Technology, AI and the changing legal landscape of M&A

Artificial intelligence (AI) has the potential to change the game, whether it’s around deal rationale or execution. But use of technology in deals, and by dealmakers, won’t reduce M&A activity. Greater transparency into asset performance will not spell the end for corporate finance as we know it.

The reality is that as companies embed technology (and not just AI) for a range of front – and back-office functions, they create far more options to acquire businesses and assets, with a higher confidence of delivering value-enhancing synergies.

At the same time, use of technology by regulators will increase, not reduce, scrutiny of transactions — demanding more intensive contextualization of deal rationale and impact.

As AI gets better at analyzing increasingly granular data around deals, the roles of corporate finance and legal teams will also grow: when all outcomes can be modeled, it takes expert human judgment to spot a troublesome clause or risky contract and evaluate the optimum course of action.

And that’s before we’ve even considered the additional M&A deals we’ll see from companies looking to exploit their technology platforms and explore new capabilities and global opportunities. The deals might get more efficient, but the volume will rise – and the risks are not going away.

Technology is no longer just a sector theme in M&A, then. Across every sector it is changing what buyers are trying to acquire, how they value targets, how they structure transactions, their due diligence (DD) focus, and how they plan post-deal integration.

It is clear we are now operating in a market where ‘tech’ is not confined to software and hardware businesses. It cuts across all sectors – from energy, healthcare and industrials, to services and infrastructure – and is a key factor in almost every deal now. Synergies, efficiencies and strategic change increasingly depend on code, data, systems, digital capability or specialist talent.

That shift has a clear legal consequence. Questions about IP ownership, use of data, cybersecurity exposure, AI readiness and resilience, regulatory filings, jurisdictional dependencies, employment terms and post-completion operating arrangements are now central to pricing and deal certainty, rather than matters for a specialist annex.

In other words, technology isn’t just a hygiene factor in deal rationale. And it’s not just about securing post-transaction upside either. It’s often a make-or-break factor for the enlarged entity – and demands greater rigor in diligence, valuation, deal structure and contractual agreements.

At the same time, technology issues are becoming more subjective and speculative – knowing which technologies will win out in the long term is less clear now. It’s also more regulated, with issues such as national controls on IP ownership and data sovereignty creating more risk for deal-doers.

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How AI is accelerating technology-led M&A

Although aspects of this evolution have been visible for some time, the rapid maturity of AI has supercharged the importance of technology as a factor in M&A.

The AI subsector has driven tech transactions to dizzying heights. London Stock Exchange Group (LSEG) says technology accounted for 33% of global M&A transactions in the first two months of 2026, underlining how much of current deal activity is being shaped directly or indirectly by tech strategy and companies’ need to position for further AI transitions.

AI has affected valuations, too. The market ‘SaaSpocalypse’ of 2025 hit enterprise software providers’ valuations as the impact of AI coding scythed through what were already fully valued stocks. Software-dependent businesses were re-rated as buyers reassessed their value according to which were AI-native, AI-resilient or AI-exposed. And in 2026, AI and related businesses themselves have been on a valuation roller-coaster, as the implications of required investment, evolving market opportunity and regulatory controls play out.

AI is changing the M&A landscape in adjacent sectors, too. The UN Conference on Trade and Development (UNCTAD) analysis of digital investment and M&A activity in power and infrastructure, for example, shows how AI-related demand is pulling technology considerations into sectors such as utilities and datacenter ecosystems. The Financial Times reported US power and utility M&A reached $204bn in the first five months of 2026, already more than 40% above 2025’s full-year total, driven by AI and data-center demand.

Record private equity war chests – Bain reported global private equity dry powder at $1.3trn entering 2026 – have kept pressure on funds to deploy capital even as the nature of target risk changes. Private capital funds continue to dominate platform-based roll-up strategies increasingly predicated on shared tech platforms and, now, AI retooling; add-ons are now the default structure by deal count, representing three-quarters of buyout activity in Q2 2025 and more than 80% of lower middle market deals in 2024.

Half of the private capital manager respondents to a recent survey believe AI-facilitated roll-ups are a new asset class in themselves, and 15% believe they may deliver truly VC-scale returns for much bigger deals. “Given the scope for margin transformation using AI, we believe AI roll-ups have the potential to deliver returns that go beyond the traditional PE value-creation toolkit of leverage, multiple expansion, and SG&A synergies,” said the report sponsor, Tenet. 

The high costs – and opportunities – around AI are also shifting the types of deal that look doable. PwC, for example, has argued that companies are rethinking the meaning of ‘control’, using partnerships, minority investments and capacity agreements to secure access across the AI landscape, rather than relying solely on traditional full acquisitions.

