Harnessing AI in Mergers and Acquisitions: A Transformative Era

Harnessing AI in Mergers and Acquisitions: A Transformative Era

By Mark Edwards

Artificial intelligence (AI) and big data are revolutionising decision-making in strategic mergers and acquisitions (M&A). By delving into market trends, competitor strategies, and historical deal outcomes, these technologies are ushering in a more data-driven approach to evaluating the feasibility of M&A transactions. This shift will profoundly impact the coming years as AI models evolve to predict market movements and pinpoint strategic growth prospects with increasing accuracy.

Target Company Identification:

Potential acquisition targets are being identified, and a significant transformation is underway by integrating AI algorithms and big data analytics. These powerful tools enable swift analysis of vast amounts of information, facilitating the identification of companies that align with specific strategic and financial criteria. As a result, opportunities that may have eluded traditional methods are now brought to the forefront, enhancing the efficiency and effectiveness of the target identification process.

Role of Advisors:

Expert advisors, including investment bankers, lawyers, and accountants, are integral to the M&A process. AI and automation augment their capabilities by assisting in complex financial modelling and legal document review. This technological integration is reshaping the landscape for advisors, allowing them to operate with heightened efficiency and effectiveness, ultimately enhancing the overall M&A process.


While negotiation in M&A transactions heavily relies on human judgment and interpersonal skills, AI contributes to the process in various ways. Through advanced financial modelling, AI aids in analysing financial data to inform negotiations. Moreover, AI facilitates a swift review of legal documents, identifying critical clauses and potential risks. However, it is important to note that the negotiation process remains a blend of AI-driven insights and human expertise, highlighting the symbiotic relationship between technology and human decision-making.

The Data Landscape:

Even before the disruptions caused by the global pandemic, the volume of data involved in each M&A deal rapidly increased, surpassing the capacity for human processing alone. In navigating this data-driven environment, leveraging AI techniques has transitioned from a luxury to a necessity. AI enables dealmakers to synthesise and comprehend the complexities of target companies, empowering them to make informed decisions with greater precision.

Outlook for 2024 and Beyond:

As AI capabilities evolve, companies seeking to enhance their products and services will increasingly turn to AI expertise. Established firms aiming to maintain a competitive edge may explore acquisitions of startups offering innovative AI solutions. However, challenges such as ensuring responsible AI use and safeguarding data privacy must be addressed to realise the full potential of AI in M&A transactions.

Investor Appetite in the Software Sector:

Investors and acquirers are consistently and increasingly hungry to invest and acquire in the software sector, driven by its resilience and growth potential. According to a report by PitchBook, venture capital investment in software companies reached a record high in 2023, with $400 billion poured into the sector globally.

This surge in investment underscores the attractiveness of software companies as targets for M&A activity. Sequoia Capital was the top VC investor, followed by Tiger Global Management and ES Investor from South Korea, which came in third place.

Sequoia recently invested $19.13M in a chat-based money transfer platform called Felix in a third-round deal on January 29, 2024, alongside 10 co-investors.

Also in the AI field, Sienna Investment Managers participated in a Series C funding round for AI diagnostics technology developer Ibex Medical Analytics on September 6, 2023. Alongside 5 co-investors, the deal raised a total of $55.00M.

The convergence of AI-driven insights and investor appetite in the software sector is reshaping the M&A landscape. As companies leverage AI to identify strategic opportunities and investors flock to the software sector for growth and innovation, the future of M&A in this space looks promising.