Generative AI is reshaping the M&A journey, but dealmakers shouldn't ignore the challenges associated with the new technology.

• During a recent Harvard Business Review Analytic Services webinar, sponsored by Datasite, Chad Burton, chief operating officer of investment banking at Piper Sandler, and Nigel Cannings, CEO of Intelligent Voice, discussed solutions to these challenges and what lies ahead.

First things first: Most dealmakers say increased productivity is the biggest benefit of generative AI and that the technology has the potential to speed up deals by 50%, a 2023 Datasite survey of 500 dealmakers found.

• The technology is already improving the speed and accuracy of research, including relevant deal precedents and buyer recommendations for pitches.
• New advances can also transform due diligence, helping dealmakers quickly sort and summarize content.

An example: Burton is seeing the benefits of using generative AI at Piper Sandler.

• "What we're seeing is both an efficiency in adding potential buyers unknown to us at the time or augmenting the list we already have and then, as we go out to clients, it becomes a seamless process between curating the list and the outreach," he said in a recent Datasite webinar. "We've already seen the reduction of human error."
• These initial efficiencies can create opportunities — and even promote work-life balance for those in the banking industry.

Okay, but: Dealmakers are grappling with the technology's data privacy and security risks.

• For example, Burton said Piper Sandler does not allow the use of a popular chatbot due to privacy and security concerns.

Here's what else: There's also a generative AI skills gap in the workforce.

• A recent global survey by Harvard Business Review Analytic Services found that "a lack of talent with necessary skills/knowledge" is the No. 1 barrier to organizations using generative AI.

Cannings' biggest concern with using generative AI in the workforce is that it'll create another gap: an expertise gap. If not used responsibly, it has the potential to deskill the workforce.

• "How are we going to train the experts of tomorrow?" he said. "Because we still need human beings at the top who ultimately can answer the hard questions… The person who answers the hardest question in the call center is actually the person who started one day on the phone answering very routine questions."

A solution: To maximize impact and ensure security, organizations should only engage with trusted partners.

• Cannings, CEO of transcription solution Intelligent Voice, has observed an uptick in the use of third-party generative AI solution providers who are already trusted experts in the field.
• Burton concurred: "What we have found easiest is to partner externally with third-party providers — Datasite being a great example."

What you need to know: The M&A management platform Datasite has leveraged AI and machine learning for several years to make the deal management process more effective and efficient.

• Datasite's application has been trained on more than 4 million documents and an M&A vocabulary of more than 400,000 words so it can automate the categorization of thousands of documents in minutes — even allocating and indexing them into appropriate folders.

The strategy: Cannings emphasized the importance of using the technology to coexist with humans and augment processes — not replace them.

• Burton shared that Piper Sandler recently launched a training program for 120 employees, who already have baseline experience and expertise in finance, to start developing their AI skill sets, including how to use prompts and manage datasets.
• "We've been seeing that evolution of expertise going from execution in Excel to really abstract and creative," he said. "The efficiencies really start to change and accelerate."

Next steps: For dealmakers who want to introduce AI into the M&A process, Cannings recommended first training employees on the dangers of generative AI.

• He also emphasized the positive impact of using third-party service providers, who've already thought through and addressed these problems.

The takeaway: Generative AI is here to stay, and it has the potential to massively improve the efficiency and effectiveness of the M&A process as long as dealmakers approach it with tact.

• "It's going to be revolutionary," Cannings said.

Watch the webinar on demand for more.