We want to use AI to automate our proprietary inventory valuation and pricing engine. How do we document this AI system so that a buyer during due diligence values it as a proprietary asset rather than a temporary tool?

Question

Tyler Smith · Accepted Answer

To a sophisticated buyer, an undocumented AI tool is a liability, not an asset. They will worry that the system is a black box that will break the moment your current developers leave. To turn your AI pricing engine into a high-value asset, you must document it thoroughly.

First, document the system using the EOS approach of making it documented and followed by all. Create a clear flow diagram that maps how data enters the AI engine, how the model processes it, and how the output is delivered to your sales team. This shows the buyer that the workflow is integrated into your core operations.

Second, document your data sources and intellectual property rights. Prove that you own or have secure licenses to all the training data. A buyer will want to see that your AI model does not rely on scraped data that could trigger future lawsuits or compliance issues.

Third, show historical performance. Track your margins and inventory turns before and after implementing the AI engine. When you can show a buyer clear data from your weekly Scorecards that proves the AI has sustainably increased your cash flow, they will value it under the Income Approach as a proprietary driver of earnings.