EY is transforming the transaction diligence process with Watson

By | 4 minute read | September 9, 2020

At EY, our teams look to help clients solve their toughest issues. In a fast-changing and data-driven world, we give them the support they need to reimagine their ecosystems, reshape their portfolios and reinvent themselves for a better future.

When considering a transaction, clients are typically evaluating if an investment or divestment can be made, and at what price. EY transaction diligence professionals help clients by investigating the financial, taxation, commercial, operational, IT and cyber environments associated with a deal. The end goal is to uncover information they need to make the best possible decision.

In diligence, transaction professionals, whether from large professional services firms, specialist boutique M&A consultancies, private equity houses or other, are responsible for — largely manually — combing through and analyzing a vast amount of transaction-related data in deal rooms. Much of this data is often siloed in disparate sources. This process must be carried out in detail so the information relevant to a deal is identified and thoroughly analyzed. Yet its hands-on nature risks diverting attention from more high value activities such as deeper analysis and drawing the critical insights that make a difference when under often pressured timelines.

EY Diligence Edge means better outcomes for clients from the initial conversation

Now, through EY Diligence Edge, EY teams are transforming the way transaction diligence is performed with the help of AI. The result will be better outcomes for EY clients. Let’s take a look at how it works.

Firstly, we have embedded EY Diligence Edge with IBM Watson Knowledge Studio and Watson Discovery to provide EY transaction professionals with an outside-in view of a target company and its competitors. With this power, EY Diligence Edge can consolidate and analyze a range of external information, including news, financial and social media data, to assist M&A practitioners in providing strategic recommendations at the click of a button.

Linking real-time and historical events to the diligence process can help clients to better identify risks up front, such as litigation or cyber-related issues as a result of product recalls or regulatory breaches that may have happened a year ago or even during the diligence process itself. Similarly, EY Diligence Edge can help surface risks on global deals as a result of risks in certain regions or countries of which the deal team may not be aware.

In a data room, AI technology in the diligence process comes to life

Within EY Diligence Edge we have built what we call a “smart data room.” So, when the diligence process has commenced and a virtual data room is available, EY Diligence Edge goes to work ingesting the hundreds or thousands of documents available. It then scans them using an M&A-specific AI model powered by Watson, which we have trained to understand the various diligence topics based on the EY M&A approach.

EY transaction practitioners are able to conduct searches — surfacing documents, concepts and pieces of information that are relevant to clients on a deal — and present them for further analysis. And EY Diligence Edge does this across the entire data room, beyond the finance, tax, operations or IT folders which, with resource and time pressures being what they are, are those typically viewed to the exclusion of others where important data can also still be found. The previous manual processes are now streamlined, automated and extended, and our EY practitioners can focus more on analysis and insights to create value for our clients.

Lastly, EY Diligence Edge allows the presentation of findings in ready-made and user-friendly charts and dashboards, which can be easily updated as required, for a more agile, intuitive and effective reporting environment.

EY Diligence Edge is writing the future of transaction diligence

  • More thorough diligence: EY Diligence Edge can automatically consolidate and analyze a broad range of external data. It can also ingest, classify and search an enormous amount of information within a data room, far more than can be done manually. And it can do this across the entire data room, reaching folders that may not have been searched otherwise, especially in time-sensitive transactions.
  • EY transaction professionals can spend more time adding value as opposed to processing data: By automating parts of the diligence process and reducing the manual work required, our professionals can focus more on providing clients with more thorough analysis and insights.
  • Better transaction advice: Because we can provide deeper diligence and better insights, we are able to support clients with more informed recommendations, which they can use to make better decisions and drive better outcomes.

AI is fundamentally changing the way transaction diligence is performed at EY. With Watson, EY teams can provide better transaction advice to clients, which they can use to make better decisions and drive better outcomes.

This Publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Member firms of the global EY organization cannot accept responsibility for loss to any person relying on this article.