All Regions Expect AI to Cut Due Diligence Time to Three Months or Less By 2025
Minneapolis, Minn., September 24, 2020 – Not only will new technologies reduce the time it takes to conduct due diligence to one month or less by 2025, but dealmakers in the Americas will be the first to adopt them. This is according to findings from The New State of M&A report from Datasite®, a leading cloud-based technology provider for the M&A industry, and Euromoney Thought Leadership Consulting, a leading source of research and content for global business leaders.
The report, which is based on a survey of over 2,200 M&A practitioners from corporations, private equity firms, investments banks, law and professional services firms across the Americas, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) on the current state and future outlook for M&A, shows that more than half of the respondents (56%) predict that by 2025, due diligence will take, on average, less than one month to complete, as new technologies like artificial intelligence will change the mergers and acquisitions (M&A) process by automating some portion of the lengthy process. This compares to 64% of EMEA practitioners, and 66% of APAC practitioners who said due diligence will take one to three months to complete. The sentiment was even more pronounced in the Americas, where 69% of 702 dealmakers – the highest percentage across all regions – say the process will take less than one month to complete.
More dealmakers in the Americas (77%) also assess a high level of digital M&A technological maturity and sophistication at their company and industry-wide compared to their peers in EMEA and APAC. Additionally, among the Americas dealmakers, US dealmakers are leading the way, a result of its global leadership in finance, financial advisory and technology, as well as its investment in technology.
“The due diligence process is critical to the M&A life cycle, and as more companies are expected to adopt AI and machine learning technologies in the next five years, we will see a surge in deals closing with increased efficiency,” said Rusty Wiley, Chief Executive Officer of Datasite. “By leaning into new technologies, organizations are enabling their practitioners with the tools needed to be successful within a modern, rapidly changing M&A landscape.”
Still, Americas dealmakers acknowledge that adoption challenges remain, including the rigidity of their company’s organizational structure which may act as a barrier to adopting new M&A processes associated with digital technologies.
Environmental, social and governance (ESG) criteria as a consideration in M&A due diligence is also gaining in importance, particularly amongst Americas dealmakers. While most dealmakers in all three regions say ESG criteria is an important or very important consideration, a full 72% of Americas respondents – the highest across the regions – predict that by 2025, ESG will become a very important factor in the deal making process, a significant increase from today’s 16%.
Other key findings from the report include:
The survey was conducted by Euromoney Thought Leadership Consulting for Datasite between February and April 2020. To learn more about the new findings, please visit: www.datasite.com.
Datasite is a leading SaaS 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
About Euromoney Thought Leadership Consulting
Euromoney Thought Leadership Consulting specializes in creating original, authoritative and impactful thematic research and content for global business and finance leaders.
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