How AI is driving deal-making, but also fears of disruption, according to JPMorgan global M&A head

The AI enthusiasm that has burst into the economy in 2023 has already emboldened several buyers, particularly in the large-cap tech and venture capital world. But behind the scenes, this technology can also have a deterrence effect on M&A – causing would-be deal-makers to take a pause due to fear that the assets they’re buying could ultimately become disrupted. 

“You could get into investment committee [within a private equity firm] and talk about any business, and I could say this is going to get disintermediated by AI, internet, something, and find a reason not to put money to work,” said Anu Aiyengar, global head of M&A at JPMorgan, in an interview with CNBC. “A lot of people don’t want to analyze it … and then say, what impact will it have on our business? Pretty hard to answer.”

(See the full interview with Aiyengar above.)

As a result, Aiyengar says the calculation in various boardrooms involves wondering whether it makes sense to do deals now, or wait and find something with a “better capability” that is “cheaper or better or faster.” 

“It’s one of those unknowns … that is adding to the uncertainty element,” Aiyengar said about the ultimate impact of artificial intelligence. “And uncertainty is not a good thing for M&A.” 

About $2.5 trillion in M&A has been transacted worldwide this year, through October – a decline of 21% year over year, according to LSEG. This year’s slump is off of a lower base, due to deal volumes sliding last year as well, off of a record-setting 2021. 

Aiyengar attributes the modest 2023 activity to “the gap between seller price expectation and buyer willingness to pay,” as well as other variables like the overall uncertainty stemming from inflation, rates, changing consumer behaviors post-Covid, geopolitics, worldwide elections in 2024 and antitrust scrutiny. 

AI is an added piece to the uncertainty puzzle that buyers need to consider when evaluating a transaction, Aiyengar said. 

“AI is the topic about which we know the least and talk the most,” she said.

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