AI is at the forefront of the investor community's growth agenda

25 January 2024 | Transaction support

Charles Murray


In our transaction support work, sponsors have been clear that one of their key short-term priorities for AI technology is to drive efficiency gains rather than revenue growth. In the context of stubbornly low revenue growth, efficiency becomes a major factor in achieving EBITDA goals. AI is very much at the forefront of the growth agenda and will be especially visible in IT services, both through strategy support and implementation projects.


Hello, I'm Charles Murray. I'm a Partner at Analysys Mason, and I specialise in transaction services.

Where is AI being considered by financial sponsors and operators when it comes to M&A transactions? 

So, sponsors and operators are looking at AI in a variety of different ways in terms of transactions. When I first started talking to clients about the use of AI, one of the surprising factors was the efficiency agenda came very strongly, very quickly.

So sponsors and operators are looking at AI from an efficiency perspective, first over maybe revenue growth or other areas. And efficiency very much in terms of portfolio companies, portfolio management.

And that's because in the current economic environment, with more limited revenue growth, now gaining EBITDA is very important for valuation and efficiency agenda can be pushed quite hard. And certainly AI is seen as a way to enhance that efficiency agenda.

Will AI make an impact in the deal process?

Difficult to say. We've been looking at it from use in terms of efficiency when it comes to customer interviews, customer referencing and results, to be honest, are fairly mixed. We see some efficiency gains, but on the other hand, we see some impact in terms of additional resourcing.

So, on our own personal perspective, not yet. There's obviously in terms of just the amount of documentation and parsing that and getting summaries out quickly, it has potential.

Our big concern is that actually the large language models are not yet good enough. They're probably not conditioned or built properly for sort of legal documentation, and I don't think it's going to be. It requires so much more additional work to check the results of the AI that you might as well go and do the work in the first place.

That may change over time, but it'll take a lot of change.

So from a deal transaction perspective, I think there's certain tactical areas where it may benefit, but I don't think is going to materially impact both the time frame or the effort required to get a deal done.

How can AI be used to boost the growth agenda?

Boosting the growth agenda through AI, we see this very much happening in the IT services sector where the IT services providers, the MSPs and the resellers are looking at developing AI capabilities to sell services to their end clients, be that consulting services, how best to use AI, but through implementation services, implementing some of the platforms that Microsoft etc. have created to help clients now develop in-house AI capabilities to either increase their go-to-market or to improve their efficiencies.

So from an IT service perspective, yes we're seeing, AI is very much at the forefront of the growth agenda.

What is your one key message to the TMT industry right now? 

My one key message for the industry on AI is think wisely where you use it and don't believe the hype.