During due diligence, the buyer's technical team is discounting the value of our custom AI-powered operating systems because they are built on top of public large language models rather than proprietary code. How do we prove the intellectual property value and structural defensibility of our workflows to maintain our premium multiple?

Question

Tyler Smith · Accepted Answer

It is a common tactic for buy-side technical teams to discount custom AI tools by calling them simple wrappers around public models like OpenAI or Anthropic. To defend your valuation, you must shift their focus from the underlying base model to your proprietary operational architecture and data pipelines. Prove that your value does not lie in the raw AI model, but in how you have integrated it into your unique operational workflows. Show them how your systems connect proprietary company data, automated quality assurance checks, and human-in-the-loop steps. This workflow orchestration is incredibly difficult to replicate and represents your true intellectual property. Next, present your operational metrics. Use your weekly Scorecard to show the buyer the dramatic reduction in delivery time, error rates, and labor costs that these workflows produce. Compare these metrics to industry averages to highlight your competitive advantage. Show the buyer that your automated processes are fully documented and integrated into your Accountability Chart. When you prove that your custom AI integrations have built a deep competitive moat that directly drives your high profit margins, the buyer will realize that replicating your system is far more expensive than paying your premium multiple.