As President Trump took the oath of office for a second term earlier this year, Wall Street’s dealmakers began preparing for a wave of mergers and acquisitions. With an estimated $2 trillion in private equity dry powder waiting to be deployed and anticipated antitrust rollbacks, bankers are predicting deal activity will surge beyond previous records. Multiple banking sources indicate that healthcare consolidation and previously stalled tech sector mergers are positioned to lead this wave. The electric vehicle and battery manufacturing sectors are also primed for consolidation as companies race to achieve scale, with analysts predicting the most active M&A market since the 2017-2018 peak.
Yet in corporate legal departments, the anticipation is tempered by a sobering reality: mounting workloads, shrinking budgets, and the ever-present pressure to do more with less. In conversations with general counsel, the focus has shifted from whether to adopt AI to determining where it can create the most immediate value amid these constraints. The emerging consensus points to contract analysis and intelligence as one of GenAI’s highest-impact applications across the contracting lifecycle.
AI: Powering M&A Efficiency
This year marks a critical inflection point for GenAI in legal. The days of cautious AI experimentation and limited pilots are giving way to full-scale deployment of AI tools that dramatically improve the speed and accuracy of legal work while reducing costs. With analysts predicting an M&A ‘golden age’, the coming deal surge is accelerating this shift, pushing M&A and entity restructuring transaction workflows to the forefront as the perfect proving ground for AI-enabled acceleration.
Corporate transactions—whether mergers, acquisitions, divestitures, or spin-offs—demand extensive contract preparation to identify risks, rights, and obligations critical to successful execution. Traditional approaches relied on mass mobilization of lawyers to review and manage drafting, chasing, executing, and tracking dispositions across thousands of agreements. This process often strains legal departments already struggling with mounting workloads and growing business complexity in areas like AI, ESG, privacy, and cyber compliance.
While previous waves of legal tech offered limited relief, GenAI represents a fundamental shift. Its language-centric nature aligns perfectly with high-volume, recurring work that’s core to business operations. The smart integration of Gene amplifies context-aware human judgment, enabling complex reasoning across multiple related provisions and familial agreements. This powerful combination streamlines disposition workflows, delivers critical insights more efficiently, and facilitates dynamic status tracking.
As deal activity surges and AI regulations multiply, in-house legal teams are harnessing GenAI’s natural language capabilities to transform contract analysis into a source of strategic advantage.
Getting under the hood: AI-powered due diligence
Even before a deal is struck, GenAI is fundamentally changing the due diligence process. Where acquirers once had to make decisions with limited visibility into a target’s contractual obligations, AI-enabled review now allows deep analysis of complex agreements at remarkable speed. This velocity makes it possible to conduct exhaustive reviews of entire contract portfolios within the tight timeframes of a clean room, particularly valuable for assessing bespoke contracts and non-standard terms. By systematically evaluating target companies’ agreements, acquirers can uncover risks and opportunities that might otherwise remain hidden until post-closing. This deeper understanding enables more informed valuations and stronger negotiating positions, and crucially, gives buyers a clearer picture of their future contractual obligations before finalizing deal terms.
The contract extraction, interpretation and reasoning capabilities of GenAI can also be applied to the sell-side of M&A transactions. When preparing for sale, companies often face an extensive ‘laundry list’ of questions requiring information to be uploaded to a Virtual Data Room (VDR). Many of these questions require deep reasoning over contracts—understanding change of control provisions, assignability rights, termination clauses, and other critical terms across thousands of agreements. GenAI transforms this process by enabling selling companies to quickly analyze their contract portfolios and respond to buyer due diligence requests with greater speed and accuracy. This helps sellers present a clearer picture of their contractual obligations and opportunities to potential buyers.
