The impact of artificial intelligence in M&A consulting is immense and will lead to process adjustments and market shifts at lightning speed, Marc Reinhardt writes in his article for finews.first.
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Europe's M&A market has recently faced challenges. Higher interest rates and economic uncertainties have made PE firms and enterprises in strategic takeovers cautious. This situation has notably affected small and mid-cap transactions. As transaction costs are generally linked to the purchase price, fee negotiations between clients and advisors are common.
Balancing expected costs and potential returns makes it particularly challenging for owners of smaller companies to find suitable partners for M&A transactions or succession planning. In the medium term, this creates economically and socially sensitive issues that must be addressed.
«The digital transformation of due diligence seems within reach»
Artificial intelligence (AI), particularly generative AI, is a beacon of hope for achieving greater efficiency while maintaining consistent quality. AI has the potential to support or even fully automate manual processes throughout the transaction process. This is crucial for freeing consulting teams from time-consuming, manual, and costly tasks. M&A strategists focus on various aspects of the process, including thorough due diligence, structured document management, and contract preparation.
The digital transformation of due diligence seems within reach. This process involves a comprehensive review of all relevant aspects of a company, analyzing fundamental business data using defined checklists, and ultimately identifying the risks and opportunities of a potential takeover. Smart algorithms could accelerate and standardize data analysis, allowing consultants to focus on reviewing these analyses.
«AI can automatically extract, clean, and structure large volumes of unstructured data»
The increased use of smart algorithms will make data abundance and quality a competitive advantage in the M&A sector. A better understanding of successful transactions will help advisors improve success rates in future deals.
AI can automatically extract, clean, and structure large volumes of unstructured data from various sources, saving time and reducing human error. Additionally, AI aids in target identification by precisely identifying companies suitable for acquisition or merger based on specific criteria and client objectives.
Ultimately, AI will match potential buyers and sellers best suited for each other based on historical transaction data and current market conditions. The potential for succession planning is similar. What has until now been seen as one of the central risk factors for Switzerland as a business location can be mitigated by precisely analyzing potential candidates and reducing effort and frustration for both parties.
«Data protection issues must be resolved before the benefits can be fully reaped»
The potential impact of artificial intelligence on M&A consulting is immense, promising rapid process adjustments and market shifts. Ready-to-use tools will help process transactions more efficiently and cost-effectively.
However, improvements in technology are still needed. Challenges such as AI models' «hallucinations» must be addressed, and data protection issues resolved before the benefits of this technical transformation can be fully reaped. Nonetheless, the advantages for both advisors and clients will be substantial.
Marc Reinhardt is a partner at Marktlink Zurich. He has over 20 years of experience as an M&A advisor and has been responsible for the expansion of the Marktlink office since 2023. He previously worked at EY and most recently at Mazars as Partner and Head of Corporate Finance/Financial Advisory Services.
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