Are you including the possibility of AI disrupting your target?

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May 26, 2023

by a searcher from University of Florida in West Palm Beach, FL, USA

One factor that is often overlooked is the risk of disruption from artificial intelligence. With the rapid advancements in AI, many companies could face new competitors that emerge almost overnight. It's important to evaluate whether a potential target could be disrupted by AI, machine learning, or other emerging technologies. The companies that are investing in their own AI and automation may be better positioned for the long run.

Does your acquisition checklist include evaluating the risk of disruption from AI and emerging technologies? What other factors do you see as most important when evaluating acquisition targets?

Please share your thoughts!

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Reply by a searcher
from Harvard University in New York, NY, USA
Disruption is insanely hard to predict before it's happening. Good to think about a little but you could easily miss disruption that will occur. VCs are right about 5% of the time and this is our job. Taxi medallion owners didn't see Uber/Lyft coming in early 2010s, Blockbuster store owners didn't see Netflix coming in mid-2000s, during the early fintech emergence 5-7 years ago, VCs were betting one of two ways - startups would take down the big banks or big banks would defeat their startup challengers; neither of those happened and both have done really well over that time period.
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Reply by a searcher
from Naval Postgraduate School in Washington, DC, USA
Absolutely, evaluating the risk of disruption from AI and emerging technologies should be a key part of any acquisition checklist. In this rapidly evolving tech landscape, the companies that have invested in these technologies or at least show the potential to adopt and leverage them could indeed have a strategic edge.

However, while the potential for AI disruption is certainly an important consideration, it’s just one piece of the puzzle. A holistic approach to evaluating acquisition targets can help mitigate risk.
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