While artificial intelligence is not quite ready for prime time, it can impact valuations not only in the process of performing a valuation, but also on the value of a subject business, says veteran valuation expert Jim Alerding (Alerding Consulting). During a recent BVR webinar, he discussed a few examples of putting ChatGPT through its paces with some basic business valuation questions.
ChatGPT was asked this question: “What information do you need to write a business valuation engagement letter?” The response was incomplete, and some of it was plain wrong. In another “conversation,” ChatGPT was asked about BVR’s DealStats database. At first, it didn’t recognize the DealStats name, but, when prompted using the database’s prior name, Pratt’s Stats, it corrected itself and then told us all about the database. It was actually impressive the way the app corrected itself (and it also apologized).
Key point: It’s important to note that the content AI generates comes from public domain material, which can be questionable in the first place and not very useful for professional purposes. The application cannot reach behind paywalls nor access other materials that are generally not available to the public. Its use of language is generally good, but it can still appear awkward and stilted. Also, it can demonstrate biases that it picks up on its own or is led to them by the users or generators.
In summary, Alerding sees ChatGPT as just the beginning of the AI era—a sensation much like Atari was back in the 1970s, with everyone wanting to jump on the bandwagon. Users need to be very cautious before using any information this application generates.
More details of Alerding’s insights into AI are in an article in the May issue of Business Valuation Update.
Have you used AI in a BV context? Tell us about it at info@bvresources.com.