EP 75 | AI, M&A, and the New Rules of Exit Planning with Jeff Willinger

Sleep Number's new collections are designed to adapt to the changing nature of your life and your sleep needs. Whether it's the personalized comfort of the Comfort Mode mattress, the targeted pressure relief of the Comfort Next mattress, or the Climate Collection that actively cools or warms to help you fall asleep and stay asleep.

And now, get early access to our biggest sale of the year. Save 25% on the new Comfort Next Luxe for a limited time. Only at a Sleep Number store or sleepnumber.com.

Hey, it's Ryan Reynolds here for Mint Mobile.

Now, I was looking for fun ways to tell you that Mint's offer of unlimited premium wireless for $15 a month is back. So I thought it would be fun if we made $15 bills, but it turns out that's very illegal. Uh, so there goes my big idea for the commercial. Give it a try at mintmobile.com/switch.

Upfront payment of $45 for 3 months, $90 for 6 months, or $180 for a 12-month plan required. $15 per month equivalent to taxes and fees extra. Initial plan term only. Greater than 50 gigabytes may slow when network is busy. See terms.

Welcome to the Exit Engine Podcast, episode 75. Welcome to the Exit Engine Podcast, where we help founders, owners, and entrepreneurs turn their businesses into assets buyers fight for. If you're looking to grow smarter, reduce risk, and ultimately exit stronger, this is the show for you. I'm your host, Jo Stapleton. And with me, as always, is my partner in value and salability, Mr. John Kniff. Good morning, John.

Good morning, Jo.

Uh, today, John, is exciting because we're going to talk about, I think, that something that everybody's been, you know, is on everybody's mind all the time right now, and that's AI. Yes, but it's AI and, and how it affects M&A. Yep, the letters AI, M&A. We're going to talk about it all today. It's going to be an exciting episode.

I'm excited to hear from our expert about all the ways that AI can affect mergers and acquisitions.

Excellent. Very cool. But first, John, let's talk about the new ExitEngine ecosystem. We've just launched what we think is going to be a very valuable and important platform for those of you who care enough about their businesses and your own futures that that you're going to want to learn and grow towards a successful exit.

Yeah, it's everything and everyone you'll need to plan and execute a successful exit on your own terms and timeline. ExitEngine helps founders grow smarter and exit stronger by providing diagnostics, roadmaps, coaching, community, and advisory support that reduce risk, increase value, and make businesses buyer-ready. It's the first exit planning ecosystem in the world And you can start for free right now. Just go to www.myexitengine.com.

Excellent. John, artificial intelligence is rapidly transforming the world of M&A, right? We are seeing things every day, new technologies, new platforms, new stuff that's kind of all over the place. AI is really— and again, this isn't just about M&A. AI is right now everywhere. It's the talk of everything right now. But when it comes to M&A, AI really is taking what has historically been a highly manual kind of intuition-driven process, right, and infusing it with more data precision, pattern recognition, and real-time analysis, which is really key, especially to make things go faster, right?

Yeah, and it's— yeah, and one of the things that we've talked to a number of vendors and we've talked to a number of people about how they're, as an example, they're gathering information, right? We talked to a couple of people who are Instead of having to manually go through files, they have all sorts of artificial intelligence where you can dump everything into a Google folder and they take, you know, you dump 100 documents in the Google folder, the AI mashes it up and then spits back a memo, a confidential memorandum, spits back a financial model, and basically does all that manual work, as you said, in very real time or in, you know, 5 minutes.

No question. Very, very quickly. I mean, we're seeing products now out there. We're seeing AI-driven, you know, quality of earnings tools. We're seeing AI, you know, AI, like you said, you know, AI SIMs, right? Confidential information memorandums. But AI is also more than just a set of tools, right? It's becoming a strategic lever. And what we gotta understand too is that as you prepare for sale, that's really where AI starts to act. It can really enter the picture from the founder's perspective, right?

Yeah.

There are going to be ways, there are ways in which we can transform our companies using AI to make them more valuable and sellable too, right? So yes, the AI is being used by M&A people like us to be able to speed the process, to be able to make faster decisions and things like that. That might be good for you as a company, or it might be bad, right?

Right.

Because again, it's a matter of if I'm— if I've got a quality of earnings tool and I can run all my— if I'm a buyer and I've got a QoE, an AI QoE tool that I can run, you know, all my prospect companies through and the whole thing and instantly show me if they're sellable or not, or if they're a good value for me, right? Well, that's good for me, for the buyer, but what's it actually doing right, for the sellers.

Yeah.

So there's, there's a lot of ways. And so that's where our guest today comes in, okay? Because our guest today is Jeff Willinger. He's a digital transformation expert with more than 2 decades of hands-on enterprise strategy under his belt. Jeff isn't interested in throwing more tools at your problems. He's about real results. From helping global enterprises modernize infrastructure and align their tech with business outcomes to implementing AI-driven workplace transformations, Jeff has seen it all. He's a former Microsoft MVP. He's the founder of Willinger Plus. He advises companies navigating the chaos of AI integration, Microsoft ecosystem optimization, and digital collaboration, transforming complex environments into streamlined, secure, scalable solutions. Today we're going to talk about AI and getting ready for sale. Mr. Jeff Willinger, thanks so much for being on the Exit Agent Podcast.

Wow.

I guess if I was playing buzzword bingo, I think I would have bingo by now. It is great to be here.

It's awesome to have you here, Jeff. We've talked a bunch before. We're obviously all kind of aligned on how AI is transforming lots of things in business. But talk to us a little bit about what you're seeing kind of in a general way in terms of AI and its effect on the M&A world and its effect on companies making exits and things like that.

Great, great start. You know, when people think about exit strategies, they— I mean, this is what you've been doing most of your careers, right? They often focus on timing and valuation. But from what I've seen in the past few years, that AI is quietly rewriting what value even means in a business sale.

True.

So if you look at 10 years ago, buyers would look at your financials, your people, your processes, your clients. Today they're looking at your data maturity, how you collect it, analyze it, and act on that information. The D word, data, we just don't talk about it enough. I just spoke at a data conference and that's all we talked about is using data to make better decisions. It's because AI really turns data into foresight, and foresight, guess what, it turns it into predictability, which turns into valuation because As buyers get more scrutinous, they really, it's not replacing people, it's really increasing confidence, confidence in your numbers, your pipeline, and your customer retention metrics, obviously, that drive the deal, right?

