deal activity.
After a deal is completed, generative AI can help in a number of ways:
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Streamline and improve the transition services agreement design process by using generative AI to automate tasks such as contract analysis and schedule generation.
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Use generative AI to enhance post-deal assessments and leverage historical insights to catalog findings and identify best practices to improve your deals and your team's capabilities.
To get the most out of generative AI, business leaders should keep five imperatives in mind when developing their strategy:
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Follow your values: Rather than a one-off application of generative AI, we will focus on capabilities across the M&A lifecycle, particularly those that unlock value in post-deal activities.
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Reinventing the way we work: Understanding how generative AI can rethink your M&A team's work can free up time for critical thinking, and data collection and presentation is one area where generative AI excels.
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Develop a secure, AI-enabled digital core. This is essential and should help users move beyond silos to gain insight into potential synergies and optimized organizational structures.
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Closing the gap on responsible AI: Establish strict protocols to ensure responsible and ethical use of generative AI while ensuring data security to mitigate the leakage of sensitive information.
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drive Ongoing Reform: Strategies need to evolve over time through ongoing efforts and a continuous process of updating, optimizing, and creating value.
With today's speed of change and disruption, dealmakers see the potential for generative AI to help drive value in M&A. But right now, it's not clear how to leverage it across the deal lifecycle. Until they figure that out, many will miss out on the efficiency and productivity benefits generative AI can bring — and the potential for even greater gains. It's time for more M&A leaders to refocus, realign, and proportionately align their investments to areas that bring value, while embracing reinvention.
