M&AI: Three AI Applications that Can Help Seal the Deal

With the introduction of Chat GPT 3.5 in late 2022, AI technology has leaped from the pages of science fiction to become a business-ready tool with real-world applications. Even though the technology is currently in its infancy, AI-powered tools are already having a substantial impact on business. As it relates to deal flow, the value is already becoming clear. Here are three ways AI is being used today to facilitate dealmaking.

Due Diligence

Today’s AI advancements can improve the due diligence process by enhancing a dealmaker’s ability to manage larger values, filter huge data sets, organize complex information, and perform advanced analysis according to their programming or prompting. That’s particularly useful when there are huge quantities of materials to digest.

Although the output from AI technology needs to be thoroughly checked and verified before it is incorporated into any final analysis, due diligence can be accelerated with AI support. Whether it’s employed to organize vast quantities of data, investigate certain areas of interest, or generate analyses as a jumping-off point, AI looks like a promising option to make one of the most time-intensive phases of M&A much more manageable.

Forecasting

Forecasting can feel more like an art than a science. We all know that the most complex models can’t account for every macroeconomic or geopolitical variable. AI-powered tools can be employed to analyze existing and past trends more thoroughly and generate predictions for the likely future of markets, potentially resulting in predictions that align more closely with reality. While AI lacks the intuition of a long-serving professional who can rely on a storied career to inform their ‘gut feeling,’ AI has a theoretically limitless dataset to draw correlations and base its predictions.

Considering the degree to which AI is reliant on data, the use of AI tools may not be appropriate in certain situations that are unique or defined by developments of an unprecedented nature. But even with its current limitations, it will be interesting to compare the predictive power of early AI to the accuracy of its human counterparts. Mark Twain is said to have coined the phrase “history rhymes.” Given the vast amount of material AI can analyze quickly, it’s easy to see how AI forecasting can help even the most experienced professionals refine their predictions based on the historical “rhymes” AI can help identify.

Specialized Tools

Several AI tools powered by machine learning already fulfill very specific functions. Some AI tools analyze the historical behavior of potential partners to gauge their likely interest in a potential or proposed deal, helping dealmakers predict which potential bidders are losing interest and which are behaving consistent with the intention to close. There are other AI tools designed to substantially ease the time and human resources invested in administrative tasks by classifying and organizing documents based on patterns within them, or structuring databases so their contents can be nearly instantaneously organized by file type, dates, fields, and more. These are just a couple of examples, but as AI capabilities continue to grow more and more sophisticated, their application will continue to expand, and the firms that incorporate the right tools at the right time will enjoy considerable efficiency advantages over their peers.

Ask Marcum

If you have questions about the AI tools that may benefit your business, contact a Marcum professional today.