Right, it's risk reduction, right? I mean, at the end of the day, that's what every buyer is looking to do, right, is to be able to monitor what is the risk profile What am I looking at in terms of, if I take this business over right now, right, what am I looking at from a risk standpoint? And also, I think so, I think the AI thing can come in there. We've already talked to a bunch of people, even on this podcast, about risk particularly, and about, hey, how AI helps them, helps manage risk in general. But in terms of things like insurance and, you know, like you said, the foresight, the predictability about certain outcomes, But what you're saying is, no, no, now when a buyer is looking at your business, they are looking at, also looking at the way that you have been able to transform data into learning, into action, into, right, and make it a repeatable process.

Exactly. I've worked with companies that started integrating AI 12 to 24 months before a planned sale, automating reporting, Identifying their most profitable customer segments, huge. Cleaning up inefficiencies. So when they finally went to market, their valuation multiples were much higher, not because of the hype, but because of their performance was provable, stable, and scalable.

Yeah.

Because like, to your point, they wanna take all the risk out. But I will say that on the flip side, I've seen others rush to what I would call it AI wash, if you will, their businesses right before sale. They bolt on all these tools without structure, and the result is what you might imagine, chaos in the data room. So this message is simple, right? If you're thinking about an exit strategy, start using AI now, not later, not to look cool because all the CEOs are out on the golf course, they're like, yeah, we have AI and we have AI, but no one knows exactly what to do with it. So it's not to look cool, but to really build a smarter, more sellable company. Because at the end of the day, AI won't sell your business for you, but will absolutely make your business worth more to the next buyer.

Well, and it's so true. Yeah, it's so true because it's like AI is becoming— using AI is becoming table stakes, right? To your point, if you're not using it and you're not using it to enhance value and basically drive it into all corners of your business, someone's gonna question you and say like, well, why aren't you using it? Like, there's all these tools out there that can help benefit you in the sale and help benefit your business. And if you're not using them, it's kind of one of those questions like, uh-oh, like, let's go find a business that's actually using the technology that's available to you.

Exactly.

What are some— let's get specific. What are some of the things and the ways in which founders should be thinking about using AI in this context, right? So let's just set up a scenario here. I'm now— I might be a 15, 20-year-old company. I've been around for a while, doing pretty good. I've got pretty good, you know, ARR. I can prove financially that I'm healthy, you know, that I'm healthy, you know, or have been healthy up until this point. I've got some systems. I've got some IP potentially, and I've got some, you know, and I've got some processes in place. I've got a customer set, right? So those are my You know, those are the kind of asset things, right? What is a company like that gonna use, right, at this 2 years out, right? Where am I gonna start using AI now in terms of being able to make, you know, make a difference in terms of the value of my company?

Yep. You know, traditionally exit strategy was about timing and valuation. Today, obviously, AI changes both of that. It's not just about when you sell, but what kind of business you're selling. So I'm going to tell you an example in a second, but buyers really are no longer looking just at financials, right? They're looking at that data maturity, AI readiness as indicators of future scalability.

Right.

Because at the end of the day, they want to buy a growing business, not a sinking ship. And AI can either increase your multiplier or expose those inefficiencies that will devalue your company. It really depends how early you integrate it.

Right.

I had a mid-market company that adopted, uh, I'm all about automation to streamline operations before going to market. So that's exactly what they did, uh, prior to selling, uh, a small manufacturing company. And guess what it did? It led to much better multiples because the buyer saw that predictable margins and scalability. That's what they're looking for.

Yeah. And any way that you can prove that, I mean, you know, so again, it's one thing to say, hey, look, over— take historical data, right, in general, and we could report on this stuff before AI, right? It's just that this— it's the manual intervention. John tells the famous story about the report that took, you know, whatever, 4 or 5 days to, you know, to be able to run so that the CEO could get this particular number that he wanted to get, right, which probably actually meant nothing in reality. But nowadays, right, the speed of this, obviously with AI, is really you know, one of the huge factors, right? The ability to be able to get this stuff quickly. But what— but to your point, the ability to— what every founder needs to know right now is to be able to be taking a look at the data that they have, right? The information I have that helps me figure out what I'm going to do next, right? The ability to be able to use that and show it as a predictive model, right? As opposed to just a— this is what I have.

An asset, right? To truly— because if you think about data, like you mentioned this earlier, Jeff, is You know, all the things that a manufacturing company or any business has as an asset. But when people start thinking about the data as an asset to truly be mined for information, that's, you know, that's where the magic happens with AI, right?

I think that, you know, having that, the strategic value of AI and how AI builds that, what I would call enterprise value and deal attractiveness, Right, everyone thought when AI first came out, oh, we're gonna be replacing all of you with AI. No, AI isn't replacing human beings before an exit. It's really about that increasing precision and predictability in the numbers, right? Those AI-driven analytics—

Yep.

Can project the future cash flow scenarios, churn rates, customer lifetime value with far more accuracy than your traditional models.

That's it. And the learning that it gets, I mean, remember the AI thing, right, is that you're constantly feeding it learning and constantly feeding it more information back on itself, right? And that, and then, by the way, you can also expose it to, hey, here's what we want it to be. Here's what a healthy, sustainable company looks like, right? You know, and be able to actually have it match that, to be able to actually use that as benchmark, whatever, to measure yourself against, even not just yourself, But potentially, you know, data that comes from outside as well.

Exactly. It sort of reminds me when Google first came out. I know I'm aging myself, but remember when Google first came out and everyone's like, hey, have you ever Googled yourself? Well, guess what? Those private equity and strategic buyers now, they're using AI in their due diligence. So if you don't, you're already behind.

Behind.

Exactly. I had this conversation with a gentleman that owned real estate, a very large real estate company, about 1,000 employees, and for them, using that predictive analytics to identify which customer segments were most profitable, you can bet that that's where they really focused before the, you know, again, I wrote an article on LinkedIn a couple weeks ago. It was a famous quote from Phil Jackson, if you fail to plan, plan to fail.

Hey, I'm Jo Stapleton.

And I'm Jon Kniff.

You know, Jon, most founders put everything they have into building their businesses— years of sweat, sacrifice, and problem-solving. But when it comes time to exit, many are shocked to learn that what buyers value isn't what they thought.

