The Evolution of M&A with GenAI

For decades, digital technology has played a pivotal role in mergers and acquisitions (M&A). On one hand, it serves as a key objective in many deals, with companies seeking to enhance their digital capabilities. On the other hand, technology has proven invaluable in streamlining M&A processes. Despite the reliance on digital advancements to generate value, many M&A executives still face a harsh reality: the majority report that over half of their transactions fail to meet synergy targets within their committed timeframes. Clearly, while technology has been a significant enabler, it hasn't been a guaranteed solution for M&A success.

What’s needed now is a fundamental shift in M&A strategy. Many executives recognize this necessity, ranking Strategy and M&A as the third most important area they intend to reinvent over the next two years. Technology, particularly generative AI, is seen as a critical lever for this transformation. In fact, 98% of organizations view technology as the primary driver for reinvention, with 82% specifically identifying generative AI as a key enabler. The time for M&A reinvention, powered by AI, is now.

Generative AI: Transforming the M&A Landscape

The emergence of AI, and more recently generative AI, represents a significant leap in the digitization of M&A. Business leaders are increasingly optimistic about the value this technology can bring to the table. According to Accenture's latest survey of 750 global C-suite executives involved in M&A, nearly two-thirds (64%) anticipate that generative AI will revolutionize M&A deal processes, surpassing other recent technological advancements. This optimism is fueled by the technology’s growing relevance, ease of use, and its applicability across the entire M&A lifecycle.

Moreover, 70% of executives believe generative AI will help them generate higher alpha on their transactions. While this enthusiasm is promising, executives also acknowledge that significant challenges remain, including a lack of clarity on where to prioritize efforts and difficulty in executing a comprehensive AI strategy.

Developing a single, all-encompassing generative AI solution for M&A is unlikely. Instead, success will depend on creating informed strategies that guide investments in generative AI across the entire deal lifecycle. By doing so, dealmakers can unlock the full potential of AI-driven value.

Seeing the Bigger Picture: Strategic AI Investment in M&A

Despite the optimism surrounding generative AI, only one-third of executives report making substantial investments in AI specifically for M&A activities. More than half (57%) say they are investing selectively. This disconnect between high expectations and actual investments suggests an untapped opportunity. Our research highlights that executives place significant value on generative AI’s potential across various deal activities, particularly in pre-deal stages. However, their investments do not yet reflect this belief, underscoring the need for a more comprehensive, strategic approach.

Five Imperatives for Leveraging Generative AI in M&A

To harness the full potential of generative AI, executive teams must continue to deepen their understanding of the technology, identify areas within the M&A lifecycle where AI can deliver the most value, and assess the robustness of their supporting infrastructure. Focusing on the following five imperatives can help organizations build an effective strategy for generative AI-enabled M&A:

1. Lead with Value

Shift away from isolated investments in specific activities. Instead, develop a holistic strategy that spans the entire M&A lifecycle, maximizing the value generative AI can provide.

2. Reinvent Talent and Workflows

Recognize how generative AI can redefine the work of M&A teams. Upskill or reskill employees to integrate AI in ways that complement human expertise.

3. Build an AI-Enabled, Secure Digital Core

Ensure security protocols are up to date and continuously monitored. Establish clear metrics to track performance across M&A lifecycles.

4. Prioritize Responsible AI

Balance the pursuit of value with risk management. Implement guardrails to ensure ethical AI usage and mitigate potential risks.

5. Embrace Continuous Reinvention

Generative AI is only the beginning. Organizations must adopt a dynamic approach to M&A reinvention, evolving their strategies in line with technological advancements.

Generative AI: Shaping the Future of M&A

Executives are beginning to realize that their Strategy and M&A functions are primed for transformation, and generative AI is the tool they need to drive that change. As they embark on this journey, they must unlock their imagination and think beyond traditional boundaries.

Generative AI offers a powerful opportunity for dealmakers to differentiate themselves in the competitive M&A landscape. However, unlocking its full value won’t happen overnight. The M&A world is in constant flux, with technologies advancing and skills continually evolving. Success will come to those who can adapt, innovate, and leverage AI to its fullest potential.