Artificial Intelligence is now a core factor in mergers and acquisitions, influencing acquisition strategy, risk assessment and deal mechanics across sectors. Buyers are targeting companies with advanced Artificial Intelligence capabilities, proprietary datasets or exposure to growing demand for computing infrastructure such as data centres and energy providers, while becoming more cautious about legacy businesses that have not embraced technological change. A target’s approach to Artificial Intelligence adoption and its vulnerability to Artificial Intelligence driven disruption is becoming central to long term prospects, raising questions about the sustainability of Artificial Intelligence related revenues, the pace of technological obsolescence and whether value resides more in software or in underlying data.
As Artificial Intelligence capabilities become more important to enterprise value, due diligence must probe far beyond traditional software and intellectual property reviews. Buyers need to verify whether purported Artificial Intelligence is genuinely sophisticated technology or relatively simple automation, and diligence should examine how the Artificial Intelligence was developed, the extent of its integration into products and systems, its use of trade secrets and confidential information, the nature and type of training content and how outputs are used. Legal diligence must assess regulatory compliance, including data protection and intellectual property, and anticipate heightened scrutiny of Artificial Intelligence related deals that may affect national security, competition or data concentration. Because valuing Artificial Intelligence assets is difficult and future performance uncertain, parties are relying more on tools such as earnouts, equity rollovers and escrow holdbacks to bridge valuation gaps and link consideration to performance and technology verification.
Artificial Intelligence is also changing deal documentation and execution practices. At the confidentiality stage, there is rising concern that recipients may upload sensitive information into Artificial Intelligence tools whose models can use that data, so parties are starting to add specific Artificial Intelligence clauses to non disclosure agreements, ranging from relying on existing protections to imposing conditional or stricter bans in highly sensitive or Artificial Intelligence centric transactions. Where Artificial Intelligence is central to the deal rationale, buyers seek robust contractual protections around ownership, training data, regulatory compliance and performance claims, and pay close attention to interim covenants between signing and closing so that rapidly evolving Artificial Intelligence assets are preserved yet appropriately updated. On the execution side, private equity, venture capital and other acquirers are using Artificial Intelligence platforms to accelerate analytics and target assessment, while legal advisers are applying generative Artificial Intelligence to summarise documents, identify key provisions and flag risks, with the clear recognition that human legal expertise remains essential to review and validate outputs. Looking ahead, Artificial Intelligence is expected to continue redefining the mergers and acquisitions landscape, and businesses that understand these dynamics and work with informed advisers will be best positioned to capture value.