Here's the truth: buyers don't pay for potential, they pay for proof. Proof that your business can grow without you. Proof that your financials are clean. Proof that your processes are clear and repeatable.

If you wait until a buyer shows up to think about these things, you're almost guaranteed to leave money and control on the table. ExitEngine was built to change that.

ExitEngine is the first readiness platform that helps founders design their ideal exit step by step, combining education, coaching, and support, and access to an elite network of business specialists and capital. ExitEngine empowers you to build a valuable Transferable business and exit on your own terms.

It's not about selling tomorrow, John. It's about making sure that when you're ready, your business is worth what it deserves to be.

Don't let your life's work get discounted. Control your business destiny today. Start preparing now while you still have time to engineer the exit you want. Visit myexitengine.com to learn more.

Right.

Whether you're coaching the Chicago Bulls or whether you're selling your company, you got to stay on top of things and you have to be thinking with the end in mind. Don't just think, like I mentioned at the beginning, hey, let's, let's get AI and, and inject it everywhere. You're probably— it's probably not going to be the right time. Right.

And you bring up an excellent point that I want to just underline here because again, when we talk about exit planning, okay, and this is the problem with the word exit, and we've always had this issue, right, John?

Yeah.

In terms of what this word means, because again, exit has a finality to it. The term exit means some kind of end. I'm leaving something, right? The reality is that exit planning is just growth planning with intention. All right.

Yes, I love that. That is true. That is 100%.

Yeah, because some people will think of that when they're doing exit planning. Maybe they don't have a thought, or they might exit in 3 years or 4 years. And then we come in and we help them, and they want to hold on to the business, right? Because they become— it becomes more powerful, it becomes more profitable, it becomes something that they want to hang on to. And then, A, it increases the value, and it maybe helps them or has them rethink Whether they want to sell in 2, 3 years.

And I think that changes the nature, right, of what we're talking about today with the AI and that kind of thing. Because again, it's a matter of, look, we can talk about all the AI tools that we do when you're ready to sell and you're getting preparation or whatever, okay? But remember that there's a lot of people out there, right, that are not— are listening to this podcast going, but I'm not ready to sell, right? I'm not thinking about selling.

Yeah.

And so what we're saying is it's not about selling, right? It's about building a healthy, sustainable company that can sell if you want, if and when you want it to on your own terms. And not just about the multiple, not just about the value, the total value or the money that you'll get, but what it gives you is options, right? It gives you the ability to say, I want to sell, I don't want to sell, I want to sell it to my employees, I want to sell it to this strategic buyer. I have— when I am ready to go to market, I'll have not just one buyer coming to the table, but 3 or 4 or 5 or 6, which raises my multiple, right? I've got— so the idea is that what you want to be able to do today is start looking at the ways that AI can start driving the overall value of the business, right? So that you are creating options for yourself.

Bingo. Position AI is that value accelerator and what I would call operational cleaner, right?

Love it.

You know, you could identify inefficiencies months or even years before they show up on your P&L.

Right.

And some of the consulting I've been doing, I want them, their mindset to be, think of AI as your digital COO, right? It helps you tune your revenue engine, automate reports and surface those blind spots. You know, entrepreneurs don't always like to see those blind spots, but if really successful entrepreneurs are the ones that actually want to know what they are, you know, you don't want to steer a boat from behind because you don't know what the— what it looks like in front. You want to be in front. You want to be in front of things. Uh, you know, it's not necessarily the tools. You know, I had another owner that used AI tools like, you know, your AI employee or business force want to automate repetitive tasks, freeing leadership to focus on strategic growth and positioning before the sale. Or even again, to your point, even if you're not thinking about selling, think about what we can be doing right now to increase the value and really to, like I said, think of AI as that digital COO, which if you have that mindset, I think that Moving forward, it's going to grow your business a lot more.

And how do you, Jeff, how do you, you know, how does someone get started, right? What's the advice that you have or the counsel that you have for your clients to get started with this? Because I can imagine that you're dealing with companies across the spectrum of, you know, different industries and someone might not know where to start, right? I'm a manufacturing business in the Midwest. I'm outside of Chicago. I hear all about this AI.

How do I—

what's the best way to get started?

Man, 312-622—

no, that wasn't my phone number.

You have to get in the weeds. You have to do the work, right? We have to see where we're at and what's our end goal. Are we doing it just to do it, or are we doing it to solve a business problem? That's consultant speak, right? So, you know, We want to add balance and credibility, right? If AI is implemented too late, it exposes disorganization rather than create value. So let's get those quick wins. Let's figure out what the quick wins are. When I used to train people how to run marathons and someone had never even ran a mile before, well, let's get out of the couch. Let's walk a mile, 2 miles, 3 miles. One foot in front of the other. Right? Let's get those quick wins, whatever they are. Let's start using AI in your Teams meetings or Google meetings or Slack meetings. Let's get the— or Zoom. Let's get those reports and see where it really adds value. Let's use it to craft emails. Let's use it to craft plans as an outline, not as the single source of the truth, because we all know one of the biggest complaints or not really complaints. You need guardrails up or else it's going to be the wild, wild west.

Right.

So, you know, that C-word compliance or the G-word governance, man, it's not sexy, but you have to have that. And then change management. We have to get everyone marching to the same beat. In fact, when I look at companies, I put employees in a company into 3 buckets, and I'm sure your listeners could relate. Those early adopters.

Yep.

People like all your listeners that want to stay ahead of the curve, right? Those are my favorites. But then you've got that third that are never ever gonna go. Breaks my heart. They're gonna continue to fax things. Uh, for the younger listeners, faxing is what we used to do, uh, when we would communicate with others.

Back in the '90s.

Back in the actually '80s and '90s. Yes, the fax machine. And then you've got that, what I would consider the biggest potential win is the fence-sitters, that third letter of fence-sitters. You have to answer the question, what's in it for me? Why do I need to do this? I run because I like to eat a lot so I don't get heavy, right? So I see value in it. If employees, if the founder doesn't see value in it, they're never ever going to do it.

Right.

So I'm always thinking about what's in it for me? Right. And we're, you know, AI really fits into that exit strategy.

