According to an interview with Anu Aiyengar, the global head of M&A at JPMorgan, the growing influence of artificial intelligence (AI) may be impacting the M&A landscape. While AI has sparked enthusiasm in the economy, it has also instilled fear among potential deal-makers who worry about the possibility of disruptive technologies undermining the value of their investments.
Aiyengar revealed that concerns over disintermediation by AI, the internet, or other technologies could lead investors to hesitate when considering potential business acquisitions. Many individuals are hesitant to analyze the impact of AI on their business, making it difficult to make informed decisions. As a result, decision-makers in boardrooms are now faced with the choice of whether to proceed with existing deals or wait for better opportunities that offer superior capabilities at a lower cost.
The uncertainty surrounding the ultimate impact of AI in the business world compounds these concerns, ultimately hindering M&A activity. This year, global M&A transactions, amounting to approximately $2.5 trillion, have declined by 21% compared to the previous year, according to LSEG, a decline experienced since 2021.
Aiyengar identifies various factors behind this decline, including the disparity between seller price expectations and buyer willingness to pay. Other elements contributing to the uncertainties include inflation, fluctuating interest rates, changing consumer behaviors post-COVID, geopolitical circumstances, forthcoming worldwide elections in 2024, and increasing antitrust scrutiny.
The impact of AI on M&A is becoming an important consideration that potential investors and deal-makers cannot ignore. As the global business landscape continues to evolve, navigating the uncertainties that arise from technological advancements and their potential disruptions will be a critical aspect of successful M&A strategies.
Source (CNBC)
