We are preparing our business for a sale in three years, and our investment banker says we need to show high human leverage to get a premium multiple, but buyers might discount us if they think our IP is vulnerable to the next LLM update. How do we use multiple business valuation methods to stress-test our strategic reliance on third-party AI before we go to market?

Question

Tyler Smith · Accepted Answer

To maximize your enterprise value for an exit, you must prove to buyers that your AI strategy is a multiplier, not a risk. Buyers will discount your valuation if they believe your business is a simple wrapper around third-party software that could be disrupted by a single LLM update.

To prepare, use Keith Cunningham's Thinking Time to evaluate your positioning. Ask: How does our use of AI create high switching costs for our customers?

You must show that your value lies in your proprietary workflows, your curated training data, and the human relationships that tie your clients to your business. When valuation experts apply multiple valuation methods, they compare market approaches with discounted cash flow models. A buyer looking at a market approach will compare your headcount efficiency to industry benchmarks. If you run a lean team with high revenue per employee, you will command a premium.

However, to secure that premium, you must show that your processes are fully documented inside your EOS® Core Processes. Proving that your human team has the GWC™ to manage, refine, and adapt these AI systems means the buyer is acquiring an operational engine, not just a temporary software advantage. Ensure your V/TO® clearly details this defensibility.