Leverage AI and digital transformation to address people risks in M&A 

What does AI have to do with M&A? More than you might think. Artificial Intelligence (AI) and digital transformation have changed the way we approach people challenges and mitigate people risks in transactions. 

From data scraping and analytics to automation and generative AI, these cutting-edge tools are reshaping internal processes, transforming the human capital experience, and revolutionizing the work employees perform. As organizations delve into the potential of AI technologies, they are seeing a profound impact on every stage of the deal life cycle. Get ready for a paradigm shift as we explore how technology is redefining people elements in M&A, unlocking new possibilities, and challenging traditional norms.

It's easy to understand the appeal of AI in the context of Mergers and Acquisitions. M&A involves fast timelines and turnarounds, digestion of significant amounts of data (or lack thereof) in a short period of time, and overlapping dependencies between different workstreams. That makes it a natural target for AI technologies — which can drive speed and efficiency across the deal life cycle — including process improvements and efficiencies, improved deal intelligence, better deal decisions, improved risk identification, and cost reduction.

How will GenAI most impact M&A processes?

This chart is unable to display due to Privacy Settings.
The chart could not be loaded because the Privacy Settings are disabled. Under the "Manage Cookies" option in the footer, accept the “Functional cookies” and refresh the page to allow the chart to display.
The graphic shows the M&A areas that will be more affected by artificial intelligence. Process improvements and efficiencies are at the top.
From a people perspective, interdependent workstreams and the broad implications on people-related risks make the potential impact of AI technologies substantial. However, AI must be effectively managed to ensure that human capital and other deal professionals are not left behind the curve as organizations and individuals continue to learn more and integrate AI into their day to day lives. 

AI as a Business Imperative

While the term AI (Artificial Intelligence) is thrown around loosely, generative AI, data scraping and analytics, automation and related technologies have gained widespread attention since the release of ChatGPT in November 2022. Organizations are starting to notice both the capabilities and double-edged impact it can have on internal processes, the human experience, and the work outcomes we measure.

AI has become imperative in an environment of continuous uncertainty. Nearly half (48%) of executives expect that investing in AI will deliver substantial business growth this year and 39% specifically believe investing in Gen AI will substantially enhance productivity. Even more interesting, 1 in 4 predict it will fundamentally change their business model, and over half believe their company will not survive beyond 2030 without Generative AI technologies1.

Improving productivity by using generative AI

This chart is unable to display due to Privacy Settings.
The chart could not be loaded because the Privacy Settings are disabled. Under the "Manage Cookies" option in the footer, accept the “Functional cookies” and refresh the page to allow the chart to display.
This chart displays how generative artificial intelligence can enhance productivity, especially for analyzing large amounts of data, improving decision making and developing new products.

According to Mercer’s 2024 Global Talent Trends study, a majority of executives will continue focusing on AI and automation in the coming year. AI is expected to augment workforce efficiency to increase productivity by between 21% and 35% — in fact.

However, that same research also shows that many HR leaders and executives are still struggling to understand exactly how AI will add value. 

1 in 3

executives believe it will amplify human intelligence to enable higher quality output.

1 in 4

executives see the main contribution being around automation of tasks to reduce headcount costs.

1 in 2

executives believe generative AI will help analyze large amounts of data

4 in 10

executives believe AI will improve decision-making

4 in 10

executives believe AI will help their companies innovate and develop new products

These findings suggest we are still somewhat focused on doing things faster rather than exploring how teaming humans and machine can improve higher order applications and outcomes. 

Risks of AI in M&A

The use of AI and other technologies also has its fair share of risks when applied in an M&A setting. One obvious example is in the matter of privacy and security. The confidential nature of M&A work means data must be protected, and companies must ensure that deal data is not loaded into a public or non-secure AI environment.

Other risks include inaccurate information, bias, lack of context awareness, misinterpretation, security vulnerabilities, lack of transparency and accountability, legal risks, lack of human expertise just to name a few.

Despite these glaring concerns, 23% of companies have no mitigation in place to address risks associated with AI adoption1, which is alarming given more than 50% of employees say they use generative AI weekly at work2. In our opinion, these technologies in their current state should be used to supplement, not replace human capital teams’ M&A processes. Companies should make decisions about embedding AI technologies into internal processes only after detailed review with other key stakeholders (e.g. IT, legal, CorpDev, etc.) — and policies should be set accordingly.