I like what you talked about because I think one of the simplest ways to start doing it that, again, now look, everybody's looking at this generative stuff, right? And I know that's like the first place that you think about using this stuff is in your outbound communications, right? Because look, it's how we use it. There's no question it's great for getting started on stuff and being able to revise content and stuff like that. So I think it's kind of a no-brainer to think about the generative stuff. on the kind of market, you know, the front end, right? But I think that the easiest place to start for people using AI, right, is what you just mentioned before, which is to look at some of the things that are the things that are not getting done because I don't like to do it, because it's time-consuming, because it is, you know, whatever, wrote, I might have to have someone whose job it is to do this stuff. But is that— is the, like you said, is the compliance, the govern— and the governance issues, right? Contracts, right? Uniformity of contracts and things like that, right? Am I— do I have contracts? Do I have the same contract with everybody? Are my contracts completely different? Am I offering people different things, right? Those are some of the, like, immediate ways that you can apply a, you know, not generative AI, but analysis AI. Right, that exist out there right now to be able to actually look at and examine all my stuff and to come back and tell me what's wrong with it. Right? Where are the gaps? Where are the holes? Things like that. Would you agree with, with something like that?

Absolutely. I'm, again, talking about quick wins depending upon the, the nature of their business, automating the due diligence. Right? Traditional due diligence teams spend weeks reading NDAs, contracts, vendor agreement, regulatory filings. AI could do this in hours, flagging those risks, anomalies, compliance gaps. I'm always looking to see where the gaps are. So using what I would call NLP or natural language processing tools to identify the causes with legal or regulatory exposure, companies need to be thinking about that.

Yeah, no question about it. And I think those are the places in which there's what we call latent or hidden value, right? It was a great example we came up with— not we came up with, we came across the other day that I think is just so resonant of where we are right now. The concept was, if I'm making— if I have— there is a cadence to what I'm doing, right? As a business, every business has a rhythm. Okay? And you may not even know what that rhythm is. But there is some— there is a difference. There is a disconnect between what I'm out there talking about and what I am learning as I am out there, right? And the gap, the distance between what I'm doing, the action I'm taking, and the learning I'm getting from that, right, is so great that what happens is I am basically undermining everything that I'm doing, and I can't ever get to— I will never get— it's a anchor dragging me, and I'll never get to a point at which I can actually like get ahead of it and start compounding the effect I'm making because I'm dragging this, this, this, there's a distance between my learning and stuff, right? So this is making sense. The reason I'm bringing this up is to say this, the, the, the ability to be able to understand, uh, and, and to get, use AI to get the learning out of my business, to uncover the things that I don't know that I don't know, right? So in other words, if I've got my— many people think I've got a marketing problem, so I'm going to go hire a marketing person to change this marketing problem. But what it turns out is I've got a process problem underneath or some kind of gap somewhere, right, where a customer is not getting a piece of information or whatever. It's not a marketing issue, it's actually process.

Exactly right.

So That's where I think AI can become extremely valuable, like right now, right? Is getting to an understanding of what are the things that my business is missing, right? What am I not seeing? You brought up the blind spots. It's not just founders with blind spots about the business. It's blind spots about themselves. It's blind spots about their employees. There's entire corporate blind spots that the entire company will have, right? But AI can be really, really valuable here.

Yeah, I think that most M&A failures come from those unseen risks, hidden sanctions, uh, exposure, poor data security, internal control weaknesses. AI can surface those early before they become those deal killers.

Right, right.

Yeah.

And, and that's it. And it don't have to be a tech company either, right?

Like— No, no, not at all. Right.

Yeah.

And the, and the, um, like one thing you mentioned earlier was process, right? I, I find that like when we found, I should say, that companies, when they're going through a sale process, they have good people overwhelmingly, they have good products, but process is where they fall down. And I think AI has a unique way to assist entrepreneurs in creating SOPs and training manuals and things that they can point to to say, to your point, Jo, earlier is, hey, they can use this, use AI to create these processes and then edit them, have the subject matter expert at the company edit them. Do you come across that a lot, Jeff?

All the time. I mean, it's part of the, you know, part of what you do when you're selling your company. I mean, AI helps you find the skeletons before the deal closes, not after the regulators do. When I think about, we haven't really talked about data governance. You know, isn't just compliance, it's really confidence. It tells your buyers your AI house is in order. I mean, I used to have my— I used to have a business a long, long time ago. I was in the menu— I was a small manufacturer. I did printing and packaging. And man, now that I'm a much more mature gentleman, uh, I could only imagine the red flags that AI would have come up with my business.

It's so true.

Like, imagine if we had AI. I can just imagine if we had AI. You know, one of the jobs that we did that I did a long time ago was looking at regulatory filings. You talked about regulatory filings and taking those regulatory filings and putting them into Excel. Like, it sounds crazy, but we had multiple people in our Chicago and New York office going through regulatory filings and putting stuff into Excel. And to think, like, to say that now out loud is so crazy.

Yeah.

If we had all these tools that could just immediately transform stuff, it would have been gold.

Yeah, no question.

I mean, look, these are the areas in which— and look, guys, anybody can do any of this right now, right? So understand that what Jeff is saying here is that we're bringing up, we're talking about lots of things because, again, every business has its idiosyncrasies, different industries. There are regulatory issues that are different. There's compliance issues that are different and all that stuff. But even if it's just your inter— if you— even if you're not subject to any of that stuff, you know, as a business, you just need— just identifying the gaps. I mean, the reality is we talk about SWOT analysis, John, you know what I mean? And your ability to be able to analyze yourself in terms of your strengths, your weaknesses, your opportunities, and your threats. That's a part of your annual planning process, right? Why shouldn't this AI and the ability to be able to examine your business for the holes and the gaps and the whole thing be part of your annual process of how are we doing here? Because when you gather that stuff together and now you've got something to measure against year over year, wow, you've really got— you can measure the entire health of your company on an annual basis.

Yeah, I mean, exactly. And the SWOT analysis, the thing that I find really helpful about AI, even though I still say please sometimes when I ask You know, when I ask one of my tools to do it, which is so, so weird, but I'd still do it every single time.

Same.

