How AI is Changing Due Diligence: What Buyers and Sellers Should Know

When you’re buying or selling a business, due diligence is one of the most critical, (and often most time-consuming) phases of the deal. Traditionally, it’s meant long hours of combing through contracts, financials, employee records, and customer data to uncover risks and verify the value of the business. Now, with the rise of artificial intelligence (AI), that process is starting to look very different.

Faster Document Review

One of the most immediate impacts of AI is in document review. AI tools can quickly scan large sets of contracts, leases, and policies to identify key clauses, renewal dates, unusual provisions, or missing signatures. What might take a legal team days or weeks to sort through can now be flagged in hours. This means buyers get faster insights, and sellers can prepare cleaner disclosures.

Smarter Risk Identification

AI can also help spot risks that might not be obvious at first glance. For example, machine learning systems can compare contract language against industry standards to highlight outliers, or flag patterns in financial data that could point to red flags. Instead of relying only on human memory and experience, AI brings a layer of pattern recognition that’s hard to match manually.

Enhanced Efficiency for Both Sides

For buyers, AI tools mean quicker access to the information needed to make informed decisions and more time to focus on strategy rather than sifting through paperwork. For sellers, using AI during preparation can mean fewer surprises, smoother negotiations, and potentially a faster closing.

But It’s Not a Replacement for Human Judgment

While AI is a powerful aid, it’s not a substitute for human expertise. An algorithm might flag a clause as “unusual,” but it takes an experienced attorney to know whether that clause is a true dealbreaker or simply a common variation in that industry. Likewise, AI can crunch financial data, but it can’t weigh the cultural fit of a management team or the strategic value of a customer relationship.

What This Means for Your Deal

If you’re preparing to buy or sell a business, chances are AI will touch your transaction in some way, whether through your attorney’s document review tools, a lender’s financial models, or even your own early analysis of market data. The key takeaway? AI can accelerate the due diligence process and bring sharper insights, but it works best in partnership with experienced professionals who know how to interpret and act on the findings.

At Legal Dealmakers, we embrace AI tools to make the due diligence process more efficient and precise while never losing sight of the human judgment and legal strategy that make or break a deal. Our approach combines cutting-edge technology with years of M&A experience, giving our clients the best of both worlds. If you’re considering buying or selling a business, we’d be glad to help guide you through the process.