How GenAI Can Help Find M&A Targets: Private Equity Meets Hi-Tech
Private equity has shifted its stance from the days of taking over targets, with the goal of either flipping them to an interested acquirer or spinning them off into an initial public offering.
Buy-side competition is heating up. PE firms are now wielding artificial intelligence (AI) to discern which companies offer reliable, scalable, and secure products, as well as give them a first-to-market advantage.
According to analysts at Deloitte, generative artificial intelligence, or GenAI, can help identify the best opportunities.
“Product differentiators need to be fully understood to inform the deal thesis and value drivers,” said Nicolas Quintana da Silva, partner at Deloitte.
A More Systematic Approach To Investing
Thus, due diligence considerations need to take a systematic approach to “equip buyers and investors with a comprehensive understanding” of what to look for in an investment.
“From leveraging proprietary data sets to designing user-oriented workflows or an intuitive customer experience, understanding a target’s ability to create customer ‘stickiness’ is essential when forecasting growth and market share against evolving competitors,” said Quintana da Silva.
Large language models, such as OpenAI‘s GPT system are more designed to handle conversational interactions, but are not currently efficient at managing workflows and rules-driven processes.
Quintana da Silva said: “Platforms that are able to effectively complement GenAI outputs with visual cues, citations, feedback mechanisms, and explanations of a model’s decisions will build customer trust and may also realize rich usability data that can itself be inherently differentiated and valuable.”
