Artificial Intelligence: what impact on the financial valuation of companies?

The integration of artificial intelligence (AI) into companies is not just a matter of operational modernization; it is becoming a key factor in the financial value of companies. In this article, we'll explore how AI influences the financial value of companies, and how XVAL can help you maximize that value in today's environment.

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AI, creating value for companies

By transforming business operations, AI has a direct impact on key financial indicators. For example, by optimizing production or customer service processes with AI, companies can reduce costs and increase efficiency, thereby improving profitability. What's more, AI can help generate new revenues through innovation in products and services, offering a new dimension to financial valuation.

AI helps companies to better understand and manage risk, a crucial aspect for investors and valuers. Using predictive analytics and big data processing, AI enables better assessment of market risks and opportunities. This improved risk management can lead to higher valuations, as companies are perceived as more stable and better prepared for the future.

Using AI to optimize resources (human, material, financial) is another key factor in adding value to a company. AI enables a more efficient allocation of resources, reducing waste and improving productivity. These improvements are reflected in financial balance sheets, increasing the company's value in the eyes of investors and appraisers.

Here are a few examples to illustrate the positive impact of AI on business value creation:

Increased productivity: According to a study by Accenture, AI could boost corporate productivity rates by up to 40% by 2035. This increase in productivity stems from the automation of routine tasks and the optimization of work processes.
Cost reduction: a report by PwC indicated that AI could reduce companies' operational costs. For example, in the healthcare sector, AI could save up to $150 billion annually by 2026 in the US, by optimizing processes and improving the efficiency of care.
Revenue growth: According to a McKinsey report, AI has the potential to add $13 trillion to the global economy by 2030, representing annual global GDP growth of around 1.2%. This growth would come from innovation in products and services, as well as improved decision-making thanks to data analysis.
Improved Customer Experience: A Capgemini study found that companies using AI for customer experience could increase revenues by 5% to 10% compared to those not using it. AI enables greater personalization and a better understanding of customer needs.

These examples show that AI is not just an advanced technological tool, but also a key factor in growth, efficiency and competitiveness for companies in various sectors. These quantifiable benefits are essential to understanding why AI has become a central element to be taken into account in a company's value enhancement approach.

AI: a risk for companies that fail to adapt

AI can also be a risk factor for some businesses. Sectors that rely heavily on routine, manual tasks, with no distinct added value in the face of advanced automation, could see their value decline significantly.

For example, according to a McKinsey study, up to 30% of the world's tasks could be automated by 2030, significantly impacting unprepared companies. This risk must be taken into account in any assessment of company valuation.

In this context, it is crucial to integrate AI risk assessment into business valuation. Companies need to be assessed not only on their ability to integrate AI, but also on their vulnerability to automation and technological innovation.

Here are a few examples to illustrate these risks:

Job loss and reputation risk: According to a McKinsey report, up to 30% of tasks in around 60% of professions could be automated, raising concerns about job loss. For companies, this represents a reputational and PR risk, particularly if the transition to automation is not managed responsibly and transparently.
Implementation costs and uncertain ROI: The initial investment in AI can be high, and the return on investment is not always immediate. According to a Deloitte survey, although 37% of organizations have deployed AI solutions, many face challenges in terms of measuring ROI. A poorly planned investment or an unsuccessful AI project can negatively affect the company's valuation.
Data security and privacy issues: AI adoption often requires the processing of large amounts of data, increasing security risks and privacy concerns. Security breaches can lead to significant financial losses and reputational damage. For example, according to IBM, the average cost of a data breach in 2020 was $3.86 million.
Risk of Technological Dependence: The adoption of AI can lead to over-dependence on specific technologies, limiting a company's flexibility and agility. This dependence can be risky if the technology becomes obsolete or compatibility problems emerge.

These examples show that, while AI offers significant opportunities for growth and improved efficiency, it also presents significant risks that need to be carefully managed. These risks, if not properly addressed, can have a negative impact on a company's financial valuation and overall reputation.

XVAL, Your Business Valuation Partner in the AI Era :

At XVAL, we understand thecrucial importance of AI in the financial valuation of companies. Our services are specifically designed to assess and maximize your company's value in this new technological landscape. Whether you're transitioning to AI integration or looking to assess the impact of your existing AI initiatives, we offer tailored solutions to meet your needs.

The AI era is not just an era of technological change, it's an era of financial revaluation for companies. To remain competitive and maximize their value, companies must not only embrace AI but also understand its impact on their financial valuation. With XVAL, you have an expert partner to guide you through this process, ensuring that your company realizes its full potential in the world of AI.