Companies involved in mergers and acquisitions appreciate how time-consuming these activities can be. This is especially true for larger companies that have literally thousands of existing contracts and policies. Any one of these could pose potential obstacles in reaching a negotiated agreement. Failure to identify such issues can be costly and lead to a variety of problems later. Yet, investing adequate time and resources into these pursuits is also burden companies involved as well. These are a few of the reasons many companies are turning to AI systems for mergers and acquisitions.
Artificial intelligence and robotics are being used in a variety of industries to facilitate higher quality, efficiency, and cost-effectiveness. The use of AI in healthcare, education, and manufacturing are just a few industries in this regard. Therefore, it’s perhaps not surprising that many companies are embracing technology with AI acquisitions. The use of these systems offers a number of advantages that traditional strategies don’t. This is a big reason why AI acquisitions and mergers are becoming more and more common. Companies that fail to see the benefits of this technology will soon be at a competitive disadvantage.
“[Our AI systems] derive structure from chaos. For example, we can tell what are the tables, price lists, clauses, and charts. We look at that with the robot and transfer it into structured data. What we do very well is having the ability to understand every little bit of the contract.” – Peter Wallqvist, CEO and Co-founder of Ravn
A Changing Merger and Acquisition Landscape
Traditionally, most mergers and acquisitions are relationship-focused. They consist of many handshakes, conferences, negotiations, and face-to-face conversations. But that notably changed with the pandemic. Companies considering mergers or acquisitions had to adapt to new tools. Videoconferencing and work-from-home environments replaced travel and in-person meetings. (Dive deeper into how innovation has reshaped videoconferencing technology in this Bold story.) In essence, the pandemic accelerated the digital transformation of many industries. Thus, it’s not that surprising that companies began evaluating AI systems for mergers and acquisitions as well.
AI mergers and AI acquisitions differ in many ways from traditional procedures. Instead of having legal teams sift through thousands of files over months, AI systems for mergers and acquisitions can accomplish this in hours to days. In fact, statistics show that AI acquisitions reduce attorney review time by as much as 95 percent. Using machine learning, statistical methods, and algorithmic processing, AI systems can examine massive amounts of data. For larger companies, AI acquisitions software can therefore save them handsomely in both time and money. This is why so many firms are making the switch.
“Companies and their lawyers often have to perform a cost-benefit analysis in areas like legal due diligence. [The challenge is whether to] perform a partial review of a database of documents and keep costs low, or perform a thorough review and blow through the budget.” – Adam Nguyen, Co-founder and Senior VP of eBrevia
Major Advantages of AI Mergers and AI Acquisitions
AI systems for mergers and acquisitions notably save time and money. However, these are not the only benefits of these systems. One of the most important advantages involves the ability to take emotions out of decision-making. By allowing AI acquisitions and mergers to proceed, data is analyzed objectively rather than subjectively. Inherent biases and opinions not substantiated by fact is removed from the situation. As a result, these systems allow firms to make better choices about whether they should proceed or not.
In addition to better decision-making information, AI systems for mergers and acquisitions also improve overall transparency. When companies agree to utilize artificial intelligence, they permit a more thorough and comprehensive analysis of the situation. This has notable benefits concerning risk mitigation and the detection of bias. The possibility that problematic terms or contracts are identified increase. Likewise, these systems can generally find potential liabilities or regulatory issues to a greater extent. These are added perks that AI mergers and AI acquisitions offer in their analysis.
“AI classifies and organizes data faster, better and cheaper, and augments human intelligence. It empowers people to make use of huge amounts of data to make better decisions and tell better stories.” – Jay Leib, Co-founder and Executive VP of NexLP
A Blossoming AI Mergers and AI Acquisitions Field
Over the last several years, a number of businesses have launched that offer AI systems for mergers and acquisitions. These systems are designed to address many different aspects of the entire AI process. Notably, when companies are considering mergers or acquisitions, several functional areas of the businesses must be evaluated. This not only includes existing contracts of both companies and their basic organizational structures. But it also includes data analysis of human resources, finances, R&D, asset management and operations. By using AI mergers and AI acquisitions software, these areas can be evaluated faster and more completely.
Understanding this, a variety of businesses now offer various AI systems for mergers and acquisitions. For example, Recommind provides an open text end-to-end eDiscovery AI system to assist with extensive file analyses. Another company, Kira, offers total due diligence assessments for companies entertaining mergers and acquisitions. And eBrevia utilizes AI mergers and AI acquisitions programs to perform contract analysis in multilingual formats. This is important for international mergers and acquisitions. Depending on a specific company’s needs in these areas, a variety of AI systems for merger and acquisitions now exist.
Less Time, Less Cost Means Better Resource Use
In traditional analyses for mergers and acquisitions, attorney costs can comprise as much as 30 percent of the total. Due diligence tasks in these areas account for a large chunk of time and money. However, the use of AI systems for mergers and acquisitions reduces these anywhere from 30 to 90 percent. As a result, companies enjoy opportunities to invest more into other productive areas. AI mergers and AI acquisitions programs can also identify roadblocks early that allow companies to abort negotiations. Given the advantages these systems provide, it’s not surprising they are being increasing leveraged. In fact, this is rapidly becoming the industry standard for those routinely involved in mergers and acquisitions.
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