All of this begs the question: Are we ready for AI? Mercer data shows that only 13% of executives believe that a majority of their workforce is ready to adapt to the new world of work, if their jobs were fundamentally changed or eliminated by AI & automation1.

AI and the M&A Playbook

One way to ensure that AI and other transformative technology is being applied to M&A in the most efficient and productive ways is to proactively integrate it into your M&A playbook.

M&A playbooks enable deal teams to work more efficiently and effectively through the application of a common structure, processes and tools that maximizes the deal team’s ability to drive desired outcomes. To adapt to both an environment of increased disruption and the rise of AI, Mercer’s M&A Advisory Services team has adapted our model, moving from a standardized approach with pre-defined scenarios, to a flexible approach, which enables human capital professionals to execute on different strategies and provide custom solutions for unique requirements of each deal.

Value of Mercer’s M&A playbook:

  • Increases speed and focus of M&A work by accelerating project planning and launch.
  • Improves accountability and decision-making by identifying the governance and team structure and roles required to support the deal.
  • Enables the team to maximize deal value through a knowledgeable approach, grounded in the deal rationale.
  • Provides a flexible approach model which enables HR to execute on different transaction types and strategies and provide custom solutions based on deal requirements.
  • Creates a common M&A framework for HR, including terminology, methodology, processes, and tools to facilitate the delivery of HR services and solutions in the end-to-end M&A process and ensures a consistent approach to human capital M&A globally.
  • Is easy to adopt and maintain and facilitates knowledge transfer to new staff.

Whether you are an organization that has an existing M&A playbook or in the process of developing one as you anticipate an uptick in M&A activity, you will want to develop an M&A playbook to account for these new technologies and their applicability to supplementing internal processes. This might even go as far as replacing certain manual aspects of the deal process to create speed and/or savings through efficiency.

Translating ideas into action can be a difficult task to navigate given the influx of AI-related technologies that have popped up over the past 18 months and the continuous improvement in capability; however, we see many organizations starting their journey to understand and utilize AI in their process. Through our experience working on over 1,000 transactions annually, we at Mercer have identified key areas across the deal life cycle where we believe the technology exists today to enhance how human capital supports the deal process and in many aspects, have proof points of success using these technologies in supporting companies’ people-specific M&A processes.

  • Target identification and assessment
  • High level workforce and skills assessment to inform the deal thesis
  • Market and industry trends impacting the workforce

Rapid intake and summation of significant amounts of data from a virtual data room - can include automation of extracting certain key elements of data (e.g. 401(k) plan design information from the plan document or publicly available 5500)

  • Plan documents
  • Benefit/Open Enrollment Guides
  • Employment agreements
  • EE handbooks

  • Smartsheet - Automation of follow-ups, notifications
  • Development and consolidation of project plans, interdependencies and end-state design
  • Project management support (i.e. summarizing meetings and action plans, tracking risks, issues & decisions, tracking roles, responsibilities & accountability based on key inputs)
  • Employee sentiment gathering / pulse assessments
  • Development of employment agreements

  • Development of communication materials by stakeholder groups
  • Change management KPI tracking and reporting
  • Chatbots to provide employee support

  • Quick digestion and summation of sites like Glassdoor
  • Review of open positions from sites like Indeed
  • Assessment of DEI/ESG initiatives
  • Leadership composition and skills
  • Preliminary culture assessments
  • Employee sentiment and culture
  • Headcount analytics - Preliminary view on organizational structure from scraping LinkedIn data (will not be a complete picture given not everyone is on LI, especially lower paid, blue collar employees, certain industries, etc.)
  • Customer sentiment

  • Benefits and compensation intelligence

  • Talent profile development
  • Key talent and skills identification
  • Fastest rising skills in Target and industry/competitors
  • Skills competitive advantage
  • Skills adjacency based on top 3-5 fastest rising skills
  • Tenure composition
  • Talent inflow and outflow insights
  • Assessment of overlapping roles to support synergy realization
  • Geographic availability of talent in specified regions
  • Diversity by gender and ethnicity in Target versus industry/competitors
  • Retention planning and design

  • Purchase agreements
  • TSA documents
  • Vendor contracts
  • Employee agreements

1 Mercer Global Talent Trends – 2024 Study

2 Oliver Wyman Forum analysis, Frontier Economics and Accenture.

About the author(s)
Related products for purchase
Related solutions
Related insights