Most global M&A dealmakers want AI regulated: Datasite® survey

Data security and privacy are seen as biggest obstacles to incorporating technology into business

MINNEAPOLIS, Minn. – Oct 11, 2023 – With growing global concerns surrounding the risks associated with artificial intelligence (AI), particularly generative AI (GenAI), dealmakers want governments to regulate the technology ahead of widely incorporating it into their business, according to findings from new survey by Datasite, a leading SaaS-based technology provider for global mergers and acquisitions (M&A) professionals.

Almost three quarters (73%) of 500 global dealmakers surveyed across the US, UK, France, and Germany said governments should regulate AI. Additionally, while 90% of dealmakers said they have moderate to extensive familiarity with AI, more than 60% said adoption of GenAI at their own organizations was low or that they were using it experimentally, suggesting personal familiarity has yet to translate into their work. This may be driven by data privacy and security concerns, which most dealmakers (34%) identified as the greatest risk to using GenAI in their business, followed by job displacement (25%), quality control (20%), and intellectual property rights and bias and fairness (9%).

“From automating manual, repetitive tasks, such as organizing and categorizing files in preparation of due diligence, to powering data analysis to increase value and accelerate M&A integration, AI is already reshaping various phases of the dealmaking process,” said Rusty Wiley, Chief Executive Officer at Datasite. “However, there is a healthy awareness of the challenges associated with GenAI, and acknowledgment that establishing systems, processes and regulatory frameworks are critical to effectively harnessing its benefits and mitigating risks.”

In fact, while almost half (42%) of global dealmakers said productivity was the biggest benefit of using GenAI in their business, 36% identified data security and privacy concerns as the biggest obstacle to incorporating GenAI in their business, ahead of other barriers, such as a lack of competence and expertise (26%), GenAI’s immaturity or need for more validation (20%), and unclear application use case (12%).

When it comes to deal management, the biggest opportunities are in streamlining processes rather than driving outcomes. Dealmakers expect GenAI to have the most impact on improving processes, followed by improving deal intelligence and making better deal decisions. Furthermore, while more than half of the dealmakers surveyed said GenAI could speed up M&A deals by 26-50%, just 15% said it would help reduce M&A costs or improve risk identification. 

While recognizing these opportunities, further integrating GenAI into daily dealmaking processes is expected to present upfront teething issues, such as AI anxiety. Over half of dealmakers anticipate that GenAI will increase their daily workload (47%), while a similar portion (47%) expressed concerns about its impact on their employment.

“M&A is ultimately a relationships business, and people are essential to driving deals forward,” Wiley continued. “As an industry on the precipice of a massive shift in technological adoption, it will be important for dealmakers to ensure their business models are primed to leverage AI to increase efficiency, apply sharper insights and ultimately improve deal outcomes.”

Other key findings from the survey include:

• 43% of dealmakers expect GenAI to be the most disruptive to the technology, media and telecommunications sector, followed by financial services (24%) and healthcare and life sciences (12%).
• 33% of dealmakers expect software engineering to drive the most GenAI-related M&A opportunities in the next five years, followed by research and development (25%) and marketing and sales (24%)
• Three in ten dealmakers (30%) said security, privacy and compliance was the biggest factor to sink a GenAI deal, followed by data and data quality, competence and expertise, transparency and explainability, and technology validation.
• 14% of dealmakers said they have seen a deal derailed because of concerns about GenAI.

To help dealmakers capitalize on AI-driven opportunities, Datasite introduced Datasite Intelligence, an AI-powered search engine that helps dealmakers get better and faster deal searches for pitches. The application uses natural language processing and advanced AI technologies to improve the speed and accuracy of research, including relevant deal precedents and buyer recommendations, which are based on anonymized private equity activity from Datasite’s closed and secure platform, one of the largest active transaction databases in the world.

“The application facilitates faster, more informed decision-making,” said Doug Cullen, Chief Strategy and Product Officer at Datasite. “For example, it can help generate a targeted list of deal precedents and buyer lists in minutes, or surface potential buyers based on real time activity, not past history.”

Dealmakers in more than 180 countries make their deals in Datasite, including 74 of the top 100 legal firms and all the top 20 global financial advisory firms. In 2022, Datasite facilitated more than a quarter of the top 100 global deals.

Datasite’s global dealmaker survey spotlights attitudes, behaviors, and forward-gazing predictions from 500 dealmakers around the globe, exploring their perspectives on GAI’s impact on disruption and innovation in M&A ahead of the international AI summit to be hosted in the UK. The survey was conducted in August 2023.

To learn more about Datasite, please visit: www.datasite.com

About Datasite

Datasite is a leading SaaS (software as a service) provider for the M&A industry, empowering dealmakers around the world with the tools they need to succeed across the entire deal lifecycle. For more information, visit www.datasite.com