The resurgence of interest in artificial intelligence (AI) within the business community is anticipated to catalyze a surge in merger and acquisition (M&A) activities in the coming year. Analysts tracking dealmaking trends suggest that after a slowdown that persisted through 2022 and into 2023, M&A may experience a turnaround. Factors contributing to this potential upswing include stabilized interest rates, moderated inflation, and a growing apprehension among companies about falling behind in the race to acquire new AI capabilities.
Daniel Friedman, the global leader of the transactions and integrations practice at Boston Consulting Group, expressed optimism about increased deals in the next 12 to 24 months. The latter part of 2022 and a significant portion of 2023 witnessed challenges in M&A due to rising interest rates, geopolitical tensions, and recession fears. However, recent improvements in economic conditions have positioned many companies to strategically invest in vital areas such as digitization and AI.
With interest rates on a downward trend and inflation becoming more manageable, Friedman anticipates a rise in dealmaking, particularly in AI and technology. Willis Towers Watson predicts a "seismic shift" in M&A dealmaking in 2024, driven by the growing prominence of AI. Companies are expected to seek ways to incorporate AI into their operational portfolios, recognizing its transformative potential.
Further, David Dean, Managing Director of Global M&A at WTW, highlighted the possibility of AI playing a more significant role in the M&A process itself. AI tools, such as generative AI, could expedite the evaluation of potential targets, adding efficiency to M&A services.
The aggregate value of global M&A transactions related to AI witnessed a 23% growth to $75 billion in 2023 compared to the previous year, even though the number of deals decreased by approximately 7%. The importance of AI in technology
As the AI frenzy continues, technology companies are at the forefront of AI-related acquisitions, but the trend is broader, reflecting a strategic move by companies across various sectors to harness the transformative power of artificial intelligence.
