The embedded AI shift in enterprise software M&A
Strategic buyers are acquiring software companies specifically for domain-embedded AI capability, even when they don’t present as “AI companies”.
Embedded AI has become a fundamental trigger for enterprise software acquisitions, reshaping how strategic buyers select targets, according to Victor Basta, managing partner at Artis Partners. “Without a deeply embedded AI story, soon it will probably become impossible for any digital-first business to succeed in terms of getting an exit,” said Basta.
AI-driven acquisitions are happening across virtually every software category. Large technology giants such as Meta and Google occasionally pursue AI-native targets in $10 – 30 billion-dollar deals, but these remain rare. Most strategic buyers—particularly mid-market public companies and larger private equity-backed platforms—are acquiring businesses which have successfully embedded AI into their product functionality and operational delivery.
“These companies don’t manifest as AI businesses. They’re not on a Gartner AI list,” said Basta. “But that capability ‘under the hood’ is exactly what buyers are chasing. It’s about acquiring businesses with customers, product, and domain strength, but with AI capability already built in.”
This marks a clear shift from 12 months ago, when AI-native model-builders and enterprise software companies operated in separate market segments. Today, strategic buyers no longer separate these categories, as adoption quickly becomes more use case driven rather than infrastructure led; OpenAI’s shift to agentic technology is just the latest manifestation of that broad trend. Additionally, buyers are assigning higher valuations based on perceived differences in how deeply companies have embraced AI credibly.
Recent deals Artis advised on highlight this dynamic. Ravelin Technology, acquired by global leader in payment processing Worldpay, leverages embedded AI for merchant fraud detection. Likewise, businesses as diverse as digital mental health platforms and HR enabling software are in the process of being acquired based on their ability to support customers with AI capability tuned to their specific use case. Neither of these examples would position themselves as AI-native, yet embedded AI significantly underpins their strategic value.
“In a year or two, there will be no software that isn’t AI, so the current distinctions driving exit values will no longer apply, but for the moment it is making the difference between prices of 100 and 200 for similar businesses,” said Basta. “Buyers understand this and are acting now to build capability from within.”