AI Diligence: A New Lens for Evaluating Target Companies

AI diligence is an emerging discipline, and it matters now more than ever.

For private equity and venture capital firms evaluating potential investments, the traditional diligence playbook covers financials, operations, legal, and market positioning. But there's a new dimension that increasingly separates companies poised for compounding growth from those that will struggle to keep pace: how they relate to artificial intelligence.

This isn't about whether a company has an "AI strategy" on a slide somewhere. It's about understanding, with real clarity, what's actually happening on the ground.

The Spectrum of AI Adoption

The challenge is that AI adoption exists on a spectrum, and every point on that spectrum requires a different kind of evaluation.

Some target companies aren't using AI at all. That's not necessarily a red flag—but it raises important questions. Why haven't they adopted it? Is there resistance in the culture? Are the workflows too fragmented or undocumented to support it? Is the data environment too sensitive? Or have they simply not prioritized it yet?

For companies in this position, the right question isn't whether they're using AI today. It's whether they're ready to use AI tomorrow. That means looking at the conditions inside the organization: how work gets done, how decisions flow, whether experimentation is encouraged or discouraged, how much process maturity exists, and what structural friction would slow things down. This is the domain of AI Readiness—an operational assessment of whether AI can realistically be adopted and sustained. It establishes a baseline, identifies blockers, and helps investors understand both the gap and the path forward.

Validating AI Claims

Then there are companies that say they're using AI. They'll describe workflows. They'll reference tools. Someone will mention productivity gains.

But how do you know if any of that is real?

This is where AI Diligence comes in. It's one thing for management to describe AI initiatives in a pitch deck. It's another thing entirely to get into the workflows, talk to practitioners, and understand whether AI usage is broad or narrow, deep or superficial, durable or dependent on a handful of power users.

AI Diligence evaluates how AI is actually being used across the organization—not in theory, but in day-to-day operations. It looks at adoption depth, productivity impact, governance and risk posture, experimentation velocity, and whether success is repeatable or fragile. The goal is to validate claims, surface risks, and give investment teams a clear-eyed view of execution capability.

Why This Matters Now

This matters because AI is no longer optional. It's becoming a fundamental operating capability—one that affects how organizations compete, how quickly they adapt, and how much value they can extract from their existing resources.

For PE and VC firms making investment decisions, the ability to distinguish between AI reality and AI theater is increasingly important. A company that has genuinely operationalized AI is a different asset than one that's dabbling. A company that isn't using AI but has the conditions for rapid adoption is a different opportunity than one that's structurally resistant.

How Gadoci Consulting Can Help

Gadoci Consulting offers a scoped, detailed lens for evaluating both ends of this spectrum. Through our AI Readiness Assessment, we help investors understand whether a non-adopter is positioned to move—and what it would take to get them there. Through our AI Diligence engagement, we help investors validate the claims of companies that say they're already leveraging AI, surfacing what's real and what's not.

This is an emerging area, and it's worth the investment. Our process, our frameworks, and our experience operating in this space give investment teams the insight they need to make better decisions—before the deal closes.

Because in a world where AI capability is becoming a differentiator, knowing the truth about a target company's AI operations isn't a nice-to-have. It's essential diligence.