In the cryptoverse’s unfolding legend, where brave startups forge paths through digital wilderness, Kraken has once again proven its mettle. The recent acquisition of NinjaTrader for a staggering $1.5 billion, a deal hailed as the "largest-ever deal combining TradFi and crypto," showcases Kraken's strategic vision and its embrace of cutting-edge technologies. While each deal is unique, this one is notable as artificial intelligence (AI) had an integral role in helping expedite the due diligence process. By doing this, Kraken was now allowed to complete the acquisition faster and with greater certainty.

This acquisition represents a new milestone in Kraken’s history of strategic growth. It builds on past successes, such as their acquisitions of Cryptowatch in 2017, Crypto Facilities in 2019, and Staked in 2021. Upon the deal's expected closure in the first half of 2025, NinjaTrader will continue to operate as an independent platform within Kraken’s broader trading and payments suite, further solidifying Kraken's position in the financial landscape. For this acquisition, success truly depends on how the two companies fit together strategically. Second, the due diligence process must be both speedy and precise, an area in which AI has already proven to be a difference-maker.

The Challenge of Traditional Due Diligence

Due diligence as it’s historically practiced is a long and incredibly manual workflow. You’ll piece together multitudes of data, from finance disclosures, contracts, and market analysis. This due diligence process allows you to determine the target company’s value, risks and potential synergies. Kraken's experience was no different. The traditional due diligence process would typically take a team of six Kraken employees, and it would involve "a period of weeks through painstaking effort," according to sources familiar with the matter. It used to take Kraken’s due diligence process before exclusivity two to three weeks—before adopting AI.

This time consuming process can often present a significant choke point in M&A transactions. It can unnecessarily prolong closings, raise costs, and even risk the whole deal. Kraken knew there had to be a better, smarter way. To tackle this, they reached out to Termina.ai, a new AI-powered platform built for the sole purpose of making and speeding up the due diligence process. Termina.ai’s capabilities promised quicker, more precise insights, and Kraken was excited to test it out.

Termina.ai: Accelerating Due Diligence with AI

Termina.ai’s platform combines a powerful suite of AI capabilities, purpose built to improve every stage of the due diligence process. As for Kraken, in less than 24 hours, Termina was able to produce a detailed report. The resulting report was about what you’d expect from a consultant to look like. Within a matter of weeks, Termina successfully completed at least 10 cuts. Each redaction removed days, if not weeks, of labor. The overall clock for the deal was five or six weeks. Here's how Termina.ai specifically aided Kraken in the NinjaTrader acquisition:

  • Due diligence analysis: AI analyzed the target company's data, identifying potential discrepancies between the prospectus and underlying raw data, and assessing the business thesis and planned synergy.
  • Rapid analysis: Termina's AI generated a full report within 24 hours, typically a task that would take weeks, providing Kraken with a comprehensive understanding of the target company.
  • Data-driven insights: AI analyzed billions of historical data points to provide insights on the target company's strengths and weaknesses, helping Kraken understand where it stands.

These capabilities allowed Kraken to gain a more holistic understanding of NinjaTrades’ business. This way, they were able to uncover hidden risks and opportunities, resulting in a better-informed decision regarding the acquisition.

Validating the Investment Strategy

Beyond just speed and efficiency, Termina's AI played a crucial role in validating Kraken's core thesis for the NinjaTrader acquisition. The AI-powered platform provided ongoing, data-driven insights that supported the strategic reason for the deal. That economic boost in confidence fueled Kraken’s investment strategy. This validation proved hugely relevant, given the size and precedent-setting nature of the acquisition.

Now Kraken had a huge edge, as they were able to thoroughly and more quickly evaluate the acquired company’s data. They were skilled at spotting potential gaps and testing the business thesis. This provided them with enough confidence to move forward with the transaction. They were confident in their investment strategy, and they knew it was built on strong data.

The Future of AI in M&A

Kraken’s journey with Termina.ai is just one example of the transformative impact AI can have during M&A. AI technology, as you know, is moving extremely fast. It has the potential to be an even bigger gamechanger in dealmaking by continuing to improve efficiency, increasing accuracy, and producing better outcomes. According to industry experts, 80% of all M&A processes will be aided by AI in just three years. This transition will increase effectiveness in identifying targets, performing due diligence, and integrating new company.

Here are some of the ways AI is poised to revolutionize the M&A landscape:

  • Enhanced due diligence: AI can analyze thousands of pages of documents, financial statements, and contracts in hours rather than weeks, reducing the time and resources required for due diligence.
  • Improved financial analysis: AI tools can process years of financial data in minutes, identifying trends, anomalies, and potential red flags that human analysts might miss.
  • Streamlined post-merger integration: AI can help automate responses to common deal queries, track deals, and provide data analytics, making post-merger integration smoother.
  • Better deal outcome prediction: AI can predict the likelihood of deal success based on various factors by analyzing thousands of historical transactions.

Adopting AI now will provide these companies with a clear strategic advantage in the M&A landscape. As such, they’re able to uncover and close deals at a greater speed, efficiency and with more confidence. Kraken on its successful acquisition of NinjaTrader and how AI is changing the finance world. This strategic play creates value and accelerates innovation in a rapidly changing sector.