Despite Early Innings For AI, M&A Activity Soars

While the mass media overuses the term Artificial Intelligence (AI), most experts agree that successful AI will include more than one dominant technology, instead being an evolution of interwoven technological building blocks patterned after Big Data’s technology stack evolution. Robotics, natural language processing, image analysis, IOT, machine learning, and deep learning are all examples of pieces of the AI puzzle. Successful AI will be defined by solutions that perceive, interact, learn, act and evolve.

Building on early stage AI advancements, more than 140 vibrant private companies have developed sufficiently to be acquired since 2011 – and almost half received venture capital. Buyers are the usual suspects – Google, IBM, Yahoo, Intel, Apple and Salesforce among megacap public companies – as well as, surprisingly, industrial companies such as Ford and GE. There have been 40+ acquisitions in 2016 alone. We expect this pace will only accelerate, attracting new entrants to the acquisitive feeding frenzy developing.

Clearsight Advisors predicts a transformed M&A landscape up and down the AI stack. Primarily, we see an increasing need to connect new technologies (chatbots, virtual assistants, etc.) back to CRM and legacy systems. There is a growing appetite for consulting firms steeped in data management to prepare enterprises for AI, such as the recent acquisition of DataSource Consulting by EXL. We also see rising demand for companies that measure, track and automate vertically specific applications that leverage AI. One thing is abundantly clear – AI acquisition activity is robust and becoming more so each quarter. M&A activity is unlikely to slow anytime soon.