Right. It gives you, it gives you the real McCoy, so to speak. It gives you the stuff that's not biased by a person, myself included. Right. It gives you the real problems and can highlight, as Jeff mentioned earlier, it surfaces the problems that may be a human doesn't want to address, right? It's like the self-awareness book that we— the self-awareness author that we had, Les Zorba, is if you're more self-aware, you can use AI to surface those challenges and you won't be surprised by them. Or said differently, you will be surprised by them because they'll surface things that are sort of in that biased part of your brain that AI doesn't have those problems. So.

Yeah, to me, In M&A, AI's biggest— I'm looking again, I mentioned earlier, let's get some quick wins. To me, the biggest short-term win comes from automating what's slow, standardizing what's subjective, and illuminating what's invisible. But the real differentiator isn't just using AI, it's governing it as well. That's where value and trust converge. And You know, to our discussion today, that's everything.

Yeah. Give me an example of how somebody would actually use that, like, you know, use AI to govern their data, their processes, things like that.

To govern data?

Yeah.

No.

Yeah. I'm just— so if you're talking about data governance and the idea behind the data governance, right, the whole idea is to make sure that you've got clean data, that your data comes in from a place, right, that you know that it's reliable. Right, et cetera, et cetera. And there might be some legal ramifications to it as well that you've got in terms of customer data or things like that, right? But what you're saying is that from a value standpoint, right, the ability to kind of— I can demonstrate to a future buyer that I have got clean data, I've got accurate data, I've got data that is legally I'm allowed to have, et cetera, et cetera, right? I mean, those are the things.

Yeah, I mean, a global bank, say, uses AI-driven data discovery to map 200 million records across 14 systems, identifying where customer data was improperly stored. How many times are we getting notifications on our email? Hey, you know, maybe you should think about changing your password or whatever it is.

Right.

So AI for data discovery and classification, that's probably, you know, how you can use AI to govern data. I mean, That's probably the quickest one. AI will make your data visible. You can't govern what you can't find, right? And then you mentioned a second ago AI for data quality and integrity monitoring. AI will act as that data quality watchdog, continuously checking for accuracy, duplication, and consistency.

Right, absolutely. And alert you when it finds it, right? And so the ability to be able to come up and say, hey, look, we saw this thing, or here's a— here's a potential data leak, here's a potential threat, right? That, like you said, the foresight, right?

Yeah.

The ability for— it gives you foresight. By the way, from the marketing standpoint, right, we've been dying to try to create this foresight, right, for like decades, right? I spent a lot, you know, some time, you know, in the marketing analytics world, and I can tell you that the ability to be able to discover what data to measure, what was important, what was real, and then create predictability from it was something that we strived for, but 10 years ago was very difficult to actually do. I mean, in a real way. Like, again, I can use this historical data and I can kind of show that this might be a pattern, but the reality is there's always a It might be significant from a probability standpoint, right? But it may not actually be real. And I think that what AI is giving us now is a much more realistic picture potentially of the future, right, that we can create by looking at the data as it's coming through in real time.

And I don't want to just focus on the negative here, right? AI just doesn't find Bad data, it teaches your systems, right? This is the key. It teaches your systems what good data should look like.

There you go.

It's like finding that— go back to Moneyball, right? If you go back to Moneyball and Michael Lewis's book and you find the Greek god of walks, Kevin Youkilis, that unlocks something in baseball. And it's like almost using AI to find that on-base percentage was the key thing for baseball players. And finding that in your business is the holy grail of what AI can do. And it doesn't require someone working 24 hours a day. To your point, Jeff, you unleash these AI agents on your data and it can come back to you with these types of insights. Yeah.

And our ability to be able to take that information and do something actionable with it. Even if it's to protect myself, even if it's to prove to the buyer, hey, look what I've got in place right here, right? I'm protecting myself. I'm protecting— I'm mitigating risk and I'm making better decisions because I've got— and you'll get to do that too when you buy my company.

Yeah. And everyone, again, there's not limitless money to buy people and to get more people and to throw people at the problem. Again, if you're not using these AI tools and these AI systems to to make your business more saleable and to make your business more efficient, to Jeff's point earlier, someone else is. Other people are looking at it. And all these tools are getting cheaper and cheaper. And it's just one of those things where, again, if you're not doing it, other people are, and they'll get the multiple instead of you.

Yep.

Exactly right. Yeah. Let's talk about the risks of AI. OK? Because, again, in and of itself, there are going to be some things that by its very nature that are going to be potentially hurt you if you're not careful, right? What are some of those things that you've seen? What are the risks around AI when it— whether it comes to not just M&A, but just in use in general in business?

Oh gosh, there are literally just sessions just on the risks and what companies should be sort of looking out for, sort of the blind spots, if you will.

Right.

You know, obviously AI often requires massive data ingestion, including customer, employee, financial data that may cross legal or jurisdiction boundaries. So using AI tools on target company data before a deal closes, it can actually violate different types of confidential clauses. So sensitive data may be processed without proper consent due to, you know, During due diligence. Data misuse happens all the time during diligence, can lead to regulatory fines or derail the deal entirely.

Right.

So how do you mitigate this? Establish a clean room, a clean room for AI analysis. Include data transfer, AI processing rights, and NDAs and term sheets. And, you know, I hate to say it, but the fastest way to kill a deal is to let AI analyze data it shouldn't have touched. Yeah.

Yeah.

Well, yeah, we find it, you know, we find it to be a great first tool.

Right.

But like lawyers are saying, there are sorts of problems that lawyers are encountering with these hallucinations, these data hallucinations that cite a case that doesn't exist. And it's all, you know, I think that a good practice, Jeff, is also to have, right, to have people reviewing the things that AI creates to make sure that Yeah.

I would say the reason for that is AI models can inherit or amplify a bias.

Yes.

We haven't talked about biases, right? So what that's going to do, it's going to lead to flawed risk assessments, valuations, hiring integration decisions. So a model predicting, say, workforce retention post-merger penalizes certain demographics based upon biases based upon historical data.

Right.

AI valuations overvalue digital mature companies while undervaluing traditional industries. So biases can lead to bad decisions, reputational risks, potential legal challenges. So how do you mitigate that? We perform a bias audit and require model transparency, include diverse datasets, human oversight, go figure. And keep, you know, guess what? Keep those final decisions human-led, right? AI can't tell you what's fair. It's only what's likely. Governance bridges that gap.

