AI Acquisitions Need Patient Operators
Buying a traditional business and automating its workflows can create value, but success depends on industry knowledge, patient change and the people who understand how the company works.
Developed from a conversation between Pete Winn and Andy David
The appealing AI acquisition playbook is simple. Buy a traditional service business, automate its manual workflows, cut staff and keep the extra margin. The opportunity is real, but the neat version leaves out what makes the business function. Many problems are peculiar to an industry, while crucial operating knowledge may be unwritten and held by people who can walk out after the transaction.
A stronger starting point is a good business, not merely an obvious target for automation. New owners need to listen to its operators, preserve key knowledge and understand why apparently inefficient processes exist before removing them. AI is often more useful when the person who already controls the business applies it to pain points they experience firsthand, making small changes and learning from each one.
That patience changes the economics. A company without concentrated key-person risk is likely to cost more, while meaningful operational change can take years rather than a quick series of workflow replacements. Even experienced private equity firms accept that some acquisitions fail. AI may improve a business, but it doesn’t abolish change management, industry nuance or the need to buy carefully in the first place.