Financial professionals generally aren’t known for embracing the prospect of additional government regulation. However, a notable exception is coming vividly into view.
Given rampant concerns over the various security and ethical risks associated with the proliferation of artificial intelligence technologies, should governments regulate AI?
Absolutely, according to deal-makers, who suggest they’re wary of incorporating AI into their businesses without such regulation. In a new survey of 500 M&A professionals worldwide, almost three-quarters (73%) favored government involvement.
While there are many ways to categorize AI technologies, in the M&A sphere, the greatest concerns relate to “generative AI,” or GenAI, which creates brand-new content (high-quality text, images, code, data, 3-D renderings) from the vast quantities of data it’s trained on.
Deal-makers are well aware of GenAI’s promise, according to Datasite, a provider of M&A technology that conducted the survey. That covers everything from organizing and categorizing files in preparation for due diligence to powering data analysis to increase value and accelerate M&A integration.
“AI is already reshaping various phases of the deal-making process,” said Datasite CEO Rusty Wiley. “However, there is a healthy awareness of the challenges associated with GenAI, and acknowledgment that establishing systems, processes, and regulatory frameworks is critical to effectively harnessing its benefits and mitigating risks.”
While 90% of the deal-makers claimed moderate to extensive familiarity with AI, more than 60% said the adoption of GenAI at their organizations was low or that they were using it experimentally.
Although almost half (42%) of survey participants said productivity was the biggest benefit of using GenAI in their businesses, almost as many (36%) identified data security and privacy concerns as the biggest obstacle. That was a much bigger barrier than lack of competence or expertise (26%), GenAI’s immaturity or need for more validation (20%), and unclear use cases (12%).
One in seven deal-makers (14%) said they’ve seen a deal derailed because of concerns about GenAI.
Almost half of those surveyed said GenAI could speed up M&A deals by 26% to 50%. On the other hand, just 15% said it would help reduce M&A costs or improve risk identification.
Might M&A professionals have factored their personal circumstances into their dim view of GenAI aiding with efforts on costs and risks? More than half (52%) of the survey respondents anticipated that GenAI would increase their daily workload, and 51% expressed concerns about its impact on their employment.
According to Wiley, the employment concerns aren’t necessarily well-founded. “M&A is ultimately a relationships business, and people are essential to driving deals forward,” he said.
Almost half (43%) of deal-makers said they expect GenAI to be most disruptive to the technology/media/telecommunications sector, followed by financial services (24%) and life sciences (12%).
“With the [M&A] industry on the precipice of a massive shift in technological adoption, it will be important for deal-makers to ensure their business models are primed to leverage AI,” said Wiley