AI due diligence in technology M&A: the questions buyers now need to ask

Executive summary. This Lexbridge note focuses on the operational decisions behind the legal issue: what teams should identify, which controls deserve priority and what evidence should exist when the decision is later reviewed.

Understand where AI creates value

The buyer should identify which products, workflows or revenue lines actually depend on AI. A generic statement that the target “uses AI” does not show whether the technology is material to valuation, customer commitments or future integration.

Trace data and model dependencies

Diligence should cover training and evaluation datasets, foundation-model providers, fine-tuning arrangements, retrieval sources and critical open-source components. The question is not only whether licences exist, but whether the target can continue operating the product after closing.

Test the IP story

Claims of proprietary AI may depend heavily on third-party models or datasets. Buyers should distinguish owned code and know-how from licensed dependencies, and assess whether customer contracts or contributor arrangements create ownership gaps.

Review governance as evidence

Policies matter less than records of approvals, evaluations, incidents, model changes and customer disclosures. A mature evidence trail can reduce regulatory and warranty risk; its absence may justify remediation covenants or specific indemnities.

Translate findings into deal terms

Material AI findings should influence warranties, disclosure, covenants, conditions and post-closing workstreams. The objective is not a separate “AI schedule” for its own sake but transaction protection tied to the value at risk.

Questions for the operating team

• Who owns the decision and who needs to approve an exception?
• What evidence should be retained through the normal workflow?
• Which customer, vendor or regulatory commitments depend on this issue?
• What change would trigger a new review?
• What is the practical fallback if the preferred position cannot be achieved?

Lexbridge perspective

The strongest legal position is one that the business can actually operate. That means linking the rule to ownership, systems, contracts and evidence rather than treating legal advice as a document that sits outside the workflow. For cross-border matters, the same operating model should make clear where local advice is needed and which team remains accountable for the overall decision.

Good legal design reduces the distance between the rule and the person who must act on it.