Share, , Google Plus, Pinterest,


Posted in:

Artificial Intelligence is changing M&A

In the search for new ventures, investment firms routinely conduct thorough research as part of their investigation. The goal of this extensive research phase – or due-diligence process – is to discover every aspect of the company, as the parties selling or seeking funding are not always entirely forthcoming with information. The results of the research will influence the sale likelihood, investment sum, and terms.

No two deals are alike and each merger or acquisition depends on a multitude of factors. Some of these factors will include obvious elements such as company balance sheets, employee compensation, share allocation as well as specific factors related to the IP, or assets in question. The entire process is extremely detailed, laborious and can run from months to years depending on the size and complexity of a deal.


Due Diligence software is important for M&A

Sino-Forest Corp. is one of the largest China forestry market players. The company increased in value and briefly received listing on the Toronto Stock Exchange (TSX). The company had cleared review despite a past fraud investigation in 2011 by the RCMP and Ontario Securities Commission.

When an Investment firm moved to become part of the growing corporation, their normal due diligence processed uncovered something the TSX, RCMP, and Ontario Securities Commission had been unable to find.

Utilizing an AI Due Diligence software named “The Brain”, developed by OutsideIQ (Toronto), the Investment firm was able to reveal discrepancies in the reported assets of Sino-Forest Corp.

An article from Sino-Forest Corp. pre-dating the the 2011 RCMP investigation by months was discovered by “The Brain” to show a mis-representation of land owned by the company.

The AI had performed a more thorough due diligence search than multiple teams of researchers had. If the RCMP had obtained the article and discovered the discrepancies, Sino-Forest Corp. wouldn’t have lasted long enough to entertain investors, let alone a listing on the exchange.


How good is Artificial Intelligence Due Diligence?

The Brain (2014) is one AI software pioneer in the cognitive computing niche. Fraud investigation, anti-money laundering, anti-bribery, anti-corruption and due diligence M&A are some fields where “The Brain” Artificial Intelligence is already making a mark. This makes it the first AI solution for the research of fraud investments. The goal of the product is to change the way companies and governments worldwide conduct their research into fraud claims.

With the ability to process a reported 1000 pages per minute, The Brain is able to precisely analyze online publications, blog posts and documents simultaneously, something that had not been possible with traditional research and investigation techniques. The results of the analysis is presented to decision makers to focus research and help form an opinion.


The future of Due Diligence and Artificial Intelligence

Based on the positive results of “The Brain” – the first AI due diligence software in the market – it’s likely that many more AI-type solutions will follow. The goal of these platforms is not to put the research sector out of work, but to provide a better tool to help Investment firms, governments, and corporations conduct more thorough investigations.

Already, firms handling M&A are looking into using artificial intelligence software to aid their research efforts. There are still many things the software won’t be able to predict, but when it comes down to research data and revealing potential inconsistencies, it seems like “The Brain” has all the answers.