As artificial intelligence permeates every facet of enterprise software, regulatory frameworks are struggling to keep pace. For M&A practitioners, the 'black box' of AI training data has become the new frontier of due diligence.
The 'Black Box' Liability
Traditional software M&A focused on source code ownership and security vulnerabilities. AI M&A introduces a third, more volatile variable: data provenance. Acquiring a company whose core value lies in models trained on unlicensed or un-consented data is no longer just a risk—it's a potential deal-killer.
Navigating the EU AI Act
The emerging EU AI Act is setting a global benchmark. We are seeing a tiered risk approach where 'High Risk' AI systems—such as those used in critical infrastructure or recruitment—face unprecedented transparency requirements.
Strategic Key Takeaways
Data provenance is now as critical as code ownership.
The EU AI Act will dictate global M&A standards.
Algorithmic interpretability is becoming a primary due diligence pillar.