Yeah, and I wanna maybe switch a little bit. It's like, you know, we always talk about marketable inefficiencies, and this is Jo's sort of pet thing that is so true, and it comes up so many times. I just wonder, and I'm sure that private equity companies and buyers are doing this, is they're looking at targets. And when they get to a target that's probably not using AI optimally, they're probably looking at them saying, and they're definitely doing this, is saying, how could I, as the private equity company, bring AI to the forefront at this company and really extract a lot of value and bring value to shareholders?

Right.

Do you see that a lot or do you see that ever in your travels?

It happens. It definitely happens. Yeah.

But that's an interesting point, right, is to say that it's These private equity companies are going to use everything they possibly can, right, themselves, when through due diligence, not to raise the value, right?

Right. But it's one of those synergies, right? They talk about synergies like, oh, I'll be able to buy more stuff, right? I'll be able to buy more input widgets to make my widget. But it's just a natural extension that they're going to look at, hey, if I can implement You know, insert AI tool here and we can lower the cost of X or Y or Z. It's just, it's a natural extension of those synergies.

So if you could go back to the marketable inefficiency situation, Jeff, is the idea that I've got things that I didn't accomplish. I recognize, as the seller, I recognize I haven't accomplished them yet, but I've got some plans that I just didn't get to. And so I'm gonna call those things out, right, when I go to market. to show, you know, the potential buyers that I've thought through this stuff and that this stuff exists and this might be a reason, you know, a go-forward reason, right, to, to another go-forward reason to, to purchase me. The, the question is, is, uh, you know, again, whether or not, um, you know, we, we demonstrate— AI in general could be one of those things.

Like, the—

I, I know for a fact that private equity companies are looking at companies that aren't using AI because they know They can, they can put them on some kind of platform, right, that will actually help them and probably make them better in general, just like a roll-up situation would do, just because you've got some kind of back office system that's common or whatever, right? I mean, the ability— so there's no question that, that it's, it's not having the AI, right, is the problem. Is actually the problem, right? Exactly. It is in and of itself the issue, because if I— it's one thing to say, hey, look, AI could solve all my problems. It's not going to raise their value, and, you know, you know, it's not going to raise your value You at that point, right?

Yeah, I agree. I agree.

So let's talk a little bit about digital transformation kind of in general, okay? And the notion that there are— it's so easy, right? For— there's— it's not just tech companies in the world, right? I mean, you've got manufacturing companies, you've got service, you know, companies, you've got, right, you've got people that are, that are out, out, you know, product companies where people are just literally making product and things like that. And so the AI conversation around those businesses, I wanna make sure that we are addressing the non-technical market, right? How do we get AI to start existing within these kind of non-technical companies in the same way that they obviously are kind of almost built in to so much of the SaaS stuff that we're doing, that we're seeing? Obviously, the AI companies themselves who are creating the AI are seeing right now what we used to see, you know, SaaS companies were doing 3 or 4 years ago in terms of their multiples and kind of ridiculous, you know, valuations. But what can the non-technical companies, what should they be doing with AI and how should they be approaching this kind of AI layer?

You know, you mentioned digital transformation, and even for traditional companies— manufacturing, logistics, healthcare, professional services— embedding AI signals operational sophistication and scalable efficiency. So what does that actually mean? Buyers and investors are now asking, does this company have data leverage or just data exhaust? And we haven't really talked about that.

Yeah.

AI-driven digital transformation, even in simple use cases like forecasting, customer segmentation, or predictive maintenance, can boost your EBITDA by cutting waste and improving margin predictability. It can increase your multiples by showing scalable and automation readiness. And at the end of the day, what does it do? It makes the business more attractive to strategic buyers versus just financial buyers.

So you've just broadened your buyer pool, right, at the end, because it's not just about private equity or whatever. It potentially has opened yourself up to strategic buyers, which in our mind is always, you know, a better option in general if you can find it anyway, right? Because there tends to be a lot more synergy and things like that, and it tends to be that people are buying kind of market share and capability that they don't have in most cases, in those cases. And so Being able to actually broadening your buyer pool is another way of raising, potentially raising your multiple. Right?

Yeah. I had a regional distributor that I was dealing with, an AI-based inventory optimization and demand forecasting. Guess what? Now they look like a platform company, not just like an old-school legacy operator. Right. So in modern AI, In modern M&A, AI isn't about just having the technology, it's about having those efficiencies at scale even without people, which I think is—

Yeah. And if you can position yourself as a platform, to your point, Jeff, if you can be the platform that a private equity firm uses to roll up other entities as opposed to one of those that's rolled into it, you can garner a crazy multiple, a higher multiple, I should say, than just the regular add-on or something like that.

Yeah.

And again, this is stuff that most business owners have no clue about, right? I mean, the fact that this is something that you could even position, right? This is just a reason why you want someone like Jeff on your team, right, to point these things out.

Yeah, because again, we hate to go— I hate to I don't know if I need to reiterate it, but all these people are using these tools and buyers are looking at multiple companies in your industry. It's a fact. They're required to do so in most of their charters, right? Very rarely do you have a company that's so unique that they must be acquired because of their unique technology. They're looking at a couple of different players, and when they're comparing you and they're looking at— they're doing due diligence on maybe a couple of companies, it's like, look, let's buy this one and And buy this one first, and then we can roll the other ones onto the platform. It's just, it's the natural thing to do.

Yeah, I mean, I was dealing with a small family-owned construction company, and when they were preparing for the sale, AI transformation becomes part of the equity story, right? So what we were doing is we were showing the investors and the acquirers increased revenue per employee. What does that show? Efficiency. Predictive analytics, which we've talked about throughout the podcast. driving smarter decision-making, automated compliance and risk monitoring, right? So these guys, they adopted an AI-based safety monitoring and scheduling tool, which can now position itself as a data-driven operator ready for private equity scaling, right?

Mm-hmm.

So in the exit, right, I told them, I said, AI shouldn't just be in the tech slide, it should really be in the margin slide, right? We talked about this earlier. You got to show ROI. We're spending all this money on Jeff, per se, to help us get their AI in, you know, get their house in order, and I want to see an ROI on it. I'm all about, are we doing it just to do it, or are we solving a business problem? Well, the business problem is we want to be lean and mean and look really good to PE or potential other investors. Well, guess what? Doing these things And it really embedded in that culture. So creating a culture of, you know, I talk a lot at conferences on the future of work and what does it look like? Well, it looks like where people, we're not cutting heads, we're just being more efficient and more productive.

