By Leonardo Pansardi Grisottoco-founder of ZAXO M&A Partners
The ability of artificial intelligence (AI) to process large volumes of data in real time provides a significant competitive advantage, allowing agility, informed decisions and analysis of patterns and trends. This results in the identification of more effective strategic opportunities.
For Gartner, a provider of insights for executives and their teams, technology, in particular AI, is among the main trends in Mergers and Acquisitions (M&A) for this year. Whether used to improve processes related to analyzing companies available on the market, acquiring businesses based on this technology or simply navigating an increasingly complex regulatory environment.
In this sense, Mergers and Acquisitions remain a growth engine for most companies, hence the importance of addressing the topic. Achieving success with the process will mean positioning companies for market leadership for many years to come. And this year’s success will increasingly depend on how executives will deal with these market trends, especially those related to technology, which add high competitive value to companies.
Here I list the 5 areas of M&A that will be impacted by AI:
01 – The process
The use of AI will have a significant impact on improving the speed of Mergers and Acquisitions processes. The use of tools with this intelligence can help identify potential acquisition targets, analyzing large amounts of data from different sources and identifying, for example, those that offer the best return on investment (ROI), thus increasing the probability of acquisitions. successful. In addition, AI also assists in the so-called ‘Due diligence’, which is like a “fine-toothed comb” that thoroughly checks different aspects of the business to ensure that what the company says is aligned with what it actually does. We can consider it a type of audit, but broader, which explores deep aspects of the company, from finance and legal aspects to labor issues, accounting, taxes, the environment and even the technological part. This speeds up deal closing.
02 – Businesses in 2024 should prioritize companies with AI
Artificial Intelligence will be the main disruptive technology to impact industries, according to Gartner. Therefore, although mergers and acquisitions of companies based on it are not yet a widespread trend, the organization advises that the purchase of these be a priority in all business strategies in 2024. I believe that those who do not have the skills or the time needed to Building capabilities internally may opt for M&A to gain quick access to technology.
03 – The time will be for acquisitions of small technology-oriented companies
Companies may have difficulty making accurate forecasts about key macroeconomic factors such as economic growth, interest rates, inflation, recession, employment, cost of capital, and both business and consumer confidence. This can impact investment decisions, business strategies and overall confidence in the economic environment.
Technology companies, especially previously valued startups, will face challenges in raising their next round of venture financing and will look for alternatives, such as the possibility of being acquired by strategic buyers. Therefore, the suggestion is that well-capitalized companies take advantage of this scenario, exploring acquisitions of smaller companies focused on technology, which have lower valuations, limited access to financing and face more challenging economic conditions.
04 – Proactivity in the face of Regulatory Inspection puts companies ahead of the market
Regulatory oversight of M&A businesses, especially for anti-competitive and national security concerns, is on the rise and will remain a significant factor into 2024, according to Gartner. This could pose challenges for completing major deals next year. On the other hand, this can create a competitive opportunity for strategically positioned companies and favor an increase in the volume of smaller businesses. For those focused on more substantial operations, it is important to take a proactive approach to regulatory bodies this year. AI can help a lot in this aspect, bringing valuable data and insights to decision-making.
05 – AI makes ‘post-merger’ easier and more efficient
AI facilitates the post-merger integration process by automating various tasks, including data migration, employee onboarding, and process standardization. This is possible thanks to its ability to examine large data sets that might otherwise go unnoticed. Timelines are accelerated and errors are minimized when technology analyzes information and generates insights for a more effective integration approach. It points out the potential and risks of synergy between companies in the process of merging, for example. These findings can open doors to value creation opportunities following an acquisition, including identifying potential efficiencies such as areas for growth or innovation.
