AI Use To Improve Processes Among Gartner’s Top Trends In M&A For 2024

Renewed focus on technology to drive reentry into the M&A market in 2024.

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Research and consulting firm Gartner has announced the top trends in the mergers and acquisitions space for 2024. These include unlocking technology M&A opportunities amid macroeconomic ambiguity, using artificial intelligence to improve M&A processes, acquiring AI-based businesses and navigating an increasingly complex regulatory environment.

Global M&A activity has continued its downward trend from record levels in 2021, falling 50% from its peak. Macroeconomic and regulatory challenges will continue to drive the trend, “but a renewed focus on technology, particularly AI, provides tailwinds for executives to reenter the M&A market in a big way next year,” remarked Mark Carroll, vice president analyst at Gartner.

According to Gartner, M&A remains a growth engine for most enterprises. So, in 2024, success will largely depend on how executives adjust to the current market trends. “Delivering M&A success will mean positioning their enterprises for market leadership for many years to come,” said Chris Ganly, VP team manager at Gartner.

Below are the M&A trends identified by Gartner:

Macroeconomic Ambiguity Unlocks Technology M&A Opportunities

Macroeconomic uncertainty is expected to continue in 2024, according to Gartner, with a combination of positive and negative signals distorting expectations on inflation, recession, employment, cost of capital, and business and consumer confidence.

Previously expensive startup technology companies will struggle to raise their next round of venture funding and will be seeking alternatives, which include being acquired by strategic buyers. Gartner recommends that well-capitalised enterprises take advantage of this by pursuing acquisitions of smaller technology-focused businesses with lower valuations and less access to funding than would typically be available in clearer economic conditions.

AI Use Will Improve M&A Process

The use of AI will have a significant impact on improving the speed, efficiency, and performance of M&A processes, according to Gartner. The specifics of how or where AI will be used in the short and long term continue to emerge.

Gartner recommends applying AI within internal M&A processes first by developing and testing diverse use cases. Currently, contract analytics is an impactful application for using AI to improve activities tied to letter of intent negotiation, contract due diligence, definitive agreement and transition services agreement negotiation, and contract renewals and integration.

AI Strategy Will Require New Approaches For Acquiring AI-Based Businesses

While M&As of AI-based businesses are not trending yet for enterprises, Gartner believes enterprise focus on AI will lead to a wave of deal activity in 2024. According to the 2023 Gartner CEO and Senior Business Executive Survey, AI was identified as the top disruptive technology impacting industries.

Gartner recommends that acquisition of AI businesses needs to be a priority in business strategies. Organisations that lack the expertise or time to build capabilities can use M&A to gain access to AI.

Regulatory Scrutiny Will Hinder Large M&A Activity

According to Gartner, regulatory monitoring of M&A transactions is growing and will remain a significant obstacle to big M&A deals in 2024, particularly on the grounds of national security and anti-competition. However, this trend increases the appeal of executing a large number of smaller, industry-diverse M&A deals.

“Sharper regulatory scrutiny, which can have a chilling effect on large M&A transactions, can also create a competitive opportunity for enterprises best positioned to complete a higher volume of smaller deals,” said Ganly.