Should we build our own proprietary AI models to increase our enterprise value before an exit, or is it better to buy off-the-shelf software and integrate it into our standard operating procedures?

Question

Tyler Smith · Accepted Answer

The decision to buy off the shelf AI tools or build proprietary software directly impacts your enterprise value and your balance sheet. Building proprietary AI models is expensive, slow, and risky. Unless you are a software company, building models from scratch rarely makes sense. However, custom tuning an existing open source model with your proprietary data can create a highly valuable intellectual property asset. This asset will significantly increase your valuation when preparing for a clean exit. Buying off the shelf software is faster and cheaper, but it gives you zero proprietary value. Anyone can buy the same tools. The recommended approach is a hybrid model. Use a strategic real options framework. Buy standard software for non core functions like payroll, general human resources, and basic copywriting. For your core operations, build proprietary workflows. You do this by integrating off the shelf AI engines with your unique databases using APIs. This approach allows you to own the workflow and the fine tuned data layers without the massive cost of building custom AI architectures. You build a valuable, transferable asset that buyers will pay a premium for, while keeping your development costs manageable.