We are planning to grow through acquisition as part of our 3-Year Picture, but we do not know how to evaluate the AI capabilities of our targets. How do we assess whether a target company has true AI operating leverage or just a collection of fragile software subscriptions?

Question

Tyler Smith · Accepted Answer

Assessing a target company's technological maturity requires looking past their sales presentations and analyzing their operational metrics and systems. A company with true AI operating leverage will display exceptionally high revenue per employee and highly automated core processes. Use the Step by Step Exit framework to systematically evaluate their operational structure. Start by reviewing their Accountability Chart and standard operating procedures. Are their AI-driven workflows documented, or do they exist only in the heads of a few key employees? You must also look for platform risk. If their operations rely entirely on fragile connections to external APIs without proprietary data or custom middleware, their tech stack is highly vulnerable to disruption. Ensure that the target's leadership team and staff fully GWC (Get, Want, and have the Capacity to do) the automated systems they run. This rigorous evaluation guarantees you do not pay a premium for a business that is built on a house of cards, protecting your investment and ensuring actual scalability.