My last post, When to Sell Your Business in the AI Era (Sooner Than You Think), generated a ton of calls from business owners, all asking some version of the same question: what's the harm in waiting to see what happens with AI?
Fair question. Here's the answer: waiting has a price, and it's bigger than you think.
Let me restate my case from the last post: AI is coming for every business. Not some businesses. Every business. And it doesn't have to come through your front door. Maybe AI never touches what you do, but it guts your customers' industry, and their problem becomes your problem. You don't need to be the target to take the hit. You just need to be downstream of one. The only variable is when, and nobody, including you, including me, knows the answer to that. Which means every day you wait, you're playing Russian roulette with your valuation.
Most owners think waiting is free. Business is good, revenue is growing, so every year you hold is another year of profits, and you can always sell later. That math works in a normal world. It doesn't work in this one. Here's why.
The AI Repricing
Buyers buy businesses for future cash flows. The moment buyers believe AI will shrink a business's future cash flows, they cut the multiple they'll pay to acquire that business. Across the whole industry. All at once.
I call it the AI Repricing. And it happens before AI touches your revenue. Not when AI starts taking customers from you. Sooner. It happens when the market sees a future where AI takes customers from you. Your revenue can be at an all-time high on the day your industry gets repriced.
Don't believe me? It already happened to software. A software company doing $10M in revenue was worth about $62M at the end of 2024 (6.2x revenue). Fifteen months later, that same company is worth about $33M (3.3x). Same company. Same revenue. Half the value, because the market repriced software companies based on the impact it saw AI having on their future cash flows.
The owners of those companies didn't do anything wrong. They just waited. That wait cost them $29M.
The math of waiting
Let's make it concrete. A friend runs a business doing $10M in EBITDA at a 6x multiple, so the business is worth $60M today.
Say some AI announcement comes out tomorrow that looks like it could eventually impact the future profits of his business. Not today, not next quarter, but eventually. That's all it takes. The multiple drops, let's say to 3x, and the same business that was worth $60M yesterday is worth $30M today. Same customers, same revenue. Waiting one day too long cost him $30M.
"But I'll grow into it." Do the math. At 3x, he needs $20M in EBITDA to be worth the same $60M he's worth right now. That's doubling the business just to break even on value. Waiting doesn't just risk the downside. It raises the price of standing still.
Why you can't wait for a warning
Nobody saw the software repricing coming. At the end of 2024, software owners were sitting on their best numbers ever, and nobody was calling their bankers. Software was the industry building AI. If anyone was going to see the repricing coming, it was them. They didn't.
And understand what the software story actually tells you. The question was never whether AI would come for software. It was when. That's true for your industry too. The AI Repricing isn't a risk that might hit some businesses and spare others. It's coming for every business. The only unknown is the date, and that's the one thing nobody can tell you: no warning, no schedule, no memo. Could be 5 years out. Could be tomorrow.
So here's the real cost of waiting. You're not betting on whether your industry gets repriced. That bet is already settled. You're betting on when, and every day you hold, you're betting your entire multiple that today isn't the day. Pull the trigger enough times and eventually you find the chamber.
Ask any software founder if they wish they'd sold at the end of 2024.
I'd take the multiple I can see over the one I can't.