We have spent the last twelve months building a proprietary AI scheduling platform, but it is only seventy percent complete. A strategic buyer wants to acquire us now but is giving us zero value for this unfinished asset. How do we use a real options framework to negotiate a fair price for this technology?

Question

Tyler Smith · Accepted Answer

Strategic buyers often discount unfinished technology because they view it as a high-risk liability rather than an asset. To counter this, you should utilize a strategic real options framework. This approach allows you to structure the transaction so you are paid for the future potential of the platform without forcing the buyer to take on all the upfront risk.

Start by calculating the flow cost of waiting to complete the platform yourself versus the lump-sum cost of the buyer completing it with their own engineering resources. If you have private information about the platform's high quality and its ability to reduce operational costs, you must prove this capability to reduce information asymmetry. Build a working prototype that demonstrates a completion task, such as automatically generating scheduling outputs with high accuracy.

Instead of accepting a zero valuation, propose a structured earn-out or a contingent payment. Tie this payout directly to specific development milestones, such as the platform reaching full deployment or hitting a defined user adoption rate post-close. This structures the unfinished technology as an option contract.

If the buyer completes the platform and realizes the cost savings, you receive a share of that created value. If they choose not to pursue it, they lose the option, but you have protected your downside by securing a fair price for the core business today.