Should AI be part of your acquisition strategy?

As AI becomes increasingly integrated into business operations, searchers face new considerations when evaluating potential acquisitions. To understand the practical implications of AI for SME buyers, we spoke with David Ferrin, Managing Director at Projecting by Izertis and Moonbase Capital Advisory Board member, and Ahmed Bakir, Data and AI Consultant at Moonbase Capital. Their insights reveal how AI can create competitive advantages without requiring tech giant resources. The current SME acquisition landscape shows growing interest in businesses with operational efficiency advantages. AI capabilities often provide these advantages, but searchers must distinguish between genuine operational improvements and marketing hype when conducting due diligence. A) Evaluating AI during Due Diligence When assessing target companies, understanding existing AI integration proves crucial for accurate valuation. As David notes, many businesses already benefit from AI through standard software subscriptions like Microsoft Copilot or Google's productivity suite. These embedded capabilities can significantly impact operational efficiency without appearing as separate line items. Ahmed emphasizes examining the operational foundation: "Much of the successful AI applications are at an operational level serving specific functions within an organization." -> During due diligence, focus on how AI tools reduce manual effort, improve accuracy, and streamline workflows rather than seeking transformational technologies. Key evaluation areas include data quality, existing technology infrastructure, and team capabilities. Companies with clean data processes and adequate technical foundations offer better post-acquisition AI implementation opportunities. B) Post-acquisition implementation strategy Successful AI implementation follows established project management principles rather than requiring revolutionary changes. David advocates systematic planning: "It's about being systematic and making sure that you're running it as if you were running a big project." Ahmed recommends starting small: "Taking small, gradual steps towards change is always the best approach for companies wanting to modernize their operations while maintaining their core business disruption-free." -> Pilot projects running alongside existing operations allow teams to adapt while providing immediate value. C) Immediate value applications Our interviewees identified 3 areas that offer quick wins for SME acquirers. 1. Marketing automation can transform resource-intensive activities into manageable processes where business knowledge guides AI execution. 2. Customer service automation through solutions like chatbots can improve service quality without expanding staff. 3. Research and analysis capabilities can enhance decision-making processes and competitive intelligence gathering. -> The key insight is avoiding the need to build AI from scratch. As Ahmed explains, "There is often no need to build solutions in-house, except in cases where companies have complex processes or large proprietary data that need to be integrated." To sum up… - Success comes from understanding that AI augments human capabilities rather than replacing them. - Focus on operational improvements rather than transformational changes, and maintain realistic expectations about current technology capabilities. - The opportunity exists not in building advanced AI systems, but in thoughtfully applying accessible tools to create measurable business value. Keen to hear from you: how are you incorporating AI into your acquisition strategy? P.S. For thos interested, we posted the full piece on our website: https://moonbasecapital.com/ai-for-smes-from-hype-to-hands-on-advantage/