M&A STORIES - The Good, The Bad and The Ugly Robert Heaton & Toby Tester

In recent weeks Rob and Toby have veered slightly off the M&A topic to explore the emerging world of AI and how it might shake up M&A as we know it.  In doing that we've arrived at the challenges of adopting adequate regulatory and ethical controls for AI and never mind the slow cumbersome legal system and how that might cope with AI.

The key point is that AI needs global standards for regulation, ethics and legal controls and anyone with a degree of experience knows how difficult that might be to achieve. In Australia, it's almost impossible getting individual states to agree on a standard never mind a global scale.

Rob's view is that ethical and regulatory controls can be embedded into any AI programs at source and that if the big players (Microsoft, IBM, Amazon, Cisco, Oracle, SAP can be encouraged to do this, we might at least cover 80% of the challenge.

What are your thoughts?

Robert and Toby have been clamping at the bit to start talking about the need for strong ethics, regulatory and legal instruments to manage and control the global adoption of AI.

There's no doubt about it. AI has the equal potential to cause untold harm, and the scandal playing out with the UK Post Office is a stark reminder of how ethics can be completely railroaded. That is why it must be developed ethically. And that's what we're going to go into the next podcast. But today, we've been talking about the Post Office scandal because it offers a vivid example of when ethics and ethical principles play no part.

And I think the lesson we need to learn from this is that we must protect people themselves from the very real harm. that could be caused by AI. To do this, we need to build the ethical foundations and the framework around the technology for the common good of individuals, societies, and indeed all of humanity. Furthermore, those ethical controls must be universal. 

And that raises the question posed by Robert. Should an ethical framework be built into all AI platforms so that the user is offered no choice?  This and other questions at large will be the topic of our next podcast.

This week, the Dynamic Duo of Robert and Toby ponder on whether AI will drive a new wave of AI-influenced M&A transactions - or not.   Certainly, 2023 has seen a 40% downturn in M&A volume globally so what evidence is there that AI will offer a stimulus and create a new wave of transactions?

It's not a simple question to answer because AI is still in its infancy, but adoption is accelerating at an alarming pace whilst regulation and legal controls are somewhat lagging and undeveloped.

The duo give this topic a good thrashing and generally come out in agreement with each other that AI WILL drive a new M&A wave.  That said, Toby is of the opinion that it might be five years away because regulatory and legal reforms have not been developed.  On the other hand, Robert believes that scrupulous organisations might force legal and regulatory controls to be adopted much quicker and the expected wave might be only one or two years away. 

Time will tell. 

Robert and Toby continue to delve into the topic of AI and in this episode, we start to examine how AI is or will impact each of the typical M&A processes. As the duo walk through the process from Deal Sourcing to Due Diligence and then into Legal Contracts and Valuation it becomes clear that AI is already playing a strong role in some aspects of M&A. But equally, there are other areas where AI might play a supporting role, where the need for human intervention is still prominent in what Toby refers to as 'the art of M&A' 

There's also our long-standing view that the current 'narrow' AI is simply another tool that can be harnessed to significantly advance the quality and efficiency of M&A transactions BUT like all tools, it is the quality of input that determines the quality of output. GIGO (Garbage In = Garbage Out.

We've still got more to unpack on the topic of AI in Mergers and Acquisitions, and we hope our thoughts and viewpoints stimulate your own thought processes. 

What do you think? Are you in agreement with Robert and Toby, or do you have a different viewpoint?  We'd love to hear what others have to say.

In the last episode, the dynamic duo (Rob and Toby) started to talk about the emergence of AI, and this week, we continued the conversation to try and put some definition to AI.  And we also tried (but failed) to stay grounded and not get dragged into the stratosphere around AI.

Anyway, this week's podcast was more serious than others as we sub-categorised AI into Machine Learning, Deep Learning, Narrow AI, General AI and Super AI; and that's probably just touching the surface.

We also tried to understand our personal position (as intelligent laypersons) on whether we were optimistic about AI's potential or deeply concerned about some of the dangers that AI might pose. And that ranged from the benefit to humanity as a whole (imagine AI bringing education to everyone irrespective of race, or social standing) right through to AI being harnessed for personal gain by the super-wealthy and politically powerful. And there's the easy leap from trying to define AI into a stratosphere discussion in the space of a few minutes.

The good news is we recognized our distraction and solemnly promised that we would return to AI basics and discuss its use and potential use in M&A transactions. That's next week's topic so tune in to find out if we managed to contain ourselves.

Robert and Toby often get together like old men on a park bench, to discuss a variety of topics. Some of them become podcasts, others don't. And sometimes one topic sparks a discussion on something different. That was the case recently when the dynamic duo was trying to get their heads around AI and what impact it is/will have on the world of M&A. 

It was from that discussion we asked ourselves what tools are currently used to manage M&A transactions and we concluded that the technology is not much more than a spreadsheet on steroids with a simple data room and a database bolted on. Yes, I know we're being harsh, but what really came out of the conversation was the idea that the gap between current technology tools and AI is massive and we ended up with a  view that AI will have such a dramatic impact that it's easy to equate it to that period where parts of China went from Abacus to Advanced robotics.

But that's jumping ahead of ourselves. We will start to discuss AI next week and we'd welcome anyone to join us who is keen to offer their thoughts and experiences. But in the meantime, we thought it was worth drawing the baseline and explore what tools are currently available and whether they are adding value to M&A transactions.