How M&A bankers & private equity firms use AI, by Bain & Co.
If you’re a young banker worried that AI is on the brink of making your job a lot easier, then congratulations: it probably will. Very soon.
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That’s what management consultancy firm Bain & Co. thinks, at least. In the firm’s Global M&A Report for 2025, Bain predicts that “every single step of the M&A process” will be enabled by generative AI (GenAI) within five years.
That also sounds ominous. For the moment, Bain says AI is only used in a minority of cases - just 21% of M&A professional surveyed said that they used GenAI tools. That's significantly lower than in private equity, where over 60% of firms said they employed some kind of GenAI tool already.
In M&A banking, Bain says AI will be used across the deal making process, including for making bids, for fact checking and for providing deeper insights that will allow for more cross-selling.
Due diligence will be particularly impacted, with Bain estimating that GenAI will take just one day to analyse information that would take about a week in its absence.
GenAI will also impact cross-selling. After being fed data on "sales, pricing, and customer relationship management data, as well as catalogue information," Bain says AI will be able to identify, prioritize, and suggest courses of actions for its user to achieve pre-set targets.
Bain is also optimistic that GenAI will take tedious work out of the hands of the junior banking workforce. This will give that particular group the ability to "more easily juggle demands from the base business," in Bain's very own words.
Banks like JPMorgan are already using AI in a variety of functions. CEO Jamie Dimon said that the bank's (at the time) 400 use cases included idea generation, hedging, and marketing. JPMorgan aims to have 800 AI use cases by the end of 2024.
The impact on productivity might be good for banks, but it’s not necessarily good for bankers. Around the same time as Dimon’s comments, Goldman Sachs and Morgan Stanley were said to be contemplating cutting their new analyst classes by two-thirds to accommodate the increased productivity of an AI-powered banker.
Bankers who move into private equity may, however, be spared the disappearance of their jobs due to AI. This is because in private equity, AI is well-used already. Bain & Co. noted that the industry was “an avid early adopter” of GenAI tools, with over 60% of firms analyzed “using at least one tool to improve sourcing, screening, or diligence.”
Four years ago, Professor Thomas Åstebro of HEC, in Paris, said that typical private equity juniors would find their jobs eroded as AI was used to replace their analysis, which partners at private equity firms dislike due to juniors' "own biases" - biases that can be trained out of AI. Programs can be trained to know what the most seasoned partners like, and show them exactly that. That significantly reduces what juniors are needed for, and therefore the number of necessary juniors.
AI is also used to kill private equity deals. Bain found that 70% of private equity firms had killed deals “when a likely negative impact of generative AI on the target’s business model became clear.”
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