By: Luis Gerardo Ramírez Villela
The use of artificial intelligence in M&A transactions may be helpful in the upcoming years for purposes of analyzing the relevant markets, competitors’ strategies and transactional precedents that could serve for the drafting of the corresponding purchase agreements.
Although some artificial intelligence products are currently being used and provide a more data-driven strategy for pursuing and closing M&A transactions, soon we might encounter more sophisticated platforms that will allow us to define better strategies not only for the due diligence process but for the closing of such transactions.
Some of the uses of artificial intelligence platforms include:
Target Information – There are specific platforms which allow for investigating precedents from the target company and its shareholders, as well as specific strategic and financial information which could serve as a starting point to negotiate the letter of intent and start formally the acquisitions process.
Due Diligence – The use of some platforms may allow not only carrying out a more comprehensive and quick due diligence process, but also to be more precise on the wording to be used while preparing the due diligence report and the red flags identified during such process.
This process would not be limited to legal information and documentation but would also assist accounting, financial and tax advisors during the process and allow all the due diligence team members to align within the results of the review process and facilitate risk identification.
Negotiations & Price Determination – Analyzing market conditions and competitors’ performance might be easier with the use of artificial intelligence and that may simplify and accelerate the process to determine an estimate price for purposes of the business negotiations. Please note that some platforms may carry out valuations in real-time which could give more value to the process.
Notwithstanding that the negotiations will be between the target and the purchaser – including its advisors – the artificial intelligence may assist them in specific details of other similar transactions.
Contract Drafting – Artificial intelligence may also assist in the drafting of the corresponding purchase agreement by efficiency searches of precedents and clauses that could complement the structure in place for the specific agreement.
Please note that although platforms assist in providing clauses and other specifics, it is always necessary to review accordingly and draft every agreement as from scratch to avoid any potential conflict in the negotiation and execution of such agreement.
As we can see, artificial intelligence is and will be beneficial for carrying out M&A transactions, but it should be noted that the human factor continues to be of high importance for carrying out all of the steps in connection with the closing of these type of transactions.
