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### Anticipating AI’s Initial Impact on the Firm Industry

With President Biden’s executive order on AI, we’re finally seeing a form of government action on t…

We are witnessing governmental initiatives regarding the advancement of technology, notably with President Biden’s executive order on artificial intelligence (AI), which has already influenced various industries. This action is expected to prompt the rapid integration of AI technologies across businesses and services used daily by consumers. Despite this, stricter oversight is likely to be implemented. In a recent discussion with Doug Cullen, the chief product and strategy officer at Datasite, a prominent player in facilitating mergers and acquisitions (M&A), insights were shared from a survey conducted among dealmakers regarding their perspectives on AI and where consumer attention should be directed.

Gary Drenik: Could you provide an overview of Datasite and its offerings?

Doug Cullen: Datasite is a top provider of cloud-based applications and solutions tailored for the M&A sector, equipping global dealmakers with the necessary tools to navigate the lifecycle of transactions successfully. With participants from over 180 countries finalizing their deals on Datasite, including 74 of the top 100 law firms and all 20 major economic consulting firms, the platform facilitates more than 14,000 new transactions annually. Notably, Datasite played a pivotal role in a third of the top 100 global deals in 2022.

Drenik: I understand that Datasite recently surveyed 500 M&A professionals regarding their views on artificial intelligence. What were the key findings?

Cullen: Certainly, AI is making waves in the realm of M&A, prompting our interest in understanding dealmakers’ sentiments towards these advancements. The survey revealed that dealmakers are keen on governmental oversight of generative AI (GenAI) before widespread integration into their operations. Approximately 73% of dealmakers across various industries in the US, UK, France, and Germany expressed the need for AI regulation. Despite a high level of familiarity with AI, with 90% of dealmakers claiming mild to extensive knowledge, over 60% indicated minimal adoption or experimental usage of GenAI within their firms. Concerns around data privacy and security, highlighted by 34% of respondents as the primary risks of GenAI implementation, may be hindering full-scale integration.

Drenik: According to a recent study on Advanced Analytics & Insight, 47% of executives leveraging ChatGPT primarily do so for research purposes. What types of deals are M&A professionals pursuing in the Technology, Media, and Telecommunications (TMT) industry?

Cullen: The ongoing advancements in data analytics, robotics, technology, and AI are propelling digital transformation as a key driver for businesses. To stay competitive and leverage technological progress, businesses are increasingly turning to M&A as a strategic avenue. Notably, the demand for cloud services is on the rise due to innovations like cloud-based AI and GenAI. Additionally, emerging technologies and evolving regulations, such as transitions towards net-zero policies, are creating new opportunities, particularly in the energy and power sectors. The US Inflation Reduction Act (IRA) has significantly boosted investments in energy security and climate change, injecting approximately $369 billion into the US energy and tech sectors.

Drenik: How might these developments impact end-users? Are there expectations of significant deals or disruptive offers that could alter their current landscape?

Cullen: The signing of the IRA has catalyzed the announcement of over 270 new clean energy projects, with investments exceeding \(130 billion. Notably, the IRA now includes a \)7,500 tax credit for US consumers purchasing new qualified plug-in electric vehicles or fuel cell electric vehicles, offering an alternative amid fluctuating gas prices. This incentive could appeal to the approximately 36% of adults planning to reduce driving and expenses due to volatile fuel costs.

Drenik: What aspects of M&A operations might shoppers be unaware of that occur behind the scenes?

Cullen: M&A deals are typically driven by strategic and economic motives, such as expanding market share or accessing new technologies, involving intricate financial and legal considerations. These transactions are governed by stringent legal and regulatory frameworks and often entail economic assessments like pricing evaluations and future cash flow projections, making them complex endeavors. Utilizing tools and technologies can streamline the M&A process, aiding in due diligence, deal sourcing, and integration planning. These tools enhance collaboration, ensure data security, and offer advanced insights and reporting capabilities, empowering users to make informed decisions.

Drenik: Fascinating insights indeed—it is evident that AI will continue to reshape client interactions globally. Doug, thank you for sharing your perspectives and providing a behind-the-scenes glimpse into the evolving landscape of M&A in the era of AI.

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Last modified: December 25, 2023
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