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CEO Views on AI in Deals Amid Economic Shifts

AI | Sep 22, 2023

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The world of deal-making is undergoing a significant transformation, driven by technological advancements and shifting economic landscapes.

A CEO's Perspective on the Economy

  • The July 2023 EY CEO Outlook survey reveals that US CEOs are gearing up for what might be termed a "new normal" characterized by expensive capital and heightened volatility.
  • A striking 97% of US CEOs are preparing for a potential economic downturn in their primary market.
  • This cautious approach is not unfounded. The US, while showing signs of a possible "soft landing" due to factors like labor market resilience and moderating inflation, still presents uncertainties. CEOs are not banking on best-case scenarios but are instead fortifying their organizations for sustainable growth.

AI in Deal-Making - A Game Changer

  • AI's role in this evolving landscape is undeniable. A significant 80% of US CEOs have either already integrated AI into their products and services or plan to do so within the next year. However, the application and benefits of AI vary.

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  • AI and ML have the potential to revolutionize the merger and acquisition process. They can make the due diligence process more efficient by analyzing vast amounts of data quickly. Tools like Robotic Process Automation (RPA) can automate data analysis, and AI tools offer predictive modelling capabilities.
    • Interestingly, when asked about the use of AI in the transaction diligence process, 30% of US CEOs confirmed its application. However, a larger percentage (37%) are still in the initial stages. The emphasis seems to be on traditional business strategy principles, with a focus on value, capital structure, and corporate strategy.
  • A recent Business Insider article shed light on the evolving role of junior bankers. Gone are the days of mundane tasks and grueling hours. With AI's intervention, junior bankers can now focus on critical thinking and strategy, as repetitive tasks become automated. Financial giants like Deutsche Bank are already harnessing the power of generative AI, enabling junior bankers to work more efficiently and focus on building analytical skills.
  • But it's not just about automating tasks.
    • Generative AI is revolutionizing strategic planning, financial reporting, and stakeholder engagement. It's fostering a more agile and responsive financial environment, allowing leaders to break free from traditional constraints.
  • For fundraisers and deal-makers, this AI-driven transformation means:
    • Faster decision-making, accurate market trend analysis, and enhanced stakeholder communication.
    • The integration of AI tools can also lead to more personalized investor pitches, efficient document processing, and real-time risk assessment.

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  • Concerns still need to be addressed properly:
    • With AI processing large amounts of data, there are concerns about data breaches and privacy.
    • While AI is valuable, it cannot replace human intuition and understanding.
    • Heavy reliance on AI might lead to overlooking compliance requirements -> lack of governance.
    • AI as an Investment: Implementing AI requires significant investment in technology and possibly personnel.

Into the Future

In an era marked by rapid technological evolution and economic unpredictability, CEOs are at the forefront of navigating uncharted waters.

While the tools of tomorrow promise efficiency and innovation, the human element remains irreplaceable. The fusion of AI's capabilities with human insight will undoubtedly chart the future of deal-making, setting the stage for a more agile, informed, and strategic financial world.

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