AI Has Made Valuing Companies Harder. Here's Why
AI has made valuing software companies harder, says David Sambur, co-head of private equity at Apollo. In his view, the old SaaS multiples do a worse job of capturing a business's future value, because AI is changing the product, the margins and the competitive landscape. Deals have not stalled, though. Even with uncertainty surrounding Iran, big players keep hunting for assets and treat volatility as a window to buy.
AI-processed from Bloomberg Tech; edited by Hamidun News
How does AI affect company valuations? Artificial intelligence is changing not only the products themselves but also the logic of deals in the software market.
Why has AI made valuing software companies harder?
AI is rapidly changing cost structures and the speed at which products ship. That makes the old benchmarks (revenue growth, customer retention, SaaS subscription margins) less reliable for investors.
How does AI adoption affect M&A deals in software companies?
Classic valuation models rest on predictable subscriptions and customer retention, but AI is quickly reshaping that structure, which complicates long-term forecasts for investors.
Key Questions Answered
Why has AI made valuing software companies harder?
AI is rapidly changing cost structures and the speed at which products ship. That makes the old benchmarks (revenue growth, customer retention, SaaS subscription margins) less reliable for investors.
How does AI adoption affect M&A deals in software companies?
Classic valuation models rest on predictable subscriptions and customer retention, but AI is quickly reshaping that structure, which complicates long-term forecasts for investors.
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