How artificial intelligence is upending the M&A process—and what founders must do to keep up
By Lou Sokolovskiy
Artificial intelligence is no longer just a buzzword in Silicon Valley. It’s rapidly becoming a key player in how mergers and acquisitions (M&A) are executed—and for small and midsize businesses, that shift is changing the rules of the game.
In the past, dealmaking relied heavily on relationships, personal judgment, and teams of analysts poring over spreadsheets and legal documents. But that landscape is shifting fast. Increasingly, acquirers—from private equity firms to corporate strategics—are relying on AI tools to identify targets, evaluate risk, and accelerate integration
That means small businesses hoping to attract buyers need to understand how they’re being seen—not just by human eyes, but by algorithms.
AI Enters the Deal Room
The use of AI in M&A is expanding across the entire transaction lifecycle. According to a 2025 Bain & Company survey of M&A professionals, 80% of respondents expect generative AI to play a significant role in their deal strategy. That includes sourcing targets, analyzing financials, and post-deal integration planning.
Finding the Right Fit—Faster
Traditionally, finding acquisition targets meant leaning on industry connections and investment banker shortlists. Now, AI platforms can scan thousands of companies in minutes—pulling data from financial reports, customer reviews, even social media activity—to identify firms that fit a buyer’s strategic profile.
In one recent case, a consumer products firm used an AI system to evaluate over 1,600 potential acquisition targets and quickly zeroed in on 40, most of which hadn’t appeared on their radar before. What this means is that a well-run small business in a niche market can now be discovered by a global acquirer overnight.
“Fortune Will Favor the Bold”
Despite the friction, firms with cash on hand and a willingness to move early may find themselves best positioned to benefit.
“Fortune will favor the bold,” FTI Consulting wrote in a March report. “Well-capitalized firms that have comparatively lower costs of capital and a willingness to move out on the risk spectrum will be well-positioned to benefit from opportunities arising from macroeconomic turbulence and market dislocation.”
Much of that opportunity is linked to technology-driven industries. Data centers—supercharged by artificial intelligence—are projected to require an additional 35 GW of power by 2030. Direct air capture (DAC) technologies could demand a further 2.7 GW. That surge is reinforcing clean energy’s status as not just an environmental imperative, but a commercial one.
Due Diligence on Autopilot
Once a deal enters the diligence phase, AI helps speed up the process by reviewing contracts, financials, and compliance records at scale. Tools can flag irregularities, summarize lengthy documents, and identify red flags—reducing what used to take weeks to a matter of days.
Legal and financial advisors still play a critical role, but much of the heavy lifting is now automated.
Smarter Integration
After the paperwork is signed, AI helps acquirers map integration strategies. Already, there are tools that analyze CRM systems, customer overlap, and operational data to uncover cost savings and revenue opportunities that might otherwise be missed.
What It Means for Founders
For founders in the lower/middle market—businesses with revenues between $5 million and $100 million—these developments bring both opportunities and risks.
On the upside, AI tools can spotlight niche businesses that would have been overlooked under traditional processes. But those same tools also enable buyers to benchmark dozens of similar companies instantly—raising the bar for what counts as “attractive.”
“Despite [the uncertainty], there is still a market for high-quality businesses, with valuations holding steady,” read a recent report published by the advisory firm Moore Colson on the middle market M&A. But in an AI-driven M&A world, “quality” has a new definition: it’s not just about profitability. it’s about data integrity and digital presence.
Here’s what founders should focus on:
- Data Discipline: Buyers are relying on AI to evaluate your internal data. If you don’t want to be at a disadvantage, you need to ensure that your financial records, customer information, or operational KPIs are consistent and well-maintained. More specifically, founders should invest in professional-grade accounting systems and data infrastructure long before a sale is on the table.
- Your Digital Footprint Matters: AI-driven deal tools pull in everything available online—from your website and press coverage to employee LinkedIn profiles. A weak or outdated online presence can signal risk, while a well-maintained digital profile adds credibility.
Think of your company’s digital footprint as a second due diligence file—one you don’t control directly, but must manage carefully. - Anticipate the Value Proposition: Don’t wait for a buyer to guess how you might add value. Use your own data to build a case for synergies—how your products, customers, or systems could enhance a potential buyer’s business. Framing that clearly can be a major advantage during negotiations.
The Tradeoffs Ahead
Despite its enormous benefits, AI also has its downsides in the M&A world. Critics warn that over-reliance on algorithmic tools may overlook qualitative aspects like culture fit, leadership quality, or brand loyalty—factors that are harder to quantify but critical to long-term success.
At the same time, scrutiny is growing around how AI is being used in dealmaking. The European Union’s AI Act, for example, is raising questions about data privacy, copyright, and potential bias in automated decision-making.
Still, the trajectory is clear. AI is becoming an essential part of the M&A toolbox. A recent PwC report notes that acquiring AI talent and tools is now a top driver of M&A activity, often through smaller, targeted “tuck-in” acquisitions.
For business owners, that means preparing now. The companies that present themselves clearly, with structured data and a strong digital presence, will have an edge. Those that lag behind may struggle to stand out—or even be seen.
In today’s market, it’s not just buyers that are evolving. The sell-side has to evolve too. And increasingly, the first impression you make won’t be with a banker or a buyer—but with a bot.
Stay ahead of the curve.
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Aug. 2025
