The fundamentals of merger and acquisition (M&A) deals in the GCC region have not been significantly affected by artificial intelligence (AI) and still rely on human cognition, finance experts said during ICAEW’s Corporate Finance Faculty roundtable.
However, the experts also noted that technology has improved the speed of transactions and is expected to play a bigger role in the future, especially as data becomes more abundant.
ICAEW members and guests gathered in Dubai to discuss the impact of innovative technologies on deals in the GCC. The event was held at the Capital Club in the Dubai International Financial Centre (DIFC).
Following an introduction by Sam Surrey, Principal Director, Deloitte, panellists discussed how advances in technology have positively impacted the speed of deal execution. At the same time, panellists agreed the fundamentals of M&A activity haven’t changed and it still remains a human activity irrespective of digital tools.
AI for example has the equivalent of decades of knowledge and experience if fed the right data – it can analyse great quantities of data over a vast period of time. Today’s technology allows multiple corporate parties in different jurisdictions to communicate, access data and exchange information instantaneously. In the context of M&A, technological advancements such as online data rooms, corporate search services and information databases have increased the speed at which deals are made.
While panellists agreed that in the near future some tasks will become obsolete, others will be fully or partially automated or, in many cases, redesigned to eliminate or reduce the need for human input and decision making. AI could more accurately predict where the market is going, what the trends are and will be able to come up with strategies never seen before. Already algorithms can analyse up to 15 languages and make the necessary due diligence before proceeding with the deal.
Panellists discussed how auditors can utilise the best of what technology can offer to drive quality and deliver on their mandate to provide trust and confidence to the capital markets. One of the main points highlighted by the experienced panellists was the fact that technology can only help if the data its being fed is of high quality, containing meaningful information.
Since the process of manual data extraction can be time and cost consuming, the scope of the data or the assessed contractual relationship is often restrained. This can lead to sub-optimal and costly decisions as the basis for an analysis and decision making is incomplete.
Speakers explained that AI software can currently identify and classify relevant documents and can also be trained to find, extract and process relevant documented data. Once the software is properly programmed, it can extract hundreds of data points from documents – such as commercial real estate contracts – within a matter of seconds, working 24/7 and guaranteeing 100 percent data consistency.
Alexander Gross, Senior Director at Drooms, an award-winning data room provider, said: “Cloud solutions such as virtual data rooms have been introduced for secure storing and sharing of confidential business information. By building machine learning into our software, we can assist audit in finding management and automatic red flag analysis. All corporate finance transactions require the sharing of confidential information and in these time-critical situations, the use of data rooms can be useful. We are currently working on the translation of documents from Arabic to English right within the data room. In the future we see artificial intelligence boosting the efficiency of your due diligence more and more up to a 95 percent automated due diligence report with just one click. The remaining five percent would be covered by experts still.”
Speakers highlighted that in the Middle East there is a lack of quantity and quality when it comes to data. Regional companies that have been built from the ground up in the last 25 years, have focused mostly on the operations of the business and not given importance to the collection of documents and important contracts.
If businesses work hard to keep data in order, they can allow audit specialists to identify issues earlier and reduce the risk of unforeseen surprises at the end of year. This integration of analytics has fundamentally changed audit experiences by improving audit quality and providing new insight into the data captured.
“The world is changing extremely fast so we need to become proficient at developing and working with a new set of professional crucial skills for the 21st century,” said Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA). “Sharing data is not part of the culture in the Middle East region but this must change. AI is a great help in business, but human interaction will still be fundamental when it comes to making important decisions in the context of deals.”
The event was attended by more than 70 ICAEW members and senior business representatives from the major global and regional financial organisations.
Panellists included Christian Carstiou, Head of Data and Analytics, KPMG Lower Gulf; John Sharp, Partner, Hatcher+; Alexander Gross, Senior Director, Drooms; Robin Butteriss, Partner, Corporate Finance Advisory, Deloitte. The discussion was moderated by Salma Sakhnini, Entrepreneur, Strategist and Business Advisor, and CEO, ICON Investment Consultants.