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PEO Insider - AI: The Impact on Mergers & Acquisitions

By Wanda Silva

When I was young, I watched movies with robots and drones; we called this science fiction because such things would, of course, never come true. This was only imagined to be future scientific or technology advances as is artificial intelligence or AI. So here we are – and yes, robots and drones have come to offer technological advances that can enhance the way we interact with each other and with the world. And they are here to stay!

So how can AI impact mergers and acquisitions (M&A)? What M&A tasks can a robot control or computer complete in the M&A world that are usually done by humans? Let’s look at just a few examples.

LEVERAGING AI IN M&A TASKS

Target Screening. To determine the best ROI, shareholders of the buying company must identify acquisi- tion targets and understand how the deal will impact their strategy and financial performance. By harnessing the power of AI, buyers may be able to more efficiently and accurately identify potential targets, thereby increasing the likelihood of successful acquisitions.

Due Diligence. AI can streamline the due diligence process by document review and analysis. Cloud based data rooms have already revolutionized M&A due diligence by replacing physical data rooms and I think AI will enhance the process even more. And to think that back in the day we had real paper deal books that we mailed!

Analysis of Information. AI may be able to analyze information such as a company’s brand, management, trajec- tory, resources, productivity, and financial information to determine the profitability of the combined entities.

Reduction of Risk. AI may be able to reduce risk in due diligence by analysis of huge volumes of data, therefore forecasting trends. This could help decision making for more successful MA strategies. Companies can leverage AI as algorithms accurately aid better predictions which makes a shift in how deals are originated and evaluated.

Valuation. Determining the value of
a PEO is made of many distinct pieces of the valuation puzzle. I just do not see a tremendous impact on the human ability to understand valuations across

the PEO industry unless they have done multiple deals and understand the comparisons in detail.

Post-acquisition. AI can follow an acquisition, facilitating the integration by automating various tasks including data migration, employee onboarding, and process standardization.

In summary, AI is reshaping the way buyers undertake due diligence, make decisions, and integrate post-merger. Organizations can obtain profound understandings of target companies, minimize the duration and expense of M&A and make better informed decisions driven by data.

But at the end of the day there is one thing you cannot take out of successful M&A transactions and that is the people. It takes a combination of

business and emotional intelligence to be a great M&A advisor, and it takes an incredible “read” on the people involved on both the buy and sell side to know if a deal will ultimately be successful. It is kindness, integrity and respect that truly guide the M&A process and those for me are simply real-time and human. So for now, while some of the deal tasks can be completed by AI, great deal making is about the ability to understand, guide and value the people and will not gain immediately from AI in my opinion. But then again, I was not a believer in science fiction!