News and Research

Why Automation is Good for Investment Banking

Entrepreneur and venture capitalist Marc Andreessen famously remarked that software was eating the world. Many pundits are now concerned about the effect of automation in the financial services world. Much of this fear is misplaced, at least in the short-term. The amount of new automation software tools and analytics for investment bankers is on the rise to handle all of the data captured by deal makers.

Few analysts have looked at how artificial intelligence (AI) might eventually affect M&A and investment bankers. Most coverage looks at the big players, such as efforts by Goldman Sachs to automate certain deal execution processes, or JP Morgan’s use of in-house engineers to analyze financial data. The middle market is also on top of automating certain tasks and evaluating data using tools and databases.

Most investment bankers will quickly tell you that what they hate most about the work is data collection and processing. It’s tedious drudgery that falls largely on the shoulders of junior bankers. The middle market centers these tasks due to a large number of potential buyers, and it weighs on the minds of bankers. Capturing the data and knowing what to do with the data is extremely important. And, “for those investment banks that do not use these tools, will be severely left behind. It’s no longer a good ole boys network of buyers,” according to Aaron Solganick, CEO of Solganick & Co.

The good news is that automation may save investment bankers, and improve the efficiency of closing and managing deals, without taking their jobs. Tasks pertaining to processing and collecting data are among the easiest to automate.

Of course, there’s bad news too. Automation may render some portions of bankers’ jobs meaningless and moot. When data processing and collection becomes fully automated, what’s left for bankers? One tactic is to prize creativity and to elevate the role of bankers’ intellect.

No matter how good technology gets, there is always room for human innovation, creativity, and thought. Before there was Excel, there were handmade spreadsheets. Excel didn’t replace the people making those spreadsheets—only the hands filling them in.

Many companies will continue to elevate the role of junior bankers as a direct response to automation. That means expectations will change and rise. Rather than crunching numbers, junior bankers must have well-rounded skills, creative thoughts, and the ability to bring in new ideas.

More and more firms are willing to trade technical skill to get someone who is creative with data, who can craft good stories and strong narrative, and who is client read from the beginning. Modeling is important. Human skills are irreplaceable. That’s food for thought for the coming generation of investment bankers. A seller should consider using an investment banking firm that has invested in automating its processes and tasks to find more buyers and be able to handle a large amount of data that gets exchanged and evaluated in the deal process. Solganick & Co. is one of those firms.

About Solganick & Co.
As an investment banking firm specializing in Technology and Digital Media, Solganick & Co. offers an in-depth understanding of each industry sector including macro and micro drivers that lead to a successful transaction. Experienced involvement with industry deals gives Solganick’s expert investment bankers an accurate depiction of current M&A trends and the present deal-making climate. We provide mergers and acquisitions (M&A) advisory services to CEO’s, company founders, board of directors, private equity firms and majority control shareholders.

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