It's so funny because it's— I think what we're learning because of AI now is something actually very, very interesting about people. And I think I say this to John all the time. I think that one of the things that AI actually can do if we allow it it is to actually make us more human. Because the reality is, is that what we're seeing is, the problem with learning and feedback and, right, and data, right, that the stuff that happens that I get after the fact, after some action, right? I've done a thing and I have data now to go back on and whatever. I have learning. I have, how did it go? We used to do, right, the postmortem, right? You do the after-action report, right?

Whatever.

The thing that says, this is the thing and this is what we learned from it and all that.

Lessons learned. Yeah.

Right. The problem is, is that, right, 9 times out of 10 in companies, and this has happened to all of us personally, I'm sure it's happened in every company we've ever worked in and we've ever seen, is that that learning never actually makes it back into, right, the go-forward stuff. It never gets reintegrated. Or if it does, it's very, very slow. And so the question, again, that AI is raising to us is that, or is presenting, is it's a way of being able to actually take the human part of the reinvestment of learning away, which we're not very good at, right? That's really what it is. We're not good at taking the learning and reinvesting it. Maybe it's because we're afraid of the feedback. We don't— it hurts and we don't like it. Maybe it's because we've got a process problem internally.

Change is hard, Joe, right? Change is hard. So like when someone— like when, again, it goes back to what I said, what I was talking about earlier is someone has a way of doing things and they have a bias. Like I have biases. You were talking about this earlier, Jeff. It's like AI cuts through all that baloney and gives you the straight talk in a lot of ways and says, yes, maybe AI has biases too, but it allows you to look at things sort of objectively, or it should allow you to look at things objectively to improve those things and take lessons learned and change the standard operating procedure based on what we just learned, just as an example.

The 3 things that I think that PE and strategic acquirers are willing to pay a premium for: digital transformation embedded in the operations. Number 2, scalable automation that lowers labor Intensity. And 3, predictable data-driven growth, right? Buyers don't pay more for robots, they pay more for reliability.

Yep, and I love having that, just one thing, I love having the AI in the margin slide, right? That hits home to my financial bent because yes, it's almost, again, I've said this before on podcasts, but it's almost like the internet. The internet's embedded in every company. AI should be embedded in every company, especially the margin slide to say, if you're using AI to improve margin, man, you are doing exactly what you should be doing because buyers will appreciate that to say, you're using AI to increase margins? Let me hear that story.

Exactly. I mean, look, this AI transformation, formerly known as digital transformation, is no longer an option. in the M&A world, right? It's the new measure of really operational maturity. And for these non-tech companies, embedding even the most modest AI capabilities really transforms the exit story from we've grown to we're scalable, predictable, and future-proof. What investor doesn't wanna hear that? That's the language that investors and acquirers pay a premium for.

True.

Dude, that's so well said. I, I think that's it. I mean, honestly, John, of all of— this is, I think this is episode 6. I'm not exactly sure where we are, but this is gonna end up around 70 somewhere. Okay.

Yeah, 60.

Every single 69 other episodes in the whole thing, I don't know if there's ever been a more specific and, and honestly more specific— yes, Jeff's— um, no, really, if we give it— when we give awards out next year, this is— this is gonna get this because No, it's so specific, okay, and real and shows not only about, again, what we've been trying to say and are shouting from the mountaintops everywhere we go, that this isn't about whether you sell tomorrow. It's about the fact is that using AI right now to look at your blind spots, to uncover the things that the hidden information you don't know, the hidden value that you don't know is there, is good for you. Now, right? And also makes you a more healthy and sustainable and sellable company down the road. But know this, that the buy side, the people on the buy side, right, they know this already, right? They are using these tools to measure you, to look at you, and they are looking for you to be able to have these things installed, right? They want you to be taking advantage of what they know to be the way that businesses are run and that mature and stable businesses operate. And if you're not one of those, it doesn't mean you won't sell, right? It just means it's gonna be not on your terms and it's gonna be a lot harder to do so, right? So Jeff's advice, I think, is to say, hey, look, start right now wherever you are, right? Start getting— start infusing AI. I think infusion may be the right word, right? Is Infusing AI in the things that you were doing, right, that help you figure out what you're not doing right, right, what you might be missing, right, and then get that information back to you so that you can now do something about it, and then use the AI will help you do something about it too, right?

Exactly.

Yeah, I mean, I think that the— I think that overall, when we talk about AI in the M&A space, Now, it's a different picture than we talked about in A&I and the M&A world even a year ago, 2 years ago, John, when we were working for IT PE firms, looking for IT companies. The reality was that they were looking for AI companies, but it wasn't a matter of looking at the company for the way that they've infused AI into their actual thing.

Yeah, and I think Jeff used the term AI-washed, right? These buyers, to your point, will be able to tell if you're using sort of these things that are bolted on as opposed to infusing them into their operations, right? If you're, oh, we use— and I'm not going to name any of the tools, but we use all these different tools in our— well, okay, that's fine. You can't just bolt those on. You need to infuse it into your business and use it for data governance. And when you talk about the use cases, because all these use cases will come up, Oh, we're using it for data governance, we're using it for customer revenue concentration, we're using it to analyze our customers, we're using it to standardize our contracts. They will understand that this isn't just a surface layer thing, this is part of the DNA of the business.

Yeah, it belongs not only, you said, in the margin slide, but in the strategy side.

Yeah, I mean, really, like I said earlier, really embedding Get into the entire culture of the organization.

Yeah.

Right.

And the good thing is with these tools, the last thing about that is you have the ability to do that, right? We talked about the manufacturer who may not be using AI. You can drive down the use of AI to every employee at the company. And for relatively low cost, you can do this. Hey, look, use this AI, make yourself more productive, make your teams more productive. I don't have all the answers as the owner of the business. You know your area better than I do. Use these tools to make your teams and your people more efficient. That's a way to start, right?

That's a possibility.

Yeah. Look, we're entering in an era where AI isn't just transforming how companies operate, right? It's transforming how they're valued, especially in the M&A world where AI and digital transformation have become the new language of Growth, trust, and scalability. Whether you're a manufacturer, services firm, family-owned business preparing for a sale, AI is no longer that technical project. It's a strategic signal to the market that your company is data-driven, efficient, and future-ready.