AI regulations spark contract review surge
GenAI’s influence on contract management extends far beyond M&A activity. Legal departments across industries are confronting an urgent need for comprehensive contract analysis driven by new AI regulations. Europe’s AI Act requires organizations to identify and assess all contracts involving AI systems, particularly those deemed “high-risk.” DORA’s Article 30 mandates detailed review of ICT third-party agreements, focusing on security measures, incident reporting, and operational resilience. Meanwhile, the UK’s transparency requirements and California’s AI disclosure rules create additional layers of complexity.
While standardized agreements can be assessed quickly, the real challenge lies in analyzing complex, bespoke contracts where AI compliance risks are embedded in custom terms. Cloud services, vendor agreements, and data processing contracts now require explicit provisions for AI usage, risk controls, and system oversight. For example, a cloud service provider must examine thousands of customer agreements to assess AI exposure and ensure appropriate governance—a task insurmountable without AI-enabled review capabilities. As periodic reviews give way to continuous monitoring, forward-thinking legal teams are turning to GenAI itself to manage this complexity and maintain ongoing compliance.
When minutes matter: How AI transforms crisis response
With mounting regulatory pressures, security challenges, and the relentless acceleration of business itself, GenAI contract abstraction, interpretation, and intelligence will soon become ubiquitous. In-house legal teams, already straining under tighter budgets and demands to deliver more value with fewer resources, simply cannot keep pace using traditional methods. Nowhere is this reality starker than during a crisis, where hours—not days or weeks—can make the difference between controlled response and costly escalation.
The traditional approach to crisis response relied on massive law firm mobilization or legacy tech-enabled reviews, typically costing millions while only allowing analysis of a small portion of agreements. Legal teams were forced to rely on institutional knowledge and limited sampling, leading to incomplete risk assessment and potential blind spots. Most importantly, these limitations meant organizations could never build a comprehensive understanding of their contractual exposure.
GenAI is fundamentally reshaping this equation. Modern AI-powered review, integrated with legal expertise, can analyze thousands of agreements in days rather than months, enabling the kind of comprehensive analysis that was previously impossible, and delivering cost reductions of over 90%. The technology scales seamlessly to meet urgent deadlines while creating a lasting contract intelligence foundation that supports ongoing risk management, compliance, and cost optimization.
One recent incident powerfully demonstrates this impact. When a Fortune 500 faced a major service crisis, their legal team had to analyze over 20,000 customer agreements to assess liability exposure and other key contract details in order to guide their response. Using AI-powered review tools, they completed in days what would have taken months and been both prohibitively expensive and incomplete under traditional methods. The rapid analysis not only revealed immediate liability exposure but also identified patterns in service level agreements, data privacy requirements, and force majeure clauses that helped shape both the crisis response strategy and future contract structures. The incident underscored a broader truth: in modern crisis situations, organizations need instant access to and understanding of their entire contract corpus—from standard agreements to complex custom deals—to effectively manage risk and respond to crises.
Market forces converge: The AI-Powered Contracting imperative
The convergence of M&A activity, regulatory pressure, and operational challenges is only part of 2025’s breakout story for AI-powered contracting. What’s fundamentally different is legal teams’ growing recognition of GenAI’s matured capabilities—particularly its sophisticated understanding of complex legal documents. GenAI’s power to accurately contextualize ambiguities, parse document hierarchies, and integrate information across multiple sections has transformed it from a promising technology into an essential tool for managing intricate corporate legal documents.
As 2025’s predicted M&A boom unfolds, this alignment of market drivers and technological maturity has elevated contract AI beyond efficiency gains into a strategic asset. For deal teams racing to deploy capital, legal departments navigating regulatory complexity, and crisis teams requiring immediate insights, GenAI’s advanced reasoning and contextual understanding capabilities are becoming the foundation for competitive advantage in an increasingly complex business environment.
David Mainiero is Vice President of AI Enablement & Legal Transformation at Factor. Factor integrates GenAI with legal expertise to transform how in-house legal departments handle complex commercial agreements, delivering improved efficiency and better business outcomes at scale.
Originally published in the M&A Journal.
