How AI Is Shaping the Valuation of Private Companies

Artificial Intelligence (AI) has rapidly become one of the leading factors in how investors and buyers are valuing private companies. While AI itself is not a new concept, the proliferation of generative AI, machine learning applications, and AI-enabled productivity tools has heavily influenced the financial and strategic drivers of valuations and re-shaped M&A transaction dynamics.

Key Takeaways

• AI integration has become a significant value driver in private company valuations.
• AI offers measurable financial and operational efficiency gains, leading to increased EBITDA margins and higher valuation multiples.
• The presence of proprietary AI assets in a company can command significant valuation premiums by being valued as intellectual property, creating competitive barriers to entry.

AI Integration as a Value Driver

Private companies adopting AI in their operations often see measurable financial and operational efficiency gains. For example, a logistics firm uses AI-driven routing software to cut fuel costs and improve delivery times. According to analysts at PrivCo, companies using AI-driven logistics enhancements achieve approximately 15% cost reductions, 35% inventory improvements, and 65% service-level gains. These efficiency gains increase EBITDA margins and position them as more attractive acquisition targets. Buyers will pay a premium for businesses that demonstrate sustainable cost reductions from AI integration. AI also enables smaller firms to leapfrog larger competitors with minimal capital outlay, minimal IT investment, or minimal new hires, resulting in tangible operating and financial results.

According to a recent survey from FTI Consulting, 59% of Private Equity funds now view AI as one of the key drivers of value creation, outstripping traditional factors such as historical growth, customer retention, and cyclicality.

In a recent client example, a regional distribution company that implemented AI demand forecasting improved inventory turnover by 15%. The EBITDA increase translated into a higher valuation multiple, moving from ~7x to ~9x EBITDA.

AI as a Risk Factor

Valuations are also s reduced by the risk AI poses to existing business models.  For example, white-collar professional services firms in areas like basic tax prep, legal research, or content production face potential downward pressure if AI can automate their service offerings. Investors discount valuations where the risk of commoditization is high.

In a recent client example, a marketing agency that relies heavily on copywriting and design saw buyers push for a lower multiple, citing the emergence of AI tools (such as Jasper, Canva, and Midjourney) that can replicate much of the firm’s core service at scale.

Premiums for Proprietary (Native) AI Assets

Companies that own proprietary (native) AI technology can potentially command significant premiums. Unlike traditional goodwill, AI assets can be valued as intellectual property, especially if they raise barriers to entry from competitors.

In a recent client example, a healthcare analytics company with access to a proprietary patient database secured a 12x revenue multiple in a PE deal because its data powered a machine-learning engine that major competitors could replicate.

Valuation Examples of Companies with Native AI Technology

• Anthropic’s value climbed to $183 billion in September 2025 following a $13 billion Series F funding round—nearly a 3x increase from its $61.5 billion valuation in March 2025. Investors cited its explosive growth and AI-driven enterprise traction as justification for such a significant valuation jump.
• OpenAI is reportedly in talks to sell $6 billion in shares, potentially pushing its valuation to $500 billion, which would make it the highest-valued private company globally.
• Databricks, a major AI-powered analytics firm, reached a valuation of $62 billion after a $10 billion funding round. Its forecasted revenue run-rate and strong enterprise demand were cited as key factors.
• OpenEvidence, a private AI healthcare startup, increased its valuation from $1 billion (following a Series A in early 2025) to $3.5 billion by mid-2025 after a Series B rise attributable to growing client adoption.
• Glean Technologies, focused on enterprise AI search, attained a $7.2 billion valuation in mid-2025 after its Series F round, up from $4.6 billion in 2024.
• Applied Intuition, specializing in AI tools for autonomous systems, rose from a $6 billion valuation in 2024 to $15 billion by June 2025 following its Series F round.

Sector-Specific AI Valuation Impacts

Manufacturing & Distribution

AI-enabled predictive maintenance reduce downtime and Capex, reducing cash flow requirements. Multiples increase when buyers can underwrite lower future capital expenses.

Food & Beverage

AI-driven consumer insights platforms help mid-market brands test new product launches at lower cost, supporting faster growth projections and higher valuations.

Tech & SaaS

Firms embedding AI into existing software are seeing valuation uplifts of 40–100% compared to non-AI peers, as strategic buyers and Private Equity firms compete for unique assets.

Empowering Business Intelligence with AI

While AI can boost valuations, the valuation uplift is not uniform or guaranteed. Buyers scrutinize whether AI adoption is superficial (e.g., using publicly available products such as ChatGPT) or deeply embedded and seamlessly integrated into business operations. Companies reporting tangible financial improvements from AI—higher margins, reduced churn, faster product cycles—secure premium multiples. Companies that operate without AI embedded or whose business models are threatened by AI risk are facing either flat valuations or outright valuation discounting.

AI has the power to transform private capital markets, making it now an explicit line item in valuation discussions. For sellers, demonstrating how AI strengthens their competitiveness or improves operational and financial performance can result in a significant increase in Enterprise Value. For buyers, AI is both a potential source of upside and a basis of risk mitigation. AI is not just changing operations; it is changing how companies are priced. To learn more about how AI can enhance your decision-making and empower business intelligence, contact us below.