A recent report from Citizens Bank anticipates a significant increase in deal flow in 2025. The report highlights many of the growth drivers I’ve previously mentioned, including a favorable economic backdrop and a rise in sellers due to the historic M&A backlog. The report also points to another critical factor fueling demand among private equity acquirers: the race for Artificial Intelligence.

According to Citizens’ AI Trends in Financial Management report, PE firms have substantially expanded their AI use cases over the past year and are eager to integrate these capabilities. Key applications include:

• Portfolio monitoring
• Exit strategies
• Due diligence
• Investment analysis

Additionally, PE firms are exploring generative AI applications, particularly in customer service and cybersecurity, to further enhance operations.

As PE firms look to expand or develop these capabilities and discover additional AI use cases, this disruptive technology will be a major area of focus for investments going forward.  Prepared buyers will position themselves for success as these opportunities arise in 2025.  

Among private equity firms, the majority expect deal flow to increase in 2025. Among those who anticipate more deals, one core reason is the ongoing race to add artificial intelligence (AI) companies and capabilities to fund portfolios. The breakthrough technology continues to mature into new use cases, including its expanding role in financial processes within midsize firms and sponsors, as seen in Citizens’ recent AI trends survey.

https://www.citizensbank.com/corporate-finance/insights/mergers-acquisitions-outlook-2025.aspx