Bain predicts takeovers will rise as AI takes over many of the tasks of bankers

Bain & Co expects takeover activity to rise after a three-year slump, but the usual winners - investment bankers - might find they have less work as corporates look to AI.

Robin Khuda sold AirTrunk to Blackstone for $24bn in 2024. Picture: Britta Campion

The number of global takeovers is expected to rise this year after a three-year slump, according to Bain & Co, as companies become more accustomed to a higher interest rate environment and economic uncertainty.

But the usual winners from an M&A uptick - investment bankers - might find both their fee pool and staff numbers crimped as the companies they work for harness artificial intelligence to handle at least the early phases of their deal work.

A survey of 300 corporate executives who undertake M&A activity showed more than a fifth are already using generative AI, up from 16 per cent a year earlier, and a third expect to be using it by the end of 2025, according to Bain.

“Generative AI will have a profound impact on the way deals get done,” says Bain executive vice president of global M&A and divestitures, Suzanne Kumar. “Early adopters are gaining an advantage by getting to better insights faster. Late followers will be outbid for good deals and find themselves staying too long in processes for bad deals.”

Gen AI is mostly being used for “finding and validating deals” at the moment, and this will expand to work across every single step of the M&A process in the next five years, according to Bain.

The survey comes as Bain reported global M&A deal value for 2024 rose 13 per cent from the previous year, but was still the second-lowest figure in a decade.

The Australian market outperformed with a 30 per cent rise in deal value to the 5th highest figure in a decade.

Bain pointed to interest rates and regulatory challenges as the two biggest inhibitors to recent global deals, and expects them to ease in 2025.

“M&A activity tends to be cyclical, and we believe the market is poised for an upturn,” said Bain head of global M&A and Divestitures, Les Baird.

“While we saw a modest recovery last year, deal value remains historically low as a percentage of global GDP as headwinds have stifled dealmaking for the past three years.

The firm believes “intrinsic demand” for deals remains high, even if activity is still muted because companies are looking toward inorganic growth during ongoing supply chain disruptions, geopolitical tensions and uneven economic outlooks.

“Even throughout the slow period, the best companies have persisted, learning how to navigate unfavourable market realities to deliver inorganic growth,” said Mr Baird. “Now, as headwinds become less acute, more companies will join those that have learned how to adapt.”

Gen AI will also play a greater role post acquisition, predicts Bain, which points out some companies are already trialling such technologies for integrating newly acquired businesses, as well as divestiture planning.

Bain believes companies already using gen AI are spending 20 per cent less time on integration work plans and transition service agreements that they would have before using the technology.

“The wave after that will involve using generative AI tools to access specific company data to help size realistic cost and revenue synergies and to craft value creation plans based on the prior performance of their acquisitions,” said Mr Baird.

Originally published as Bain predicts takeovers will rise as AI takes over many of the tasks of bankers