Off-the-shelf tools are offering generative AI capabilities to the masses, and those working on deals are no exception. But only a fundamental rethinking of processes, skills and proactive mitigation of risks will allow firms to reap the full advantage of them. So says Graham Dotchin, a partner at Azets, who will next week present an ICAEW webinar on getting started with off-the-shelf tools for M&A. 

“Generative AI tools are accessible to everybody, and they have become as widely used as google search for the majority of staff in corporate finance,” Dotchin says. But given its ubiquitous nature, use of AI on its own won’t give competitive advantage, he warns: “What gives competitive advantage is how you apply it.” 

The impact on the way M&A teams operate is inevitable, he says. “It’s going to change the way that we work, it’s going to change the skills that we need, and the processes that we need to follow. But ultimately, it’s going to expand what is possible for us to deliver.”

Managing AI risks

Free-to-access Large Language Models (LLMs), such as ChatGPT and Gemini, are public tools and the ability to manage the risks presented by generative AI – a topic he will touch on in the webinar – is a major concern; firms need to be able to manage and demonstrate safe use. Confidentiality is a case in point, he says: “For example, have you checked your settings so that your questions and answers are not being used to train the model further? 

“Think about your use of AI as ‘push’ or ‘pull’ categories: you can push information out and ask AI to assess it, analyse it or review it, and when you pull information back you’re asking for information that’s already in the public domain. When pushing information out, I think about AI as a person or business who hasn’t signed an NDA and get into the mindset of, ‘Who am I talking to? Is it safe to say these things? Am I talking to the right person? Am I giving an appropriate amount of information? Is this information confidential?’”

Another risk is ensuring that AI gives you comprehensive answers: “At Azets, we’ve set up a structure where we can test for hallucinations and inaccuracies in information. It’s not a complicated process, but we got there on the back of two years of knowledge in the marketplace.”

Impact on jobs and skills

Meanwhile, the potential impact on job roles and skills is huge, as AI slashes the amount of time it takes to source information. “If AI can drive efficiency, firms have the choice to cut costs or use the additional time and capacity to add value elsewhere in the process,” Dotchin says. “What I love about AI is its immediacy. If I’ve got a question to explore, I don’t want to spend days getting to the start line; I want to use the power of AI to where we go next”

Dotchin doesn’t believe that widespread use of generative AI will result in mass headcount reductions across corporate finance. “The advent of spreadsheets just changed the way we worked and changed the time that people could allocate to tasks. It meant we had to better service the customers. AI will be similar.

“From a skills perspective, there’s going to be a massive shift between people processing information and being asked to analyse and interpret that information.” 

The importance of human elements

AI will highlight the importance of the human demands of corporate finance, he says. “With audit and tax, the answers are generally right or wrong. In M&A, there is not always a right or wrong answer. You need technical competency. But a key skill is, can you manage a process? Can you manage people? Can you negotiate effectively? Can you read a room and work out how to get to the best solution quickly? Can you pair strategies together that highlight opportunity for people to pursue? It’s the people part of it.”

As the technology and its governance continue to evolve, many firms face a steep AI learning curve, Dotchin warns: “As people continue to develop their use of AI, clients will demand more from your experience – ‘Have you done this before? What did you see the last time you did this?’ 

“Anyone can find the information quickly and probably for free. Increasingly it’s about what do you do with that information, how do you layer on your war wounds and battle stories, and how do you layer on the successes to manage that client through the process.”

AI – the cornerstone of the practitioner’s skillset

David Petrie, ICAEW’s Head of Corporate Finance, says: “Learning how to use these AI tools and understanding their limitations – for all parties involved in M&A, from junior associates processing data and drafting reports, through to principals making the final investment decisions – is fast become the cornerstone of the corporate finance practitioner’s skillset.

“We urge members to sign up to our online events to find out more about how to turn AI to their professional advantage. In addition to the webinar on 22 September on the use of off-the-shelf AI tools in the deals process, a subsequent event on the use of proprietary AI tools in M&A will use case studies to illustrate how customised AI tools can enhance decision-making and bring significant value to both advisors and their clients.”