DealMAX Preview: The Rise of AI Technology and its Impact on M&A

It seems like overnight, artificial intelligence became the buzzword of the year for M&A dealmakers. Whether it’s business development professionals seeking high-growth AI investment targets, or dealmakers utilizing AI to streamline the due diligence process, middle-market investors have high hopes for the technology.

The topic of AI will certainly be front-and-center for many of the conversations to happen at this year’s DealMAX conference, especially during “The Rise of AI Technology and its Impact on M&A” panel. Richard Lichtenstein, Chief Private Equity Data Officer at Bain Consulting and one of the speakers on the panel, spoke with Middle Market Growth about his expectations for AI in dealmaking and what attendees can expect from his panel.

Middle Market Growth: The chatter around AI in M&A is growing. What points of the dealmaking process stand to see the most disruption?

Richard Lichtenstein: There are a few places in the process where AI has become a major focus area for most funds. Diligences frequently include questions on GenAI, and many funds have built GenAI scorecards that are filled out on every deal. Part of the question is whether GenAI will disrupt the business, but the more sophisticated investors are looking carefully at how GenAI (or AI and automation more broadly) will create upside. The upside can be either from new products or services the target can launch or from potential efficiencies. The same logic applies post-acquisition. For companies that you already own, what are the risks and opportunities?

Part of the question is whether GenAI will disrupt the business, but the more sophisticated investors are looking carefully at how GenAI (or AI and automation more broadly) will create upside.

Richard Lichtenstein

Bain Consulting

MMG: How can dealmakers and their partners determine what will be hype from what will make a real impact?

RL: There are a couple of things you can do to gain confidence in an idea before making a big investment:

Build a bot–with ChatGPT for Enterprise and similar tools you can create prototypes to test whether use cases are possible with LLMs. If the proof-of-concept (POC) works, that’s probably a good sign that you can build a full application that will actually solve your problem.

Related content: DealMAX Preview: What’s Next for Strategics?

Search for off-the-shelf solutions or add-ons to existing SaaS solutions that can do a certain task. Today, many of these existing solutions require significant customization to be fully useful, but the fact that they exist is a sign that the task is possible. For most companies, buying will be better than building when available, especially for use cases around efficiency and productivity.

MMG: What should attendees expect from The Rise of AI Technology and its Impact on M&A panel?

RL: The space is moving so quickly that there will be a lot to talk about in May that doesn’t exist right now. But, I’m sure we’ll be able to talk about the latest use cases that we see funds using for diligence, post-acquisition, and internal operations as well as the early results that they are seeing.

Join us Tuesday, April 30, 2024, at the Aria in Las Vegas for the The Rise of AI Technology and its Impact on M&A featured session. Purchase tickets at DealMAX.org.

Carolyn Vallejo is Middle Market Growth‘s Digital Editor.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.