A recent EY study of 1,200 CEOs found that more than a quarter (27%) of respondents are already making significant use of artificial intelligence (AI) as a part of their mergers and acquisitions (M&A) process, with an additional 44% making initial forays in its application today, showcasing how CEOs are planning to future-proof their business for digital innovation.

Deals today are more competitive than ever, and the right acquisition targets are more difficult to identify and even more challenging to secure. AI can be leveraged to address the challenges of M&A from origination to integration and help drive transformative outcomes.

AI as a data cruncher

The traditional process of identifying suitable acquisition targets and conducting due diligence can be time-consuming. Enter AI, the ultimate data cruncher. By analyzing vast amounts of data from financial statements, internal and external structured and unstructured data, including market trends and even online sentiments, AI algorithms can swiftly narrow down potential targets and uncover insights that might have gone unnoticed. CEOs can now make informed decisions with a comprehensive understanding of a target company’s health, market standing, and potential risks.

Over the past decade, dealmaking has been transformed as more data is available to analyze, including alternative and unstructured data sources. The ability to centralize diverse data sources that can fuel AI algorithms will unlock a whole new lens through which to assess potential deals.

Predictive analytics to inform decision-making

One of the most powerful applications of AI in M&A is predictive analytics. By leveraging historical data and advanced algorithms, CEOs can gain a glimpse into the future performance of a merged entity. AI models can forecast potential synergies, revenue growth, and operational efficiencies, providing CEOs with a clearer picture of the value a deal can bring. This foresight allows CEOs to confidently navigate negotiations, set realistic expectations, and avoid potentially non-lucrative deals.

AI as an optimizer post-integration

The journey doesn’t end with the deal. In fact, it’s just the beginning. Integrating two distinct entities can be riddled with challenges, from cultural clashes to operational inefficiencies. Here, AI can be a guiding light. CEOs can employ AI-powered tools to analyze data from both merging companies and identify areas for optimization. Whether it’s streamlining supply chains, harmonizing IT systems, or enhancing customer experiences, AI-driven insights pave the way for a smoother integration process and faster realization of synergies.

The convergence of AI and M&A presents a new frontier of possibilities. By integrating AI into the M&A process, unprecedented insight can be unlocked, increasing the odds of successful outcomes. As CEOs embark on their next M&A journey, they need to let AI be a strategic ally, guiding toward a future where decisions are smarter, synergies are maximized, and success is redefined. The power is in their hands–or rather, in the algorithms that can propel their vision forward.

Andrea Guerzoni is EY’s Global Vice Chair for Strategy and Transactions. The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

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