The impact of AI on business value (with practical examples)

Entrepreneurs frequently wonder what their company is worth. Traditionally, this involves looking at turnover, profit, or dependency on the owner. Recently, a new aspect has been added: the impact of AI on the company’s business model.

For accountants and other advisors, this means that when calculating the value of a company, the impact of AI on operations, the business model, and consequently the price a buyer is willing to pay must also be explicitly mapped out.

AI can turn out positively or negatively

Buyers and investors are now looking beyond historical EBITDA. During due diligence processes, the question of how future-proof a business model is in light of automation arises more and more frequently. This means that the valuation of a company is no longer just a matter of applying multiples to normalized profit, but also of assessing how sustainable that profit is.

This can work two ways for a company:

• Positive: a company that has already smartly automated processes and has its data in order is more attractive to buyers and can justify a higher multiple because buyers expect the company to scale more efficiently, be less dependent on personnel, and be better able to maintain future growth.
• Negative: a company that relies heavily on labor-intensive, repeatable tasks (such as administrative services or simple customer service) runs the risk of buyers building in a risk premium or adjusting the expected profit growth downwards.

Accountants are pre-eminently the right party to put this conversation on the agenda in a timely manner, often earlier than an M&A advisor, because accountants already have structural insight into their clients’ figures and business operations. Below is a practical overview to conduct this conversation effectively, featuring four topics to put on the agenda.

1. Data quality and accessibility

Ask your client whether the business data is clean, structured, and accessible, or whether everything is still scattered across separate Excel files and systems that do not communicate with each other. This is not only relevant for AI applications, but also for the quality of the figures you use yourself for annual accounts and valuation calculations. Poorly organized data is a red flag for any buyer.

2. Degree of automation in core processes

Help your client map out which business processes are already (partially) automated and which are still entirely manual. Automation can reduce future costs and increase profit margins. This can therefore increase the valuation. A buyer will assess the extent to which the automation potential has already been realized or can still be utilized.

3. Dependency on key personnel

Companies where a lot of knowledge resides with a few people are more vulnerable during an acquisition. Discuss with your client whether AI can help to better record knowledge and processes, so that the enterprise becomes less dependent on individuals. This is a classic valuation risk that can be partially mitigated through good documentation and automation, and it is something you as an accountant have been pointing out for some time, now with an additional instrument at your disposal.

4. Long-term vulnerability of the business model

This is perhaps the most sensitive conversation: is your client’s sector vulnerable to disruption by AI? Consider services that are relatively easy to automate. This need not be a reason for panic, but it is a reason to look ahead. A buyer will likely ask this question during due diligence: it is better for your client to already have a well-thought-out answer than to be blindsided by it.

Practical example: how a Register Valuator weighs this

To make this tangible, we asked Bas van Bergeijk, Register Valuator at Van Bergeijk Valuations and associated with ValuePartner as an external valuation specialist, about his experiences. He determines the economic value of companies daily: in M&A transactions, in disputes between shareholders, and for tax authorities. According to Van Bergeijk, the three elements that valuation always revolves around are cash flow, risk, and time. “I try to incorporate as many risk elements as possible into the cash flow, and for that, a sound business analysis of the business model is required. With AI, I am concerned with the impact on that business model, and subsequently the impact of that on future cash flow.” Van Bergeijk shares two recent examples where AI influences cash flow, but with very different implications for the value of the enterprise.

Case 1
The first example is a company active in IT, specifically in Business Process Management and implementation via low-code solutions. In this industry, applying AI has now become a necessary condition to maintain the business model. Qualified personnel is the most important resource, but the rise of AI changed the knowledge and competencies required to continue serving clients well: where previously knowledge of low-code technology was the primary factor, this has partially shifted. As a result, the composition of the workforce has partially changed. Precisely because this development was visible and well-substantiated, the seller was able to make their forecast convincing. The buyer gained confidence in the continuity of the business model and was willing to pay for it.

Case 2
The second example comes from marketing, at a company that creates content for social media. To determine a strategy for clients and subsequently create content, thorough research into the market, the target group, and brand building is required. That research previously cost the company approximately 200 hours; by using AI, it now takes only 20 hours, at the same budget for the client. That has a major positive impact on the realized margin. However, as Van Bergeijk indicates, the question is how long that advantage will last: “As soon as the competition or the market starts using this as the new standard, downward pressure on margins arises. This temporary advantage is now visible in the short-term cash flow, but will have to be reflected somewhere in time. The only question is: will that happen in the coming year, or will it take several more years? This starting point is negotiable in a commercial process, but in a valuation, the valuator will still have to take a position based on input from the stakeholders.”

The two examples show why the conversation about AI cannot be conducted in general terms, but must be approached per company and per process. The same technology can structurally strengthen one business model, while providing a temporary margin advantage for another that fades as soon as the market catches up. For accountants, that is precisely the reason to conduct this conversation with clients now: the sooner it is clear which scenario applies, the better the forecast and the final valuation can be substantiated.

Four steps for concrete advice

Advise your client to take the following steps well in advance of a potential sales process:

• Inventory automation potential. Show which steps have already been taken, even if they are small, tangible improvements. This strengthens the narrative towards a buyer.
• Invest in data quality. Accessible, reliable data is the foundation for further automation after acquisition and makes a company demonstrably more attractive.
• Be transparent about risks. A buyer values honesty about vulnerabilities more than a sales pitch that glosses over reality, and it prevents subsequent discussions about warranties and escrow provisions.
• Build a substantiated future narrative. Why is the company well-positioned for the coming years? This can literally translate into the multiple a buyer is willing to pay.

Strategic role of the accountant

As an accountant, you are often at the table early, long before a sales process becomes concrete. That makes you the right person to put this subject on the agenda in time: not as a standalone IT theme, but as an integral part of the valuation discussion. By proactively involving clients in this, you not only increase their chances of a good outcome in a future sale, but you also strengthen your own position as a strategic advisor, not just a number cruncher.

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