Recently our team was solicited by what was represented to us a pure AI M&A solution. The representations that were made sounded super intriguing, such as:
- We can save 90% of your time in researching buyers for your clients
- We can produce your confidential information memoranda in minutes – not weeks
- We can prepare valuation models in mere seconds
- We can send list of precedent transactions also in mere seconds
Since time is our most precious resource, we wanted to take a moment to determine what we could learn from investigating this novel AI resource and see if it could be valuable in delivering value to our clients and to us. So we asked them to send an example of their work product and we gave them a description of our client’s business – which was a training and consulting business. In fairly short order, although not within 24 hours, they sent us a screenshot of a sample buyers list for this client of ours. Here’s what they sent and we wanted to take a moment and share our thoughts about this AI-generated work product.
The screenshot above lists the top 15 strongest strategic buyers generated from their AI tool. We highlighted in yellow the list of strategic buyers this AI-generated tool recommended. This list is also presented and ranked from most acquisitive to least acquisitive, implying that we should be targeting the most active and aggressive acquirers.
At closer look, most good M&A professionals should rest easy that their job is safe for the time being. This list is absolutely wild and so far off base that it is quite laughable. Why would an insurance company have interest in a business consulting company? We also see an engineering business in here and JLL, a real estate advisory and brokerage firm…huh? In fact, of the top 15 proposed strategic acquirers on this list, not one makes any strategic sense. And worst of all, if we were to have contacted them, or if we were to propose such names to our client, we’d lose credibility and trust, the two elements most needed in any M&A process.
All that said, it is obvious this AI will get much, much better. And in fairness to this AI, our client’s business was not super straightforward and quite unique. Had our client’s business been more run-of-the-mill, then I would expect the above list would have been much more on point. We will continue to monitor how this technology improves and evolves and we will be sure to embrace it when we believe that it can enhance the work we do for our clients.
And in the meantime, we are investing in our own technology and expect to have our own AI in the near future. Stay tuned…
