M&A Prompting Guide

This guide provides M&A professionals with a comprehensive overview of how to use AI prompting to increase efficiency throughout the M&A process.

It includes:

A breakdown of prompts by type with M&A examples An overview of example prompts by M&A stage
Continue reading to kickstart applying AI to your M&A process today.

Prompt Type	Prompt Example
1. Adopting a Persona for LLM Explanation Directing LLM to adopt a specific persona can tailor the tone and style of the responses. This can range from a data analyst to an M&A strategist, depending on the desired expertise level. Application Pretend you're a seasoned M&A analyst providing insights on Company X's acquisition strategy. Copy prompt	Prompt Example Act as a seasoned M&A analyst..with over 10 years of experience. Given this expertise, analyze the strategic implications of Company X's recent acquisition, focusing on market synergy and potential growth opportunities. **Note: this is for general tools. If you use a purpose-built tool, this will be built in. Copy prompt
2. Understanding Your Audience Persona Explanation Clearly defining who your audience is (e.g., M&A beginners, seasoned practitioners) helps tailor the complexity and depth of the information provided by LLM. Application Before crafting prompts, consider the persona of your audience. For beginners, simplify explanations; for experts, delve into technicalities.	Prompt Example for beginners Explain like I'm new to M&A: Why is due diligence critical before an acquisition? Copy prompt Prompt Example For experts As an M&A expert, provide a deep dive into the strategic valuation methodologies for cross-border acquisitions in the tech sector. Copy prompt
3. Breaking Down Complex Tasks into Smaller Parts Explanation Complex analyses can be overwhelming. Breaking them down into smaller, manageable tasks allows for more focused and detailed insights. Application Instead of asking for a broad analysis of a company's M&A strategy, start with analyzing its most recent acquisition's financial impact.	Prompt Example First, detail Company Y's financial health by analyzing its debt-to-equity ratio from the last 10-K. Next, assess the operational efficiencies introduced post-last acquisition. Lastly, evaluate the legal compliance stance based on recent regulatory filings. Copy prompt
4. Prompting LLM to Suggest Improvements Explanation Encouraging LLM to suggest improvements to your prompt can help refine the question for better answers. Application Whenever I ask a questions suggest a better question and ask if I'd like to use that instead. Copy prompt	Prompt Example First, detail Company Y's financial health by analyzing its debt-to-equity ratio from the last 10-K. Next, assess the operational efficiencies introduced post-last acquisition. Lastly, evaluate the legal compliance stance based on recent regulatory filings. Copy prompt
5. Using Clear Instructions and Formats Explanation Being explicit about what you're asking for, including the desired format (e.g., list, paragraph), ensures that responses meet expectations. Application List the top three financial risks for Company Z following its recent merger, in bullet points. Copy prompt	Prompt Example Provide a bullet-pointed list of the key financial indicators that suggest Company X is a prime target for acquisition, focusing on liquidity ratios, profitability, and revenue growth over the past three years. Copy prompt
6. Providing Reference Text Explanation When possible, include relevant reference material within your prompt to give LLM context for its analysis. Application Using the summary of Company X's 10-K report provided [insert summary], identify potential areas for operational improvement. Copy prompt	Prompt Example Based on the executive summary of Company X's 10-K report I've provided [insert summary], highlight the major risk factors that could affect its acquisition value. Copy prompt
7. Iterative Prompting: Learning from Responses Explanation Use responses as a learning tool to refine further questions, especially if initial answers lack depth or miss key points. Application If the first response doesn't fully answer your question, ask follow-up questions based on the information provided or clarify what additional details are needed.	Prompt Example Your analysis of Company Y's acquisition strategy highlighted potential market expansion benefits. Can you dive deeper into how this expansion could specifically impact their product line diversification? Copy prompt
8. Contrastive Prompting Explanation Asks LLM to compare different scenarios, strategies, or data, offering nuanced insights. Application Great for evaluating strategic decisions or market positions by comparing various outcomes or approaches.	Prompt Example Contrast Company X's acquisition of Company Y with its previous acquisition of Company Z, focusing on strategic implications like market expansion and product diversification. Copy prompt
9. Hypothetical Scenario Analysis Explanation Engages LLM in evaluating potential outcomes based on hypothetical scenarios, uncovering risks and opportunities. Application Useful for strategic forecasting and planning, especially when considering new markets or diversification strategies.	Prompt Example Analyze how acquiring a leading startup in AI could impact Company X's market position, considering both current dynamics and future projections. Copy prompt
10. Chain-of-Verification Prompting (COVE) Explanation Ensures depth and accuracy by having LLM verify each reasoning step. Application Ideal for validating financial analyses or strategic assumptions, ensuring reliability in conclusions.	Prompt Example Verify the accuracy of Company Y's financial performance analysis for the last quarter by cross-referencing key metrics with industry benchmarks and detailing any discrepancies. Copy prompt
11. Elicitation of Unexplored Insights Explanation Prompts LLM to identify insights not immediately apparent or previously discussed. Application Enhances the depth of analysis by uncovering overlooked impacts or opportunities in M&A scenarios.	Prompt Example Identify three under-discussed potential impacts of Company Z's strategic pivot on its long-term market viability. Copy prompt

