The AI-Powered Deal: How Generative AI is Reshaping M&A

Generative AI has emerged as a powerful force reshaping the business landscape, and nowhere is its potential more profound than in mergers and acquisitions (M&A). Companies strategically integrating generative AI into their M&A processes over the next five years are poised to achieve a significant competitive edge and outmaneuver their competitors. From identifying acquisition targets more rapidly to assessing deal value with greater confidence, these leaders will also streamline due diligence and integration efforts, often with fewer resources. This strategic advantage is expected to drive higher total shareholder returns (TSRs) through enhanced M&A activities. (Figure 1)

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Slow to Adopt—But the Tide Is Turning

You are not alone if you have not yet embraced generative AI in your M&A processes. A recent survey of more than 300 M&A practitioners shows that just 21% currently use this technology—a modest uptick from 16% in 2023. This slower-than-anticipated growth underscores the need for a deeper understanding of who is leveraging these tools and how. Although we expected faster adoption, deeper analysis highlights which organizations are actively employing generative AI and how they are leveraging it, providing a glimpse into how they aim to outpace competitors.

Frequent Acquirers Lead the Way

Among the most active acquirers, 36% have already embedded generative AI into their M&A workflows. This is particularly notable given our research showing that companies completing one or more deals each year consistently outstrip their less active counterparts in TSRs. Active acquirers continually refine their approach to deal-making, and generative AI provides them an edge. Conversely, less frequent acquirers that also lag in AI investments risk widening the TSR gap.

Private Equity Jumps In Early

Private equity (PE) firms have emerged as some of the most enthusiastic early adopters of generative AI. Over 60% of the PE firms we interviewed already deploy at least one AI tool to boost their sourcing, screening, or due diligence processes. If you operate in a PE-heavy sector and have not yet invested in generative AI, brace for intensified competition.

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Expanding Use Cases Beyond Due Diligence

Generative AI is no longer limited to speeding up sourcing, screening, and due diligence. Early adopters are already exploring applying these tools to integration, divestiture planning, and program management. The most forward-thinking companies are expanding AI applications across all stages of M&A to build lasting competitive advantages.

Over the next year, for instance, we expect many early adopters to harness generative AI to:

• Draft integration work plans and transition service agreements (TSAs) in less than 20% of the time previously required, accelerating team mobilization and elevating the quality of initial documentation.
• Access company-specific data to accurately size cost and revenue synergies, and craft robust value-creation plans based on historical performance metrics.

Within five years, generative AI will significantly enhance every phase of the M&A lifecycle—from target selection to integration.

Three Critical Challenges for Late Adopters

The bar will inevitably rise as more organizations capitalize on these M&A innovations. Companies slow to adopt generative AI will face heightened pressure in three key areas:

1. Making Well-Informed Bids (and Walking Away Sooner)

Early adopters can compress a week of data gathering into just a day. That extra time can be devoted to more profound analysis, better valuations, and faster identification of opportunities—or warning signs. By accelerating data summarization, generative AI users can confidently underwrite high-value deals and quickly eliminate those unlikely to deliver returns.

2. Uncovering New Ways to Underwrite and Realize Value

Generative AI empowers companies to surface more prosperous cost and revenue synergy opportunities and devise more comprehensive execution plans. Consider cross-selling: by feeding AI tools with sales, pricing, customer relationship management, and product catalog data, organizations can rapidly pinpoint viable cross-selling options and propose action plans. This precision enables higher synergy estimates when required and accelerates value capture post-close.

3. Protecting People and the Business

M&A transactions can overwhelm employees when they must juggle integration tasks and responsibilities. Nearly 80% of companies using generative AI in M&A report reduced manual efforts, freeing employees to focus on sustaining core operations and strategic deal-related activities. This alleviation can boost morale, retention, and performance.

Businesses increasingly turn to AI to avoid missed opportunities, enhance synergies, and lighten employee workloads. By 2027, more than half of all companies are projected to adopt generative AI within their M&A processes. Learning from early adopters offers a blueprint for those yet to begin.

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Lessons from Early Adopters

Start Now

Integrating new technology inevitably involves a learning curve—time spent experimenting, refining processes, and influencing user behavior. Organizations that delay may find it impossible to close the gap simply by purchasing a solution later. Still, companies can automate small but essential tasks even in the first week of adoption, setting the stage for more transformative changes.

Build an AI Portfolio

One of the most straightforward entry points is to deploy an essential generative AI tool with a well-crafted prompt and secure access to high-quality data sources. Investing in an enterprise license enables companies to start experimenting immediately. From there, teams can explore either buying or developing more advanced AI solutions in line with specific strategic goals.

Innovate with Intent

Leading organizations do not just automate routine tasks; they reimagine their M&A processes to exploit AI's full capabilities. By targeting areas that deliver the most significant potential for growth or risk mitigation, they ensure the technology drives real competitive advantage.

Evolve Your M&A Teams

As AI tools take on a growing share of project management and other labor-intensive tasks, the makeup of M&A teams will shift. Future teams will focus more on extracting strategic value than on administrative tasks. Companies that rethink talent strategies—prioritizing analytical, creative, and leadership skills—will be better positioned to sustain a competitive edge.

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Act Now to Secure the Future

Generative AI holds the promise of revolutionizing the M&A landscape. There is still time for businesses that have yet to commit, but the window is narrowing. Mastery of generative AI will be key to winning transformative deals and safeguarding long-term value. By starting today, companies can build essential expertise, refine their M&A approaches, and position themselves to thrive in an evolving competitive arena.