How AI Is Changing Business Valuations in 2026

Two years ago, buyers asked about your revenue, your margins, and your management team. They still ask about those things — but now they also want to know what you're doing with AI.

AI isn't just a buzzword in M&A anymore. It's actively changing how buyers assess risk, evaluate growth potential, and determine what they'll pay. If you're planning to sell in the next few years, understanding this shift matters.

What's Actually Changing

Buyers Are Pricing In AI Efficiency

Sophisticated buyers — especially private equity firms and well-funded search fund operators — are now modeling AI-driven efficiency gains into their post-acquisition plans. They look at your current operations and ask: "How much margin improvement can we unlock with AI tools?"

If you're already running an efficient operation with AI-assisted processes, you're showing them the ceiling is even higher. If you're still running everything manually, they see both an opportunity and a cost — the investment required to modernize your business after close.

That modernization cost gets subtracted from what they're willing to pay upfront.

Due Diligence Now Includes Technology Assessment

Ten years ago, buyers checked your financials, your legal exposure, and your customer contracts. Now many buyers — particularly PE firms — include a technology and automation assessment in their diligence process. They want to understand:

• What software and systems the business runs on
• How data flows between departments
• Where manual processes create bottlenecks or error risk
• What automation and AI tools are already in place
• How dependent the business is on legacy systems that are expensive to replace

A business running on spreadsheets, paper records, and manual data entry isn't just less efficient — it's a diligence red flag that signals operational risk.

AI-Resilient Businesses Command Premium Multiples

Buyers are now evaluating whether your business is AI-resilient — meaning, is it positioned to benefit from AI rather than be disrupted by it?

Businesses that provide services requiring human judgment, physical presence, regulatory expertise, or complex relationship management are seen as AI-resilient. Think: HVAC repair, medical practices, legal services, specialty construction.

Businesses that primarily do work AI can automate — basic data entry, simple content production, routine customer service, straightforward bookkeeping — face pressure on both revenue and multiples.

This doesn't mean those businesses are worthless. But buyers are now discounting future earnings for businesses with high AI displacement risk, and paying premiums for businesses with low displacement risk.

How AI Readiness Affects Your Multiple

The valuation impact isn't theoretical. Here's how it's playing out in deals right now:

Premium factors (can add 0.25x–0.75x to your multiple):

• AI tools integrated into core operations (CRM automation, AI-assisted scheduling, automated reporting)
• Data infrastructure that enables AI adoption (clean CRM data, structured operational data, API-connected systems)
• Evidence that AI has already improved margins or productivity
• Team that's comfortable with technology adoption

Discount factors (can reduce your multiple by 0.25x–0.5x):

• No CRM or modern business software
• Paper-based processes for critical functions
• No digital record of customer interactions or operational data
• High proportion of revenue from services easily automated by AI
• Workforce resistant to technology change

The exact impact depends on your industry, your size, and your buyer pool. But the direction is clear — AI readiness is becoming a valuation input.

Industries Where This Matters Most

Industries Seeing AI-Driven Multiple Expansion

IT managed services and cybersecurity. Demand is surging as every business needs AI infrastructure and the security to protect it. MSPs and MSSPs with AI capabilities are commanding strong premiums.

Healthcare services. AI is creating efficiency gains in scheduling, billing, diagnostics support, and patient communication — but the core clinical work still requires humans. Practices that have adopted AI tools while maintaining clinical quality are extremely attractive to buyers.

Home services. AI-powered dispatching, pricing optimization, and customer communication are boosting margins for early adopters. The core work (fixing an AC unit, replacing a roof) can't be automated. This combination of AI-enhanced operations with non-automatable services is exactly what buyers want.

Professional services. Accounting firms, law practices, and consulting businesses using AI to handle routine work while focusing their teams on high-value advisory are seeing margin expansion that directly boosts valuations.

Industries Facing AI-Driven Pressure

Staffing for routine roles. AI is reducing demand for temp workers in data entry, basic customer service, and administrative functions. Staffing firms focused on these segments face revenue headwinds.

Basic marketing and content agencies. Agencies that primarily produce commodity content, run templated campaigns, or do work that AI tools now handle are under pressure. The ones pivoting to strategy, creative direction, and AI-augmented production are adapting.

Print and traditional media. Already under pressure, AI is accelerating the shift away from print advertising and traditional media buying.

Simple bookkeeping and tax prep. AI tools are automating a significant portion of routine bookkeeping. Firms that haven't moved upmarket to advisory services face shrinking margins.

What Buyers Are Looking For Right Now

When buyers evaluate your business in the context of AI, they're asking five key questions:

1. Is the core revenue stream AI-proof? Can AI replace what this business does, or does the business provide something that requires human skill, judgment, or physical presence?

2. Has the business adopted AI where it makes sense? Not every business needs cutting-edge AI. But buyers want to see that you've adopted tools that improve efficiency — automated scheduling, AI-assisted customer communication, intelligent routing, automated reporting.

3. Is the data clean and accessible? AI runs on data. If your customer records are in a shoebox, your operational data lives in someone's head, and your financial data requires weeks to compile, the business can't leverage AI effectively. Clean data is an asset. Messy data is a liability.

4. Is the team adaptable? Buyers want teams that embrace tools and process improvement, not teams that resist any change. A track record of successful technology adoption — even simple things like moving to a cloud-based system — signals adaptability.

5. What's the AI upside? If a buyer can implement AI tools to improve margins by 3-5 points post-acquisition, that's real value they can model into their return assumptions. Businesses that offer clear AI upside without requiring massive overhaul are attractive.

What This Means for Your Exit Planning

If you're planning to sell in the next 1-3 years, AI readiness should be part of your preparation — not because you need to become a tech company, but because buyers are already factoring it into their offers.

Start small and practical. You don't need a machine learning team. Implement a modern CRM if you don't have one. Automate your appointment scheduling. Use AI tools for customer follow-up and review management. Set up automated financial reporting.

Clean up your data. Make sure your customer records, financial data, and operational metrics are digital, organized, and accessible. This is valuable regardless of AI — but it becomes essential if you want buyers to see AI potential in your business.

Document what you've done. If you've already implemented AI tools, document the results. "We implemented AI-assisted scheduling and reduced dispatch costs by 12%" is a concrete data point that supports a higher multiple.

Focus on what AI can't replace. Double down on the human elements of your business — relationships, expertise, physical services, complex problem-solving. The more your revenue depends on these things, the more AI-resilient your business looks.

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Wondering how AI readiness factors into your business's valuation? Schedule a conversation to talk through your specific situation.