How does improvment of AI and Data Science affect Due Diligence process??
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New improvements in Artificial Intelligence (AI)can help M&A teams to identify patterns, frauds, accounts manipulation and market feedbacks to M&A deals. In other side new world is world of Big Data atmosphere. Data science tools can help transactions use the hidden beneficial data among such big data that standard procedures never explore them.
I’m currently not aware of AI tools that would significantly affect DD process. I could imagine that for Commercial DD, AI could become useful CDD not only focus on the target but also its market environment.
I agree that AI can help identify patterns and fraud etc. I know during the DD process, the company that is being acquired need to open up its books. But I’m not sure, if they would actually let a data scientist to get control of all the data to do analytics. This is because the deal is not signed yet – and the acquiring firm may back out. Opening the books makes one feel vulnerable
Totally! Your questions are excellent and demonstrate a genuine desire to learn. Its inspiring to see someone actively seeking information and engaging in lively discussions. It is a great opportunity to share your knowledge and show off your passion. Asking questions can help you gain a deeper understanding of yourself and your world. Curiosity will be a great asset on your journey. Never stop exploring or using your curiosity. Each question can lead to new insights and amazing discoveries.
I think the primary benefit of data science on DD is around the ability to quickly and in real time model different scenarios.
Being able to sit with a board of directors on a transaction and show in real time, the impact of different assumptions can be a very powerful way to both improve decisions (by allowing more assumptions to be modelled and questioned) and speed. If you run through every reasonable assumption with one model in a room in a few hours and they are all positive, you can have an agreement to move forward quickly.
On the AI side, I think the main power that will come now is leverage the strength of AI to identify, aggregate and show the result of previous similar transactions. It’s easy for us to model a deal that looks great, but AI can show us that the last 15 similar deals were failures. Best it doesn’t care about it’s promotion, impressing it’s shareholders or if the deal goes through so can be a great way to ensure the data is objective as possible.
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