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Driverless cars. Facial recognition. Workplace automation. Computer vision. The once-imagined applications of artificial intelligence (AI) are becoming a reality for businesses in different industries. Along with its potential to overhaul business models, AI is also beginning to have a significant impact on dealmaking.
Recently l led a panel discussion on technology in deals at PwC’s Deals Exchange. Executive dealmakers from some of the world’s top companies came together to talk about the biggest issues they’re grappling with as they consider transactions to move their businesses forward. It was no surprise that advanced analytics and the emergence of AI were hot topics.
In a real-time survey, 76% of attendees said AI is the technology most likely to disrupt deal strategy in the near future. Even though companies might not be taking full advantage of more basic analytic technologies, such as predictive and prescriptive analytics, we agree AI is going to play an increasingly important role in deal strategy and execution. Companies that understand the applications of this technology will have an advantage over their competition.
Many deals require a review of enormous amounts of contractual and financial data to determine a company’s worth. According to Gartner analysts*, more than 80% of enterprise data today is unstructured, made up of non-financial data such as contracts, social media comments and email conversations. It’s difficult to digest and extract value from this data, so it often goes underused.
My Deal Analytics team has worked with companies to rapidly analyze such data, using machine learning and natural language processing to help review large amounts of text and identify outliers. The technology learns as it goes, increasing confidence in the results. Visualization technology is often used to then develop deeper, more agile insights in real time.
Advanced use of AI also has enabled our deals professionals to extract deeper insights that could have a big impact on M&A, divestitures and other deals. As the number of structured data sets for a particular industry grows, AI can enhance insights on increasingly complex questions and be more predictive in nature. At PwC, we assist clients with thousands of deals a year, which provides the critical foundation for these types of analytics that enable more confidence in forecasts and synergy estimates ahead of a deal decision.
For companies to truly benefit from AI, they need to make the proper preparations today. Similar to deal investments, much of the success is determined by how you plan and execute strategies early in the process. In deal terms, this means four things: Invest in people, build a technology foundation, standardize your approach and enable innovation.
AI won’t just magically change deal decision-making and investment returns overnight. However, deals applications of AI technology will continue to broaden across industries and the deal process over time – and then reach more of a tipping point. With the right guidance, businesses can use AI to find data-driven insights to help them make better decisions faster – and position them for success in a fast-evolving landscape of technology and advanced analytics techniques. Companies and private equity firms who establish a clear road map early on will gain an advantage in dealmaking of the future.