Very true.

Amazing. We're gonna leave it right there. Jeff, that was excellent. Great way to end it. This is so awesome. See how fast an hour goes? I told you. That's exactly right. Jeff Willinger, thank you so much for being here with us today. Incredibly insightful. And again, it makes sense when you hear it, right? Like, it's like, of course, if I've got— if I can demonstrate that I've got these processes that I'm learning about myself, that I'm able to take that learning and reinvest that learning, that I can manage data, that I can manage governance, that I can manage compliance, I can manage my legal risk, I can do— I can use AI to do all these things, and I can do it right now. Whether you're selling tomorrow or not, it's not about selling. It's about making your company a healthy and sustainable business today. And exit planning is actually, believe it or not, the way that you do this, right?

Yeah.

AI is one of the, one of the tools in which, uh, obviously you need to employ and be employing, and that buyers are looking for you to have, right?

Bingo, right? There are the opportunities in building more algorithms It's really using AI to govern that data, elevate decision makers, and prove that your growth story is really both measurable and sustainable. That's what drives confidence in buyers, commands that premium at exit, and turns technology into that lasting enterprise value, right? AI isn't just shaping your business, it's shaping your outcome.

Oh, bang, mic drop. Beautiful. Jeff Willinger, thank you so much for being on the ExitEngine Podcast. Jeff, How can people get in touch with you if they so desire?

I'm a big phone guy. Text me if you'd like, 312-622-2300. It's my birthday and the best city in the country, Chicago, and the all-time greatest basketball player, Michael Jordan, or jeffwillinger@outlook.com, or hit me up on LinkedIn. I love LinkedIn.

Awesome. And we'll have all that stuff. Information obviously will be in the show notes as well. Jeff, thank you so much for being here. John, you know, when we talk about, of all the things, okay, that have come into, you know, our purview over the last few years that we've been involved in this pretty heavily, AI is having the biggest impact across the M&A landscape.

Well, it's changed our business, right? It's changed the way things are done. It's changed not only the way that the M&A process flows, it's changed the valuation, as Jeff pointed out, it's changed the timeline and it's also altered the way that people think about businesses is, again, how can I leverage AI to make this business more valuable from a buyer standpoint? And the seller is, hey, how can I use all these tools that I read about in the Wall Street Journal and the New York Times and I see on 60 Minutes? How can I use those to make my people and my business more efficient? Like, it's just changed everything. It's like, again, we've gone back and we've said it's like the internet, but it's like the internet on steroids. You know, there's not gonna be no AI department in any company. AI is gonna be part of every department.

Absolutely right. Yep. No, for sure. So the cool thing about people like Jeff Willinger is that these are the kinds of people that you're gonna meet at ExitEngine. If you are so inclined to join ExitEngine by going to myexitengine.com right now, Our advisory partners are really the backbone of ExitEngine. So when we say you're gonna not only get the content and the tools and the things that you need, but also the people that you need to be able to manage and increase your value and saleability on your way to exit. Again, it's not about exiting tomorrow. It's not about selling your company.

Okay?

What we're trying to teach you at ExitEngine isn't how to sell it. It's how to get it, how to make it more valuable and sellable. So that if one day you choose to do that, you can. Okay, so what you're gonna do right now, you're gonna drop everything, you're gonna go to myexitengine.com, you're gonna go through, you're gonna watch a video, you're gonna sit, you're gonna fill out a valuation form, and you're gonna, you're gonna have a call with us, right, John?

Yep.

And on this call, we're gonna show you exactly what your value and salability is right now and what it can be Okay, in the not too distant future, and what— how you can actually— what levers you can pull to actually get to that higher value and salability.

So true. Exactly correct.

So do that now. Go to myexitengine.com right now. Get that done, the whole thing. You're going to meet— and when you get in there, you're going to meet people like Jeff Willinger. You're going to meet people— every single person that we've had on this podcast will be there for you if you are so inclined. And we're gonna they're going to be there along the way. So as you get through each of the, of our framework, of our Total Exit Value System, you're going to find inside there, you're going to come across Jeff Willinger when it's time for you to think about digital transformation. You're going to come across our other advisory partners as, as you come across their, their particular segments as well, so that you are, have access to the people who can help you do the thing you need to do right now. All right. And of course, in addition to that, you're going to get all this great exit, exit planning content, the stuff that Just like Jeff was talking about today, you're also gonna get—

Roadmaps, diagnostics, you're gonna get all, you know, again, planning tools, all the things you need. You have access to experts like Jeff, you have access to tools and digital tools that will help you, A, yeah, plan your exit for maybe 2 years, but really grow your business in an intelligent way so that it's more saleable when you decide to sell it. You'll get a higher multiple, you'll get more money for it because it's a sound business that's actually a saleable asset, not just the company you've built over 20 years.

That's exactly right. So, there are a couple of other things, guys, that you can do right now, okay? Obviously, this podcast, please share this podcast with a business owner you love, subscribe to us. We want your feedback. We want to hear what we're doing wrong. We love feedback. If you need to talk to one of us or you've got a question about anything that has to do with M&A or in particular about selling your business or about value and salability, about growing your business, you can reach us directly. You can email me anytime, jo@myexitengine.com, or john@myexitengine.com. We've got— we are all over LinkedIn. You'll find us there. You'll find us at our YouTube channel, Exit Engine Community. You'll find us, you know, just about everywhere right now. Exit Engine is becoming ubiquitous in this space. We are here. We're here for you. We're here to answer your questions. Go to myexitengine.com. We appreciate everybody listening to this show, and please make sure that you share it with someone, a business owner you love. Jon, thank you as always for being my partner. Really appreciate you. Jeff Willinger, thank you so much for being on the show today. We're gonna see more of Jeff coming down the line. Guys, our webinar series has started. Please look at that. Every Wednesday there's a new webinar, okay? And you can jump on and see exactly what it's like. And you can come on, you can go to our Eventbrite page and actually look at the the ones that are coming down the pike so you can find one that's appropriate for you.

But Wednesdays at 12 o'clock, that's our time every week.

We've got one there, so you're gonna check that out as well. Okay, there's lots of content, lots of ways to learn this stuff. Go take advantage of it. myexitengine.com. John, thank you so much. Have a great one, guys. We'll see you soon.