Artificial intelligence and virtual data rooms

In theory, a data room should offer an administrator complete oversight over an M&A transaction. Typically, reports present data spanning who has logged in, when and what documents they have viewed or downloaded, what questions have been asked, by who and whether their questions have been responded to. While it is a given that this suite of reports should be part of any standard virtual data room, what if there is a whole new world of real-time analytics which could give you much greater visibility about what’s really going on and even predict what could ultimately happen to a deal? With the arrival of Artificial Intelligence (AI) integration within data room applications, this improved visibility can now become a reality.

AI provides the following due diligence benefits:

Machine learning

AI uses a combination of artificial, semantic and swarm intelligence to enable it to learn and recommend changes with every user analysed file. For virtual data rooms, AI is morethan just a clever way of identifying changes to documents to improve data quality. Where it really adds value to data room administrators is in machine learning to analyse and automate a whole bunch of processes to give you more transparency over a deal

More control

  • uploaded documents can be automatically categorised based on content (including scanned PDF’s) and adapts itself to the user to provide the data room administrator with a complete overview of any bidding organisation
  • some AI systems come bundled with provisions such as share/asset purchase and merger agreements to aid Lawyers. This allows each document to be automatically cross referenced to highlight any road blocks before they happen
  • in terms of general due diligence, provisions such as change of control, assignment, exclusivity, license grants and indemnity will greatly assist the contract review process
  • contract data whose extraction usually takes your employees or lawyers weeks or months can be extracted much faster.

Planning for the unforeseen

  • an administrator can harness the power of predictive analytics and very quickly understand the ramifications of a sudden change in buyer behaviour before it actually happens
  • understanding patterns of behavior to enable the administrator to make risk mitigating decisions and provide guidance towards the best course of action.

Future possibilities

Virtual Data Rooms provide a great platform for showcasing the many benefits of AI. One particular function where a big leap in efficiency can be made is in Managing Q&A - an important, albeit burdensome task for many data room administrators. Perhaps in the not too distant future a user may find many of their typical Q&A questions may be answered via an AI controlled “Chatbot” (similar to Apple® SIRI). The Chatbot could simulate human conversation, provide accurate, real time responses and ensure minimal human intervention while maintaining the momentum of the deal.

The continued development of AI means the future of data room due diligence is looking very exciting.

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