We want our operational workflows to be highly automated to attract strategic buyers, but we are debating whether to rely on third-party APIs or build custom open-source models. How does this tech stack choice affect our exit valuation under the Step by Step Exit framework?

Question

Tyler Smith · Accepted Answer

When a strategic buyer evaluates your business under the Step by Step Exit framework, they look at two primary things: operational efficiency and transferrable intellectual property. The way you construct your AI tech stack directly impacts both.

Relying on third-party APIs like OpenAI is excellent for speed and cost. It allows you to prioritize using AI to increase employee productivity as a starting point, as employees are a major P&L item and much time is spent on low-value tasks. This immediately boosts your profit margins, which increases your valuation multiple.

However, if your entire competitive advantage relies on public APIs that anyone can access, a buyer may view your technology as easily replicable. To build defensible, long-term enterprise value, consider fine-tuning open-source models on your proprietary data.

This hybrid approach gives you the best of both worlds. You use off-the-shelf tools for routine operations, but you build and own fine-tuned models for your core proprietary processes. This creates a distinct technological asset that is highly transferrable and cannot be easily copied by competitors.

Document this technological superstructure clearly on your V/TO® under your Three Uniques. When you can show a buyer a highly profitable, low-headcount business protected by proprietary, fine-tuned AI models, you command a significant premium when you exit.