Artificial Intelligence continues to be a must-have for businesses across industries—and executives are taking note. In the next 12 months, nearly three-quarters of respondents believe that M&A dealmakers will target acquisitions of companies offering AI solutions (71%), operating companies that successfully implement AI solutions (73%), and companies offering AI infrastructure (71%), largely related to software solutions and data security.

In Q1 alone, 55 AI startups saw M&A exits, compared to just 38 deals in Q4 of 2023. Meanwhile, 2024 is on track to be the second biggest year ever for data center M&A in North America by deal value, according to Mergermarket data. With private equity buyers and strategics, like Microsoft and Nvidia, flush with cash, it’s likely such activity will only continue in the year to come.  

“Public markets got excited about AI companies and priced them for a prosperous future,” Ballantine says. “But how long it takes for providers to increase their earnings depends on operating companies’ ability to implement it. Like the internet, it may take a while to see ROI.”

AI will also have a positive impact on M&A processes and efficiencies, say 78% of our survey respondents. Of this group, most cited risk analysis (51%), deal/valuation analysis (48%), deal processing (48%), and due diligence (45%) as the areas they expect AI will impact. Legal research (36%), target screening (30%), and contract drafting (30%) were less popular applications—and the latter two in particular saw steep drop offs from last year, suggesting that these anticipated uses may have not been borne out in practice.

But leveraging AI in the dealmaking process also creates new risks, from data privacy and security (cited by half of all respondents) and inaccurate predictions/analysis (42%) to a lack of transparency and explainability (35%). Only 7% of respondents saw no risks for dealmakers when it comes to AI.

“2024 may be the year dealmakers really lay the groundwork for AI integration into the M&A process,” says Wilhelm Lieberman, Dykema Member and Director of the firm’s Business Services Department. “Advancements in AI promise to enhance efficiencies and decision-making, but it's crucial to remain vigilant about the new risks AI introduces, such as data privacy concerns and the potential for inaccurate predictions. The potential of AI will need to be balanced with careful management in order to leverage AI’s full benefits in dealmaking.”