Deals in artificial intelligence are going through the roof

25 June 2019 3 min. read

The number of acquisitions in the artificial intelligence space boomed last year, growing by over 40% to more than 150 deals. This deal record however won’t stay in place for long – as 2019 is set to smash the milestone yet again. 

“With the growth and competitiveness of many industries now dependent on the development of these AI technologies, strategic investors across all sectors and continents are stepping up their acquisitions and investments,” said Heiko Garrelfs, a principal at Hampleton Partners.

Headquartered in London, with further offices in Frankfurt and San Francisco, Hampleton Partners is a merger & acquisition and corporate finance consultancy specialised in the technology sector. The firm keeps track of all major artificial intelligence deals globally, and having analysed the data for 2018, the researchers found that investments are concentrated towards a number of popular segments.

Using artificial intelligence (AI) to advance their digital maturity, improve efficiency and streamline business models, organisations from across the globe are adopting the technology. Automotive players are for instance using AI to enhance the digital backbone of autonomous vehicles, insurance companies to trace and battle fraud, banking institutions to fight anti money laundry, governments to plan smart cities, and retailers to gain deeper insights in consumer behaviour. 

Total number of Artificial Intelligence M&A deals 2014-2019

“Artificial intelligence can yield game-changing outcomes,” said Garrelfs, adding that around the world there are hundreds of use cases that demonstrate the technology’s value. The technology’s long term impact is however touted to be much higher – according to a study by McKinsey & Company, once AI has reached a more mature phase, it has the potential to boost Europe’s economic activity by close to a massive 20% by 2030. 

In terms of market value, artificial intelligence is forecast to grow nine-fold over the next seven-year period to a whopping $190 billion by 2025. M&A value will grow in sync with market value, in particular as start-ups in the landscape ripe into scale-ups and companies ramp up their AI-related spending. “Several industries will become dependent on AI advancements to ensure their growth and competitiveness,” remarked Garrelfs. 

Machine data analysis – the process of aggregating, parsing, and visualising data – and edge computing, a technology which brings computer data storage closer to the location where it is needed, are among the busiest deal-making segments. Edge computing allows devices to process information locally and respond more quickly, and is therefore a vital technology for the development of Internet of Things (IoT) and autonomous vehicle technology, where immediate response is a necessity.

Computer vision experienced a stellar year in 2018, mainly owing to growth in hot trends such as facial recognition, check-out-free retail and motion analysis, all of which enable the collection of more insights and provide information for future market opportunities. Language analysis and conversational AI are also two segments that are drawing much attention from players in the online, technology and media sectors.

Google, Microsoft, Apple, IBM, Intel and Salesforce have been identified as the globe’s most active acquirers of artificial intelligence start-ups and companies. The outlook for 2019 is according to Hampleton Partners brighter than ever before in the AI domain. A total of near 100 deals have been closed in the first half-year, with the barrier of 200 deals expected to be passed by year end.