How AI Will Transform M&A Dealmaking
In the first installment of our M&Ai series, we look back on a century of dealmaking and how the virtual data room is being transformed by artificial intelligence.
It’s been over 125 years since the Great Merger Movement, a pivotal era in the late 19th century when numerous small businesses in the U.S. merged to form larger and more influential companies. Fast-forward to today and the volume of annual mergers and acquisitions (M&A) activity has surged globally. Companies seeking strategic growth understand that M&A is the best lever to pull for many reasons in an increasingly competitive landscape.
It can be argued that not a whole lot has changed in all these years in relation to the fundamentals of dealmaking. Typically, the process begins with a seller announcing their desire to be acquired or a potential buyer identifying a sell-side target and engaging the firm. If all goes well and a letter of intent (LOI) is signed, the deal moves on to the necessary steps related to deal prep, due diligence and ultimately, post-merger integration (PMI).
If there is an expectation that has stood the test of time, it’s the desire that have for security and confidentiality to ensure a prospective deal remains under wraps. Almost 30 years ago, SS&C Intralinks pioneered the transformation of this process by offering a secure, virtual version of the physical deal room, allowing bankers and deal teams to collaborate online in a fully secure, virtual data room (VDR).
Generative AI technology now offers the most meaningful transformation to dealmaking since the development of the VDR. Considering the rapid pace of advancement in artificial intelligence (AI) and generative AI (GenAI) over the past two years, we may already be in the midst of a seismic shift in dealmaking. Given its centralized role in the deal process, VDR providers like Intralinks have a unique vantage point to offer innovative AI-based solutions to the dealmaking community.
If the last 30 years were about optimizing, enhancing and advancing the digital journey of the M&A banker within the VDR, the next generation of deals will be enabled by AI to a large extent. Furthermore, the adoption of AI in the coming years may not happen in a straight line and is likely to undertake a more deliberate and organic process.
Adoption in phases
The adoption of a transformational technology such as AI will need to happen in phases for it to be successful and to earn the trust of dealmakers. Establishing trust is rooted in security — just as it’s been for over a hundred years. Adding AI to an already secure and trusted environment such as a VDR provides the best opportunity of being accepted.
The adoption of AI may be expected to go through a few phases:
- AI-assisted content organization and general “discovery”
- AI-generated content and related areas
- Automation of deal workflow due to advances in Agentic AI
We are already seeing progress in the first two categories, which are hugely beneficial to sellers, advisors and buyers, particularly in deal preparation and in assisting in the completion of due diligence in a timely manner. Overall, diligence timelines are likely to compress and become more thorough due to advances in AI, helping to close deals faster and at the desired valuation.
The third category of Agentic AI is likely to make a bigger impact and is something we are watching even more closely. It provides us with the opportunity to use GenAI decision-making to help bankers automate workflows in the dealmaking process to a greater extent.
AI will continue to transform M&A
Regardless of how this technology may shape dealmaking in the future, we think AI is here to stay and will continue to embed it into the technology of M&A transactions.
Intralinks is at the forefront of this revolution. We are taking a purposeful approach toward the integration of AI into the technological ecosystem of the dealmaking universe. We are taking bold steps to advance AI as a means to achieve productivity savings for bankers by offering assistance in routine tasks while leaving decision-making to the human in the loop.
We are in the early innings of this technological transformation and it’s important to exercise caution to minimize any potential risk to users. As exciting as it is, it is also important to be cognizant of the risks and pitfalls AI may bring. I will cover this topic in a subsequent blog post. In the meantime, the copious benefits of GenAI continue to power our M&A deals forward.