AI in Corporate Transactions

Regulatory exposure to the Artificial Intelligence Regulation (EU) 2024/1689 is already a significant factor in the valuation of technology assets. When a company develops, integrates, or markets AI systems, its regulatory compliance status directly affects the risk of the transaction: non-compliance issues that go undetected prior to closing become liabilities for the buyer or investor. The same applies to the review of contracts with AI providers whose continuity or validity depend on their compliance with the Regulation’s obligations.

At Letslaw, we incorporate regulatory risk analysis related to AI as a specific component of the due diligence work we perform in M&A and investment transactions. This analysis covers:

• Inventory of the target’s AI systems: identification of the AI systems used or marketed by the company under review, including a determination of the entity’s role and the risk level associated with each system.
• Compliance assessment: review of existing technical and legal documentation, analysis of gaps relative to the Regulation’s requirements, and quantification of the risk arising from detected non-compliance.
• Report on Exposure to the AI Regulation: a specific document on regulatory risk in AI, which can be integrated into the general due diligence report and is designed to support investment or acquisition decisions.
• Coordination with data protection and cybersecurity due diligence: joint analysis with the privacy and information security departments, given the interdependence among the three regulatory frameworks in companies with technology assets.
• Recommendations for representations and warranties: identification of specific statements regarding AI regulatory compliance that should be included in the purchase agreement or investment agreements.

This service is also applicable outside the context of M&A: venture capital funds analyzing portfolio companies with exposure to the AI Regulation may request it as a tool for monitoring the regulatory risk of their investments.

If you have an ongoing transaction involving technology assets with AI components, our team can integrate into the due diligence process to the extent you require.