In this episode, Tom Maasland, a partner in MinterEllisonRuddWatts' Technology team, is joined by Corporate and Commercial partner Neil Millar to address a critical topic for investors navigating the AI sector: how to conduct due diligence in the age of artificial intelligence.

[00:50] Neil begins the episode noting the evolving nature of due diligence for investors in the AI sector, highlighting how traditional methods must be updated to address the unique challenges posed by AI-driven companies.

[01:07] Tom asks Neil about the key starting point for investors approaching an M&A deal involving a company that integrates or relies heavily on AI-based technology.  Neil emphasises the importance of understanding the AI value proposition - whether AI is central to the company’s operations or merely a marketing buzzword.

[02:17] Tom outlines crucial factors related to data integrity in AI, such as data quality, structure, and origin. They stress the need for investors to understand how data is managed, who owns it, and whether it complies with data privacy laws like the Privacy Act 2020 and global regulations such as GDPR.

[04:21] They then discuss the significance of assessing AI models for scalability, integration with existing business systems, and adaptability to market shifts, highlighting the risks of AI systems becoming stagnant or failing to integrate effectively. 

[05:39] Neil and Tom consider the importance of technical robustness and cybersecurity in AI systems, emphasising the need for strong engineering and risk mitigation strategies. They also discuss the importance of AI performance benchmarking through standardised methods and third-party audits to establish transparency and trust in AI models.

[06:55] Finally, they outline some broader legal and ethical considerations for AI investors during the due diligence process, including the protection of intellectual property rights, talent retention, ethical AI usage, and ESG factors, among others

Information in this episode is accurate as at the date of recording, 7 March 2025.

Please contact Tom Maasland or Neil Millar or our Corporate and Commercial Team if you need legal advice and guidance or any of the topics discussed in the episode.

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