Additional Prompting Guidelines

Experiment with Different Prompt Styles: There's no one-size-fits-all approach. Experiment with various prompting styles to discover what generates the best responses for your needs.
Encourage Creativity in Responses: Sometimes, asking LLM to think creatively or hypothetically can uncover novel insights, especially useful in dynamic fields like M&A.
Feedback Loop: Incorporate feedback mechanisms, allowing viewers or users to suggest topics or ask questions, enhancing the relevance and engagement of the AI-driven analysis.
Iterative Deepening: Utilize AI responses to progressively refine and deepen the analysis, targeting specific insights or clarifications needed.
Cross-Functional Analysis: Ensure prompts encompass a range of perspectives—financial, legal, operational, strategic—to provide a comprehensive view of M&A activities.
Engage with Uncertainty: Encourage exploration of uncertain or ambiguous aspects within M&A scenarios, prompting LLM to outline potential implications and strategies, thereby enriching the decision-making landscape

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Example Prompts By M&A Stage

Strategy Formulation

Use Case Market Landscape and Trends	Prompt Example Summarize the current trends in the [industry] sector and identify the top five companies by market share. Copy prompt
Use Case Opportunity Identification	Prompt Example Based on recent industry trends, what are potential acquisition targets in the [specific sector] that could align with [Company's] growth strategy? Copy prompt
Use Case Strategic Fit Analysis	Prompt Example Evaluate the strategic fit of [Target Company] for [Acquiring Company], considering product lines, market presence, and technology capabilities. Copy prompt
Use Case Acquisition Assessment	Prompt Example To assess Company X's acquisition strategy, start by analyzing its financial health based on the 2022 10-K report, then examine its market position against major competitors, and finally, evaluate the strategic fit of its recent acquisitions. Provide a step-by-step analysis. Copy prompt

Target Screening and Selection

Use Case Financial Health Screening	Prompt Example Analyze the financial health of [Potential Target Company] based on its last three years of financial statements. Copy prompt
Use Case Due Diligence Preparation	Prompt Example List the key documents and data required for a comprehensive due diligence of [Target Company]. Copy prompt
Use Case Risk Assessment	Prompt Example Identify potential risks in acquiring [Target Company], including financial, operational, and reputational risks. Copy prompt
Use Case Exploring Alternative Outcomes	Prompt Example Discuss two alternative outcomes if Company Z's merger attempt fails, focusing on rebound strategies and future M&A implications. Copy prompt

Due Diligence

These prompts are most powerful when it sits on a data room.

