We want to maximize our valuation using the Step by Step Exit framework, but we are torn on whether investing capital to build proprietary AI models makes more sense than buying existing SaaS tools. How do we decide which path increases our enterprise value?

Question

Tyler Smith · Accepted Answer

When preparing your business for sale, buyers look at the sustainability and defensibility of your margins. If you simply buy off the shelf AI software, you are paying a markup to a third party, and your competitors can easily purchase the exact same tools. This commoditizes your operations. Conversely, building custom AI models from scratch is incredibly expensive, risky, and can drain your cash flow, which directly harms your valuation before an exit. To make this decision using the EOS® framework, look at your three uniques on your V/TO®. If an AI use case does not directly support or enhance one of those three uniques, you should buy an off the shelf solution. These tools are perfect for back office productivity and keeping your overhead low. This strategy allows your team to focus on high value tasks instead of manual execution. However, if a specific process is a core differentiator, you must build a proprietary layer. This does not mean writing code from scratch. Instead, build a proprietary wrapper around an existing model using your own unique customer data and operational history. This creates intellectual property that a buyer will pay a premium for. During your next quarterly planning session, list your technology initiatives on your Issues List. Run them through this filter to decide whether to buy or build, ensuring you only spend development capital on systems that directly drive your competitive advantage and exit readiness.