AI in M&A: Why human insight remains crucial amid market uncertainty

Despite initial optimism that 2025 would see a resurgence in M&A, global uncertainty and tit-for-tat tariffs have caused deal activity to stall. 

While global M&A values remained strong in Q1, the number of deals fell by 19% compared to Q4 2024.

To find out more about this situation, we spoke to Derek Dervan, Corporate Advisory Director at UHY FDW. He shared his insights on the trends impacting the Irish M&A landscape, from the impact of global economic uncertainty to the evolving role of technology and AI in helping accelerate due diligence.

Q. Can you please tell me more about UHY and your role there? 

UHY Farrelly Dawe White is a member of UHY Global, one of the top 20 global networks for accountancy firms. That’s very helpful when it comes to transactions because we interact with offices all around the world, and especially in the US.

We are a multidisciplinary accounting firm; we do traditional audit, tax, and advisory services. I head up the advisory function and in our space that covers quite a lot: from restructuring to corporate finance and M&A, plus the hand-holding in the middle.

A big part of our work now is on big corporate finance M&A, both buy- and sell-side, and we do a lot of financial due diligence on the buy-side. We’ve closed a number of sales recently. We also do a lot of business valuations, primarily driven by tax restructurings and inheritance tax planning, but also for sale and sometimes for shareholder disputes and the like.

Q. Is there any pattern to your transactions? Do you focus on a particular sector or on cross-border deals?

The short answer is, no, there’s no particular pattern, and we’re sector agnostic. My partners and fellow directors have experience in most sectors, so we usually have the right expertise within the firm, and if we don’t, we go outside.

In terms of where the transactions are coming from, it’s a mixture of Irish businesses looking to bolt on and inbound acquisitions. So a week ago we closed for a UK/US listed business in the car parts market that wanted a consolidator and they acquired a business in Ireland.

In January we had a deal that was a sale to a European PE-backed group. In the last 12 months probably 60% of our transactions have been inbound and the rest have been indigenous; large Irish SMEs looking to bolt on.

Q. After the optimism about Trump’s impact on deals, it looks as if M&A actually slowed in the first two months of this year. From your perspective, are people still optimistic about this year?

I think people are still optimistic. At the end of last year, I would have said that Trump would have a positive impact. But now there’s a lot of turbulence in the markets and I’m not so sure.

What I will say is, there’s a lot of dry powder on balance sheets and a lot of private equity money that needs to find a home. So I do think there will be transactions. 

The Irish and UK markets are different. We didn’t really see any winding down in the middle part of last year apart from the usual summer impact. There was a lot of uncertainty around the election in the US but, towards the back end of last year, inquiries increased and we’re seeing that now coming through in terms of work. 

So we’re busy. There’s a lot of activity in Ireland; our economy is continuing to grow and we’re at full employment.

There are headwinds though, like Trump’s recent announcement of 200% tariffs on European alcohol. That would kill the Irish whiskey market overnight if it came in because 60% of exports go to the US. And similarly for pharma tariffs could have a significant impact on Ireland. At the minute it’s a lot of talk and I don’t know if that will land.

Right now, I think the M&A market in Ireland is still fairly buoyant.

Q. Have you seen any changes to how deals are done in the last few years? For example, are they taking longer?

Deals have definitely been taking longer. Obviously, COVID was an issue, then the war in Ukraine, higher interest rates, increased cost of living, and now uncertainty around geopolitical issues and potential trade wars.

I think what slows transactions down is a lack of confidence. Buyers take longer to do deals because they just want to be sure that it’s the right thing to do. Last year interest rates were starting to come down but there was uncertainty around what was happening in the US. And the cost of living here in Ireland has gone through the roof. 

Uncertainty creates problems for business owners. They don’t like it and it reduces their confidence. And when confidence is low, they’ll pull in their horns, and they’ll take their time over making decisions.

We’re doing a transaction right now that started this time last year and we’re just into due diligence right now. Our client was a buyer in the animal feed space and there was a knock-on effect from the spike in global oil prices, so they just didn’t like the uncertainty. Things have calmed down now so they’re doing the deal.

Similarly, we sold a business to an Austrian transport operator last year and again it took a year and a half to do because they were operating on the global stage and they just weren’t comfortable. But once a certain amount of confidence returns, transaction activity increases.

Q. If they were more confident, how fast could those deals have gone through if everything had gone to plan? How much of a delay was there?

In an ideal world, you can do a deal very quickly when the buyer is confident and really wants to push ahead. We closed a deal at the end of February where the Heads (of Terms) were only signed on Christmas Eve.

That’s a buyer who wanted to do the deal, dealt with any issues that came up in the diligence, and moved on. But if you have a less confident buyer, when issues come up they’ll take their time making decisions, and they’ll look for workarounds or chip at the price.

It’s different for transactions involving debt funding or where there’s leverage being brought in because you have to bring a third party along in the process. It’s easier when you have cash buyers because you only have one decision-maker.

Q. There’s been a lot of talk about the use of AI and technology to speed up the deal process. Is that something you’re seeing in practice, or is it still a manual process?

It’s still a manual process. There’s still a little bit of inertia around AI. We would use the standard ones out there like Copilot or ChatGPT to summarize a document and maybe list the top 10 points. But we wouldn’t go much beyond that, because AI is still developing and we have policies around using AI tools because you have to be very careful in the advisory world. 

We would always have an overarching sense check. There are AI tools built into pretty much everything we do, but we wouldn’t use them to write a report for instance.

Q. Do you see potential for it to change? Or do you always think at some level you’re going to have that human involvement?

If it continues to develop at the same speed we will certainly need fewer people doing financial due diligence in future, but you will always need that sense check. 

I think in time AI will end up doing possibly 75-90% of a due diligence project, but that final 10% will always need a set of human eyes.

Q. In terms of the tools you currently use, compared with five years ago have you seen any areas where automation has helped?

It’s an interesting question. Not really. Platforms like yours are much easier to use now, and that’s certainly helped. But 10 years ago we had Excel, Word, and PowerPoint and we still do. 

Obviously, there are now AI tools built into those, and there are other data analytics tools that we use from time to time, but it’s still mostly Excel and the rest of the Microsoft suite.

Q. And what about valuations? Has that process changed at all or is it still largely the same?

We still use a lot of the same techniques. There are tools out there but we don’t use them. We have certain platforms that give us market data but outside of that, it’s primarily the same tools that we use for everything else. 

We haven’t gone down the road of getting software to do valuations because we just don’t see the value in it. And I do think that Excel and the Microsoft suite have evolved over time as well, making our lives that bit easier.

Q. I’m getting the sense that there’s a lot of talk about the potential, but in terms of practical applications of different technologies and AI it’s still very much a bit of a wait-and-see kind of approach.

Yes, just thinking of how it’s developed in the last two years, if it continues at that pace for the next two years, God knows where we’ll be.

For accountants uncertainty isn’t a bad thing because we’re a resourceful bunch, we’ll always find a way to give somebody advice. So uncertainty creates other opportunities for sure. 

But it does impact the buy side where somebody has to write a check, and they’re not sure. It does make them sit back and wait and see sometimes.