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Acquiring an AI business – Not your typical tech transaction

Author(s): Michael Fekete, Sam Ip, Shira Dveris

Dec 13, 2021

The race for leadership in artificial intelligence (AI) technology picked up speed in the past year. Multinational and domestic players were relentless in their quest for game-changing AI-enabled solutions and the accompanying talent, including leading data scientists and experienced machine learning engineers. While development and refinement of AI technologies still represent an important growth area for these issuers, growth through acquisition was certainly a noticeable trend in 2021 – one that we anticipate will continue to intensify in the coming years.

The past year also brought into focus how the acquisition of an AI company raises unique risks for purchasers that, in many respects, differ from those in transactions involving traditional technology and software companies. These risks require a re-thinking of legal due diligence and allocations of risk in purchase agreements. Given the novelty of these types of transactions, expertise in AI acquisitions is still developing and purchasers should ensure that they have professional advisors with the best experience and knowledge available to protect themselves...