So when we asked an AI chatbot, “Will AI affect deal volumes?”, its answer seemed logical: “I found relatively few credible commentators arguing that technology will cause a permanent, across-the-board fall in M&A. The dominant forecast remains that AI will stimulate transactions by creating disruption, consolidation and demand for capability.” We couldn’t put it any better.

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Why technology is changing legal risk in M&A

For Eversheds Sutherland, technology is changing the logic of M&A in three ways at once.

• It is changing the assets. Increasingly, buyers want access to engineers, data, code, infrastructure and workflows, rather than just revenue streams or market share. That means contract negotiations, due diligence and warranties and indemnities require greater nuance.
• It is changing deal execution. Sourcing, diligence and repeatable acquisition processes are all technology-enabled. AI will play an increasingly important role. But, alongside making processes more efficient, industrialized deal origination and triage will result in more deals and greater demand for expert due diligence review, legal oversight or monitoring of automated processes.
• It is changing liability and compliance. Regulators are paying closer attention to AI, data, digital infrastructure and foreign investment, while buyers are becoming more sensitive to cyber, privacy, employment and integration failures.

Tech will help de-risk transactions. Enabling more – and more thorough – due diligence means dealmakers can create visibility around risk and granularity to inform valuations. If market participants perceive M&A carries less risk (and that some of that risk can be mitigated via insurance providers, for example), they gain confidence in undertaking more deals with greater strategy clarity and execution certainty.

The result is a deal market in which law firms are being asked to go beyond their traditional remit to help clients identify where the real value lies, where it might leak away, and where legal exposure could undermine the investment thesis.

Some will claim first-mover advantage on the use of AI packages such as tailored large language models (LLMs) (Copilot, Gemini), legal-specific tools (such as Harvey and Legora) and other technologies to deliver more cost-effective transaction processes. But our prediction is that these tools will deliver efficiencies evenly across the market extremely quickly – leaving human insight, creativity and experience as the defining factors. (Put another way, it’s akin to a firm claiming a competitive advantage 40 years ago thanks to its purchase of a Microsoft Word license.)

More opportunities, deals done differently and rising tech-related risks and liabilities – this is the new M&A landscape.

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What technology-led M&A means for dealmakers

Technology can make the deal rationale compelling. The days when post-merger integration could get hung up on incompatible systems are numbered. For acquirers confident in the robustness and efficiency of their tech stack, acquiring other businesses isn’t just easier now – it’s a terrific way to drive out cost post-acquisition.

AI is changing target identification and the appetite for deals. Private capital is leading the way, using novel analysis technology and databases to filter, triage and trigger deals that fit a clear investment thesis. This will become more compelling in the future for any company with a clear and differentiated strategy.

Deals are becoming slicker – and riskier. Acquirers and vendors both want deals to happen faster and more efficiently. The market is delivering, using some innovative tech. But that’s placing more, not less, emphasis on oversight and deal governance. The risks and liabilities around regulation, contracts and terms are just as high (perhaps higher).

AI is creating uncertainty in deal outcomes… Rapid advancement in AI capabilities have shaken business models – not least in the tech sector itself, particularly Software as a Service. But tech isn’t the only sector where this uncertainty is affecting deal processes. Understanding how deal terms might address these uncertainties could get many tricky deals over the line.

…but is creating a deal rationale all its own. Will it last much beyond 2026? The reach of AI-related transactions has gone from chip-makers and cutting-edge AI model design houses to energy infrastructure and even real estate. Some even just aim to poach talent. How quickly the bubble – if that’s what it is – deflates must inform deal structures and terms.

Due diligence is more important than ever. Underpinning all these other considerations, due diligence (DD) that’s fit for a fast-evolving technical era is critical. That means not just having access to more information in data rooms than ever before, but being able to analyze it well and knowing how to work it into key deal terms. AI helps, but expert oversight will be more important than ever as the volume and importance of this analysis grows.

Pricing may be getting more nuanced. More sophisticated modeling of post-deal opportunities and synergies – on both sides of a deal – could result in tougher negotiations, albeit with more granular evidence for valuations. Tech-enabled visibility into post-deal asset performance, using objective metrics, opens the door to new variable, conditional pricing mechanisms.

Technology components are in regulators’ crosshairs. Technology has become a strategic issue for many states and their regulators. Even deals outside the tech sector that require data or IP transfers, especially across borders, will need careful shepherding to completion. Regulator use of new analysis technologies opens the door to more detailed scrutiny.

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