DealLawyers.com Blog

In a recent article on the use of Gen AI tools in M&A, McKinsey channeled its inner Kent Brockman to sing the praises of our new AI overlords. Here’s the article’s intro:

That didn’t take long. In 2024, the opportunities to apply gen AI to M&A deals were just emerging, and dealmakers were focused on learning about potential use cases. But since then, the number of gen-AI-enabled tools and capabilities on the market has exploded. In a survey we conducted last year, the respondents who say they are using gen AI in their M&A activities report an average cost reduction of roughly 20 percent. Forty percent of respondents report that gen AI enabled 30 to 50 percent faster deal cycles. Of all respondents, 42 percent say they believe gen AI has the potential to transform or to bring highly differentiating capabilities to the deal process.

Although excitement about gen AI is high and users report compelling results, our survey also finds that only 30 percent of respondents engage with gen AI at moderate to high levels. Even among avid users, the large majority of respondents currently rely on commercially available gen AI chatbots, not customized, proprietary tools. Respondents across industries and company sizes identify a lack of expertise as their main challenge to AI adoption.

The article acknowledges that it may be tempting, given how fast these tools are advancing, for M&A teams to sit on the sidelines for now, but the authors suggest that they jump in with both feet:

[T]eams can benefit by recognizing what tools are already on the market and how companies are currently using them to identify M&A targets, accelerate diligence, and augment integration planning and execution. By engaging with the current tools and understanding how they are evolving, M&A teams can develop the necessary documentation, inputs, and systems they will need when the next wave of innovation arrives.

Gen AI is moving fast, and forward-thinking M&A practitioners are already embracing it. The next era of M&A will be defined by teams that don’t wait on the sidelines but learn to surf the gen AI wave as it gains speed.

– John Jenkins