Having been part of the hype in glorifying capabilities made available through generative AI (GenAI) and even leveraging it in interview processes, something interesting came to my attention.
As I was attending a couple of events that would help me land a summer internship in finance (no worries, I’m not on the wrong forum), I overheard a conversation between two (junior) bankers. The statement discussed was “With the fast development of Artificial Intelligence and GenAI, our jobs will disappear in the next couple of years.”
My first thought was “Fair. Essentially, it’s mostly Excel models and Powerpoint slides, right? Same for consultants, but then what am I doing here?!” Luckily, there’s much more to it. Even though I still believe that AI will be able to create beautifully designed AND aligned powerpoint slides, there are a couple of things I believe it will not be able to achieve in the upcoming years.
When solely focusing on junior analysts, which in normal cases would exclude relationship building, M&A professionals deal with a very complex environment. Think about innovative financial structures that require creative thinking, nuanced legal and regulatory changes, and market sentiment (Lesselin, 2023). Even though it might be possible to predict the market with complex mathematics, unpredictable factors including behavioural psychology make it more challenging for AI to predict. Other important considerations also include reliability in making ethical decisions (e.g. ethical bias) when interpreting documents, and a lack or limited contextual understanding (Kotylak & Mikhaiel, 2023). May it be from a legal or operational standpoint. Keep in mind that GenAI runs on past data, so for M&A activities in newer industries and for companies with newer business activities, it might not be as reliable.
However, it also offers significant benefits for junior bankers. For example, doing basic work in valuation (e.g. an early estimation on enterprise value), gathering data from the virtual data room, and identifying, categorizing and extracting relevant information for due diligence. Especially when dealing with a bulk of data that is spread over countless resources, sometimes including unstructured data, it can save significant time to focus on input where true value can be created. Additionally, AI can create value in prediction calculations (e.g. for deal terms), contract management and data migration. Not that bad after all?
And who knows, maybe instead of working until 2AM, we can now go home around 10PM.
References:
Kotylak, D., & Mikhaiel, D. (2023, July 7). AI in the M&A context. Retrieved from Dentons: https://www.dentons.com/en/insights/articles/2023/july/7/ai-in-the-manda-context#:~:text=In%20the%20M%26A%20context%2C%20AI,form%20a%20more%20profitable%20entity.
Lesselin, T. (2023, June 13). How Is AI Going To Shake Up M&A? Retrieved from Forbes: https://www.forbes.com/sites/forbesbusinesscouncil/2023/06/13/how-is-ai-going-to-shake-up-ma/
