The practical application of artificial intelligence in corporate finance was brought to life by industry experts participating in a recent ICAEW webinar, now available to members online.

The event, which featured speakers from EY, PwC, Azets and law firm Addleshaw Goddard, offered examples of AI in practice with case studies across different aspects of the deal process – from the strategic review right through to search, execution and due diligence in its various forms.

In the past year, corporate finance teams have moved from talking about AI to investing in it and using it in practice. While some of the bigger firms are financially able to invest large sums of money into developing their own tools or customising third-party tools, some mid-tier firms such as Azets are being creative in how they invest their people’s time to develop smart customised prompts to use the off-the-shelf AI tools available. 

The challenge facing both large and smaller firms is how they take advantage of the upsides of AI while minimising the risks – and all while managing the expectations of clients. 

More than 900 people registered for the ICAEW webinar – AI in Corporate Finance: Theory to Practice – and witnessed first-hand how AI can be leveraged in corporate finance transactions to transform the way deals are done.

Identify and screen buyers and sellers

Jan Chan, a Corporate Finance Partner at EY and AI Lead, explained how the use of AI was dramatically increasing the efficiency and depth of the process to identify and screen buyers and sellers and glean market intelligence. 

EY uses generative AI to interrogate different sources of data, including information from the internet, other data sources procured by the firm, and its own customer documents. “What we’re really talking about today is the ability to assess the risks for a potential buyer,” Chan explains. 

For a target scan, EY can query data on around 28 million companies with AI allowing it to search and customise parameters and then present rich information to staff in a way that augments their work. “It’s very clear within EY, we’ve taken a policy of not looking to automate but to augment our staff,” Chan explains. EY has developed its own proprietary AI called EY Competitive Edge. 

Market opportunities and risks

Graham Dotchin, a Corporate Finance Partner at Azets, showed how in a matter of minutes, AI can provide a review of a business, its competitors and competitive threats plus market intelligence, including a summary of the main market opportunities and risks. 

Risk mitigation is key, he warns. “The challenge is that output needs to be reviewed and making sure that what it comes back with is relevant, useful and accurate. We’re combining all of this with our experience to drive the right outcomes for our clients.”

Dotchin encourages firms to create sandbox environments to allow staff to build tools and experiment with the technology. “It’s very important that when you’re using outputs from AI you don’t de-skill people but you enhance them and support them,” he adds.

Deeper insights

Toby Popplewell, a director and Deals GenAI leader at PwC, focused on the use of AI to conduct due diligence, typically across the areas of reviewing, analysing and taking the insights produced to write reports. “Think about it in terms of how you can do things quicker, how you can look over a broader reach of information and how you can go deeper into the insights and information you’ve got,” he says.

Kerry Westland, Partner and Head of the Innovation Group at law firm Addleshaw Goddard, said the biggest blocker for using AI for legal due diligence had been around accuracy. However, research that the firm carried out last year showed that techniques, including how-you-prompt tools, and how documents are fed into large language models, succeeded in increasing out-of-the-box accuracy for some AI tools from 74% to 95% for legal due diligence.

ICAEW recently launched its AI in Corporate Finance hub, which offers dedicated insights and resources on how AI is being used in corporate finance across the seven phases of the deal cycle. The hub is available to paying members of the Corporate Finance Faculty.

David Petrie, ICAEW Head of Corporate Finance, said the past year has seen AI shift from being something that people talked a lot about to something that is actively being used for delivering a wide range of client work. 

“It’s essential that our members understand how AI tools are being used in corporate finance across the deals and investment landscape. This session provided real insight into AI functionality across the deal cycle and at various stages of the investment process.

“The results are astounding – from speed of report writing and preparation of slides and graphics, through to the nature and extent of the analysis. However, AI is not going to eliminate human intervention, and the webinar also addresses the drawbacks and issues that need to be dealt with when using the tools.” 

• AI in Corporate Finance: Theory to Practice is available on demand and free of charge.