The excitement surrounding Artificial Intelligence (AI) continues to grow as venture capital funds, private equity groups and accountancy firms have begun utilising AI to identify investment opportunities and acquisition targets. As investors become increasingly pressured to find the next big startup, AI appears to be helping assist dealmakers in their journey to an M&A deal. In light of this, Claire Trachet, CEO/founder of business advisory, Trachet, highlights the incentives and risks of implementing AI into the industry.

Companies such as KPMG, Coatue and Headline are leveraging AI tools to gain a competitive edge against rivals by enhancing their deal-making processes. In terms of deal-making, AI is being used to assess potential growth by utilising financial analysis, helping dealmakers make better and more informed decisions. In particular, KPMG has implemented OpenAI’s ChatGPT to assist its staff with advisory services. Similarly, Coatue is using AI to summarise information from various sources, like pitch decks and research reports. Pitchbook’s AI-driven tool, “VC exit predictor,” evaluates the likelihood of a company going public or being acquired, with the data provider claiming the tool had a 75% accuracy rate.

However, while this indicates a wealth of benefits for companies looking to become more efficient in their dealmaking processes, there remains a major concern surrounding the lack of human interaction within the process. Analysts foresee that by 2025, AI and data analysis will inform a significant portion of venture capital and early-stage investments. There have also been concerns raised about the potential bias AI embodies around gender and other factors, which could impact firms’ evaluations.