Use Case Financial Due Diligence	Prompt Example Summarize key findings from the financial due diligence report of [Target Company]. Copy prompt
Use Case Operational Due Diligence	Prompt Example Evaluate [Target Company]'s operational efficiency and identify any red flags that could impact the merger. Copy prompt
Use Case Legal and Compliance Review	Prompt Example Highlight any legal or compliance issues uncovered during the due diligence of [Target Company]. Copy prompt
Use Case Sustainability Assessment	Prompt Example Investigate the sustainability and environmental risks for Company Y's latest acquisition by first detailing the target company's industry impact, followed by analyzing regulatory risks, and concluding with potential mitigation strategies. Guide your analysis through these interconnected areas. Copy prompt
Use Case Prompting for Strategic Recommendations	Prompt Example Given the SWOT analysis results for Company Y, suggest three strategic actions to leverage strengths and opportunities while mitigating weaknesses and threats. Copy prompt

Deal Structuring and Negotiation

Use Case Negotiation Strategy	Prompt Example Suggest negotiation tactics for [Acquiring Company] to lower the purchase price of [Target Company]. Copy prompt
Use Case Contract Key Points	Prompt Example Identify key clauses to include in the acquisition agreement with [Target Company] to protect [Acquiring Company]'s interests. Copy prompt

Integration Planning

Successful promoting for integration planning requires comparing like-to-like documents between the seller and the buyer. These documents include sales incentive plans, HR policies, IT protocols, change management documents, etc. Once you have identified these documents, you can ask the following prompts:

Use Case Integration Roadmap	Prompt Example Draft an integration roadmap for combining [Acquiring Company] and [Target Company], focusing on IT systems, culture, and operations. Copy prompt
Use Case Synergy Identification	Prompt Example List potential synergies that could be realized by merging [Acquiring Company] and [Target Company]. Copy prompt
Use Case Change Management Strategy	Prompt Example Outline a change management strategy to ensure smooth integration of [Target Company] into [Acquiring Company]'s operations. Copy prompt
Use Case Post-merger competitive analysis	Prompt Example Create a plan to analyze the competitive advantage of Company X post-merger. The plan should include a market analysis, a comparison with top competitors before and after the merger, and an evaluation of synergies realized. After planning, provide a detailed analysis based on this structure. Copy prompt

Implementation and Integration

Use Case 100-Day Plan	Prompt Example Create a 100-day plan post-acquisition for [Acquiring Company] to integrate [Target Company], focusing on quick wins. Copy prompt
Use Case Performance Metrics	Prompt Example Define key performance indicators (KPIs) to monitor the success of the merger between [Acquiring Company] and [Target Company]. Copy prompt
Use Case Cultural Integration	Prompt Example Propose initiatives to merge the corporate cultures of [Acquiring Company] and [Target Company]. Copy prompt

Post-Merger Review

Use Case Deal Evaluation	Prompt Example Assess the overall success of [Acquiring Company]'s acquisition of [Target Company], based on predefined success metrics. Copy prompt
Use Case Lessons Learned	Prompt Example Identify lessons learned from the M&A process between [Acquiring Company] and [Target Company]. Copy prompt
Use Case Future Strategy Recommendations	Prompt Example Based on the outcome of the merger, recommend future strategic moves for [Acquiring Company]. Copy prompt

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1. Adopting a Persona for LLM

Explanation

Application

Prompt Example

2. Understanding Your Audience Persona

Explanation

Application

Prompt Example for beginners

Prompt Example For experts

3. Breaking Down Complex Tasks into Smaller Parts

Explanation

Application

Prompt Example

4. Prompting LLM to Suggest Improvements

Explanation

Application

Prompt Example

5. Using Clear Instructions and Formats

Explanation

Application

Prompt Example

6. Providing Reference Text

Explanation

Application

Prompt Example

7. Iterative Prompting: Learning from Responses

Explanation

Application

Prompt Example

8. Contrastive Prompting

Explanation

Application

Prompt Example

9. Hypothetical Scenario Analysis

Explanation

Application

Prompt Example

10. Chain-of-Verification Prompting (COVE)

Explanation

Application

Prompt Example

11. Elicitation of Unexplored Insights

Explanation

Application

Prompt Example

Additional Prompting Guidelines

Continue to level up your M&A with our Newsletter

Example Prompts By M&A Stage

Use Case

Market Landscape and Trends

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Opportunity Identification

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Strategic Fit Analysis

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Acquisition Assessment

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Financial Health Screening

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Due Diligence Preparation

Prompt Example

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Risk Assessment

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Exploring Alternative Outcomes

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Financial Due Diligence

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Operational Due Diligence

Prompt Example

Use Case

Legal and Compliance Review