The buyer wants to exclude our custom-built AI assets from the transaction assets while keeping the operational efficiency they generate in the EBITDA calculation, effectively wanting the upside of our tech for free. How do we structure the IP transfer and valuation to prevent this cherry-picking?

Question

Tyler Smith · Accepted Answer

This is a classic buyer maneuver: they want the high profit margins generated by your proprietary technology, but they want to class the software itself as a zero-value internal tool. You must not let them split the operating efficiency from the asset that creates it. If the buyer wants the EBITDA generated by your AI workflows, they must purchase the intellectual property at a premium, or license it from you.

To prevent this, structure the transaction with a clear separation of assets. First, place your custom AI assets into a separate holding company prior to marketing the business. Then, present the buyer with two distinct transaction paths.

In path one, they buy the operating business and lease the software from your holding company via a long-term, non-exclusive licensing agreement with a market-rate software-as-a-service fee. This fee becomes an operating expense for the business, which lowers the EBITDA they are buying but secures you a recurring income stream.

In path two, they buy both the operating business and the intellectual property under a blended valuation multiple that accounts for both service earnings and software value. By forcing this structure, you compel the buyer to pay for the proprietary technology that makes your high margins possible.