Reinventing M&A with generative AI

In brief

• In recent Accenture research, executives identified “Strategy & M&A” among the top three functions they intend to reinvent in the next 3 years.
  
  
• Gen AI will lead those reinventions, and M&A executives agree: 64% of M&A executives believe that Gen AI will revolutionize deal processes.
  
  
• Where M&A executives are investing, however, indicates a need for holistic strategies to realize the value they envision.

Digital technology has been a crucial consideration for dealmakers for decades. On the one hand, acquiring digital capabilities is a frequent deal goal. On the other hand, technology is also a tool to streamline and accelerate the processes associated with M&A. Despite embracing technology to generate and accelerate M&A value, the stark reality for M&A executives is that a majority of them say that more than half of their transactions have failed to achieve or exceed their synergy targets in their committed timeframes.¹ So, while technical advances to date have been important, they certainly haven’t been a panacea for ensuring M&A success.

What’s needed now is a reinvention of M&A approaches. Executives understand this imperative as well: They ranked Strategy and M&A third in order of functions they intend to fundamentally reinvent in the next two years.² Executives confirm that technology is the top lever for reinvention for 98% of organizations, and generative AI is now seen as one of the main levers for 82% of those organizations, so the opportunity for reinventing M&A with generative AI is now.

Generative AI: revolution and evolution for M&A

The advent of AI and, most recently, generative AI is a big step forward in the digitization of M&A, and executives feel particularly optimistic about the potential value it can deliver. In Accenture’s most recent survey of 750 global C-suite executives with decision-making authority in M&A, we found that nearly three quarters (64%) of them expect generative AI to revolutionize M&A deal processes more than other recent technological advancements—this due to its ease of use, the expanding relevance of the technology, and its application fully across M&A dealcycles.

Notably, but not surprisingly, the allure for executives is the end game, with 70% of them saying generative AI will help them create higher alpha (excess return) on their transactions. Yet they admit that significant barriers exist to realizing that vision, chief among them being a lack of clarity on where to focus and an inability to execute a formal strategy.

The development of a single end-to-end generative AI solution is unlikely for M&A. So, making the most of generative AI will require dealmakers to develop strategies and chart an informed course for end-to-end investments to reap the rewards generative AI can contribute to M&A deal outcomes.

See the forest for the trees

Just one third of executives say they are investing heavily in generative AI specific to M&A activities, with 57% saying they are investing in pockets. Despite this, executives say they have significantly higher value expectations of generative AI in specific deal activities than their current investments would indicate. Our research comparing executives’ value expectations against their generative AI investments reveals that executives have a bias toward pre-deal activities in particular (see figure). This indicates an overriding need to unlock imagination and underscores the need for a holistic strategy.

Five imperatives for generative AI-enabled M&A

To take advantage of generative AI’s potential, executive teams need to continue to learn about the technology, identify areas within the M&A lifecycle in which generative AI can provide the greatest benefit, and evaluate the effectiveness of their supporting infrastructure. Focusing on five imperatives can help dealmakers define and implement the best strategy.

1. Lead with value. Move away from one-off investments in discrete activities to a holistic strategy across M&A dealcycles to realize the most value generative AI can offer.
   
   
2. Reinvent talent and ways of working. Understand how the work of M&A teams can be reinvented with generative AI and then upskill or reskill people to make incorporation of it human by design.
   
   
3. Understand and develop an AI-enabled, secure digital core. Continuously maintain security protocols and define and monitor deal metrics across M&A lifecycles.
   
   
4. Close the gap on responsible AI. Balance the pursuit of value across M&A lifecycles with risk mitigation. Guardrails are a must.
   
   
5. Drive continuous reinvention. Beyond just this era of generative AI, any M&A reinvention strategy must be dynamic and designed to evolve over time.

The opportunity for generative AI in M&A

Executives have recognized that their Strategy and M&A functions are ripe for transformation. And now, with the advent of generative AI, they have the tools to accelerate their reinvention journeys. As they set off, they’ll need to unlock their imaginations.

Generative AI presents a tremendous opportunity for dealmakers looking to set themselves apart in the M&A space. However, unlocking lifecycle value won’t happen immediately. The world of M&A is in constant flux. The technologies that support reinvention are steadily advancing. Necessary skills are continually evolving.

¹Accenture Strategy, M&A CEO CIO Survey, December 2021, n=1,000.
²Accenture, “Total Enterprise Reinvention,” February 10, 2023.