The Due Diligence Gap: Pricing AI Capability Beyond The Evidence

AI capability is already being priced into acquisitions, private equity, venture capital and corporate finance. The problem is not that AI lacks value. It is that evidence of one capability can be made to support a much bigger investment claim than it actually proves. This paper calls that the Due Diligence Gap. It traces how a benchmark, pilot or operating result can become a management claim, diligence conclusion and ultimately an authorised commitment of capital. The original evidence may be sound. The problem is what it is permitted to become. For buyers and investors, the paper separates three questions: what the target can be warranted to do for the use being priced, what historical reliance is being acquired and what the capital allocator is entitled to rely upon. An acquirer does not only buy a capability. It inherits the exposure from consequential decisions already taken on it, and whatever evidence still exists to defend them. It also examines Buy-Side Recursive Assurance: professional diligence testing an AI claim can itself be materially AI-mediated before it reaches an investment committee as independent assurance. A gap does not mean the company lacks value or the transaction should stop. It means established and contingent value must not be priced as though they carry the same evidential status. Price the capability that has been established. Treat the remainder according to the evidence that actually exists.