Private Company Sellers - AI-Driven Valuation Gaps

I am working on an article and wanted to test the concept here. I would appreciate your anecdotal experience and critical feedback, as I have not found any research on this exact topic yet. "Your AI says premium. The buyer's says discount. Neither is the market." LMM transaction volumes are down this year for many reasons: softer financial performance, uncertainty, tougher lending, and tighter buyer mandates. I also strongly suspect AI is quietly widening valuation expectation gaps. This is not a criticism of AI. I use it all the time. It has transformed research, strategy, diligence, and deal analysis. The issue is owners using AI to value their business or challenge advisors without asking it to build the opposing case. Without that step, anchoring, confirmation bias, loss aversion, and overconfidence can take over. Owners feel they are "losing money," even when the reference point was never supported by the market or an actual offer. Three recent examples (thank you Olivia Devereux for your input here). 1. A manufacturing owner concluded his business was worth $2–2.5 million based on AI and future projections, despite EBITDA falling from roughly $450,000 in 2024 to a ($75,000) loss year-to-date. To add salt to the wound, AI told him his equipment was EXCLUDED. 2. A food manufacturing company with $5 million in revenue and $700,000 adjusted EBITDA used AI to justify a $6–9 million valuation, with $8 million as the minimum acceptable price. (My estimate was closer to $2.5–3.5 million.) 3. A business services founder projected $600,000–700,000 in SDE and initially believed his company was worth $10 million based on AI. After discussing how buyers actually underwrite acquisitions, he understood why that was unlikely. Years ago, owners brought a BizBuySell printout or their accountant's opinion. Today they bring a polished AI analysis explaining why they deserve a premium multiple. The confidence of the explanation has increased dramatically. I have not yet see the predictive accuracy do so. AI can explain the market. AI can summarize the market. AI can model the market. But AI is not the market. The market is where a qualified buyer is willing and able to close on agreed terms. Are other advisors, lenders, buyers, attorneys, or business owners seeing the same trend? #mergersandacquisitions #investmentbanking #buyingabusiness #sellingabusiness #businessvaluation