The AI Deal Paradox: How Artificial Intelligence Is Changing What Your GCC Business Is Worth
Artificial intelligence is raising a difficult question for business owners across the Gulf: does AI make a business worth more, or does it simply make buyers more skeptical?
The answer is both. And the data supports both sides.
PwC's 2026 M&A industry outlook found that approximately one-third of the 100 largest corporate M&A transactions in 2025 cited AI as part of the strategic rationale for the deal. Global deal values rose 36% in 2025, and AI was a primary catalyst. FE International reported that nearly half of all technology deals in 2025 carried an AI component, up from roughly one in four a year earlier.
At the same time, Gartner estimates that over 40% of advanced AI projects are canceled before completion due to unclear value or poor controls. FE International also noted that AI companies without clear compliance or data governance face valuation discounts of 20 to 30%.
That is the paradox. AI can improve margins, reduce dependence on manual work, strengthen reporting, and make a company more scalable. But it can also create inflated expectations, vague growth stories, unverifiable claims about "AI capability," and valuation gaps between what sellers believe and what buyers can actually underwrite.
For
M&A advisory in the GCC, this changes the game. Buyers are no longer impressed by AI language alone. They want to know whether AI creates defensible commercial value or whether it is dressing around an ordinary business.
What does AI actually change about business valuation?
AI is not a standard value driver that moves in one direction. It can simultaneously create real operational advantage and create noise that makes buyers more cautious.
Some companies are using AI to improve lead qualification, customer support, demand forecasting, workflow automation, pricing analysis, preventive maintenance, or sales productivity. In those cases, AI genuinely improves the economics of the business. IBM reported that by the end of 2025, its internal AI deployment unlocked $4.5 billion in productivity gains, including a 90% reduction in cycle time for finance and journal processing. Their AI agents now resolve 94% of HR inquiries and 86% of IT queries without human intervention.
But many other businesses are simply adding AI language to their pitch materials without demonstrating what has actually changed in the company's financials. A seller may believe AI should lift valuation because it sounds modern and strategic. A buyer sees that claim and becomes more cautious, because AI assertions are now easy to make and difficult to verify.
At Transworld GCC, we are seeing this tension play out in deal work across the Gulf. The businesses that benefit from AI in a sale are the ones that can prove it in their numbers. The businesses that get hurt are the ones that talk about AI without showing where it appears in margin improvement, cost reduction, or operational resilience.
