Did the AI discussion just shift?
A month ago at Wharton San Francisco there was only theoretical interest in AI in M&A.
Last week the discussion was different. It was specific.
At the M&A Forum in Atlanta there were smart questions being asked, in particular by Tim Williamson (Salesforce). Should dealmakers A/B test AI for diligence? If so, is that during a live deal? If not, what data do you use?
Is the real opportunity in contract diligence, asked Joe Gagen (Cisco), who pointed to change in control, notice, and expiration as the most clear use case.
Did someone say a 24 month outside date?
Speaking at the annual Berkeley Spring Forum on M&A and the Boardroom, David Altschuler (Salesforce) and Kevin Yingling (Google) caught our attention with comments on the prospect of a 2 year close.
Sure, the regulatory environment is murky and slowing deals.
And the FTC’s concern re: competition between Coach, Kate Spade, and Michael Kors, etc. over wages and benefits will take time to sort out.
Expect more negotiation on stair-stepped interim operating covenants.
Is the cost of capital set for 2024?
As it appears the Fed is holding steady through the election, it will be interesting to see what professor Damodaran (NYU Stern) has to say during his upcoming M&A Master Class (5/31) on missteps to head off in DCF formulations.
His Musings on Markets are always an interesting read.
Expect a very candid look at how dealmaking tends to erode value.
Can you really spot bias in the deal model?
Revenue synergies are hard to achieve. Negative synergies are hard to even see.
Are there tricks to refining the model? Can you shift the diligence time allocation to get a better result?
These questions will be addressed by Kevin Hutchins (Juniper Networks / Santa Clara U), who is leading the M&A Diligence Master Class (Fri).
His coverage will include the latest M&A Research from the Institute, following a survey on improving the diligence process.
Speaking of the Institute’s latest survey...
Asking member’s about current M&A diligence priorities, we found a third are looking at AI and 15% are actually using it and getting value - mostly for contract reviews.
Commercial synergies and cyber are frontier issues. Speed is intriguing. Some reported in-progress pilots.
With that said, improving core diligence techniques and methods is a higher priority for most.
Lubricants needed?
In the upcoming Delivering the Deal podcast (Mercer) the Institute’s Executive Director will be discussing non-monetary rewards that can provide an attractive addition to a holistic retention strategy.
Should we be using sports tickets, wine tastings, vacations, etc. to grease the rough edges that come from deal making?
Can you get that into the deal expense budget?