Artificial intelligence (AI) technology has been praised by many for its ability to improve efficiency, but a lesser-discussed benefit is its potential to improve the dealmaking process. In the business of mergers and acquisitions (M&As), risk management is everything; a wrong decision can cost millions of dollars. Innovative thinkers like Ayelet Richter are finding ways to leverage this powerful technology in the context of risk analysis in the dealmaking process of mergers and acquisitions to make deals smoother and more reliable.
Richter is a strategic investor and M&A leader with a notable track record of guiding companies through complex strategic transformations. She formerly led the Corporate Strategy and M&A team at Stratasys, directing numerous high-stakes transactions and growth initiatives that significantly enhanced the company’s position in the 3D printing industry. Richter gained years of experience as a business strategist and dealmaker, putting her in a unique position to lead this transformative wave of AI deployment in M&A transactions and as a supporting tool for strategic decision making.
Artificial intelligence in strategic decision-making
According to Richter, generative AI will not only change existing strategic processes like M&A transactions but also create new ones and render others obsolete. She believes AI has the ability to optimize and accelerate these processes extensively. Based on her experience leading negotiation teams, the bottleneck was always the human resource. External support is required to execute multiple deals in parallel. This support can easily come from AI solutions that can enhance and expedite the data gathering and data analysis processes that are required throughout the negotiation process and especially during the due diligence process.
Moreover, Richter argues that AI’s integration into M&A and strategic decision-making drives a transformation towards more data-informed, precise, and agile processes. By leveraging AI, leaders can navigate complexity with greater confidence and execute deals with a sharper focus on value creation.
While the human factor will remain key in executing mergers, investments, and acquisitions, AI tools will become decision-supporting tools that will enable higher-level confidence in taking risks during the deal process. The process of assessing and analyzing the different risks in an acquisition or investment is crucial and is essentially at the heart of the deal itself; the make-or-break decision relies on the level of risks taken.
AI’s ability to rapidly process complex information allows management teams to make decisions faster and with a greater level of precision. This is critical for maintaining a competitive edge while advancing the deal in a timely manner, which is critical in fast-moving markets.
The Future of AI in M&A
In the deal-making process, big data analytics and AI tools are already utilized to support the target selection process and accelerate the extensive due diligence process that is required.
In addition, AI advancements enable dealmakers to essentially manage a bigger pipeline of deal flows. More negotiation processes can be done simultaneously, and the decision-makers can derive the potential from more M&As and investments in the deal flow.
However, the transformation AI can bring to this domain would be its ability to act as a strategic decision-making supporting tool. AI technology can power predictive analytics, which allows business leaders to be better informed and, based on that, better predict the company’s performance post-merger or post-acquisition outcomes. From risk assessments to forecasting potential profits, insights provided by AI can make the decision-making process easier and more trustworthy.
Richter predicts that as LLM capabilities advance and more solutions are trained on large M&A data sets, the level of reliability of AI solutions will increase exponentially, enabling it to essentially become an additional team member or even a “virtual semi” decision-making representative in the room. As AI advances in this domain, it can eventually act as a “virtual semi” Executive team member or a “virtual semi” Board member.
AI tools’ ability to go through all the extensive, complex paperwork that can be daunting to examine as part of the transaction is unparalleled to that of a human executive or board member. Much of the language in these contracts, agreements, and other documents is somewhat standard. Because of this, AI models can be trained to conduct part of the document review process, scan documents for any discrepancies that may require additional attention in the negotiation process itself, and act as a “virtual semi” team member.
Summary
“The human factor will remain the most critical element in the deal-making process,” Richter concludes and adds that “To make an informed, high-level business decision like an acquisition or an investment, business leaders must consider a plethora of data, including financial statements, market trends, customer data, and more. AI can allow business leaders to analyze more data more efficiently, ensuring they approach a deal as prepared as possible. This technology catalyst — together with the rising pressure of companies to do more deals and accelerate growth — will drive increased demand for AI-powered solutions in the dealmaking and decision-making processes.”
With a pioneering visionary like Ayelet Richter at the helm, the AI revolution in M&A and business strategy will positively impact leaders and their organizations worldwide.