Why Unaudited AI Claims in a PE Exit CIM Create Post-Close Warranty Liability
Should your deal team highlight AI in the CIM without your governance function having reviewed the claims?
The AI capabilities in your sale materials won’t contribute to valuation until someone has verified they're real.
The Situation
Mid-market PE firms are now staffing dedicated heads of AI and value creation roles among the General Partners with a mission to implement AI and highlight its contribution in portfolio companies, ahead of exits. It’s a hot market for any company that can credibly claim to leverage AI, so highlighting AI’s contribution is a smart valuation move. The operating partners I talk to are most interested in driving operational leverage but also ensuring that the AI narrative aligns. However, none have established robust AI governance capabilities yet, which introduces significant risk when drafting Confidential Information Memoranda because it results in claims not being documented in a buyer-ready and defensible format, which opens the door to Reps & Warranties claims. The SEC charged and fined two registered investment advisers in 2024 for overstating AI capabilities in client-facing materials, establishing the enforcement template that’s now migrating into private litigation. AI-related securities class action filings hit a record 12 in the first half of 2025, according to Stanford Law School's securities litigation clearinghouse, and 2026 is on track to exceed that.
The Exposure
In McKinsey's January 2026 survey of 300 global limited partners, 53% ranked a GP's value creation strategy a top-five criterion in manager selection. That means the AI value creation story is now a GP-level competitive differentiator, and the same scrutiny is migrating into buy-side diligence on portcos, where buyers are stress-testing whether the AI story in the CIM is real. When it can’t be supported, the breach surfaces not as a marketing problem but as a "compliance with laws" representation in the purchase agreement, which is the most frequent category of R&W insurance claims in North America at over 20%, with 51% of all claims now arriving more than 12 months post-close according to Aon's 2025 Transaction Solutions Global Claims Study. An AI narrative that started as CIM positioning ends as a post-close warranty claim, and your fund's indemnification structure didn't price that.
The Judgment Call
The argument for keeping AI governance out of the CIM process is that deal teams and value creation functions know what buyers want to hear, anything that adds weeks to a compressed sale timeline is a drag on the process, and sophisticated buy-side counsel will surface any real problems in due diligence anyway. That might hold when AI is a footnote in the value story. It doesn't hold when AI is a significant part of the thesis, and the deal team isn't equipped to assess whether a specific AI claim has the right governance to survive a 12-month post-close R&W challenge. The CIM is more than a marketing document; it's a set of representations that travel with the business long after the deal closes.
Risk: Inserting an AI governance control into the CIM process will create friction with partners and deal teams who view it as an unnecessary delay in an environment where “time kills deals”.
Benefit: A portco with pre-verified AI claims enters buyer diligence with documentation that clears scrutiny faster, and removes price risk.
This Week’s Action
What to do: Pull all the AI-related claims from the CIM or pre-sale materials for your most advanced exit candidate, and ask your governance function or outside M&A counsel to identify which claims have supporting documentation and which don’t.
Who to involve: The portco CAE and the GP's Head of Value Creation, so that documentation gaps are surfaced before materials go to buyers and not during due diligence.
What outcome to achieve: A list distinguishing documented AI claims from undocumented ones, which becomes the remediation priority list before buyer outreach starts.
Time required: 45 minutes to assign and frame the request; 45 minutes to review the output.
Artifact
Pre-Sale AI Claims Verification Checklist
Send this to the portco CAE and request completion before sale materials are finalized. Any item marked No or Unknown is a documentation gap that buy-side diligence could find and exploit in a post-close R&W claim.
CLAIM 1: Cost or efficiency savings attributed to AI
Can you produce a report comparing baseline to post-deployment metrics in a format that is independently reviewable?
☐ YES ☐ NO ☐ UNKNOWN
CLAIM 2: AI-driven revenue or margin improvement
Is there an auditable record of which results were AI-contributed versus human-produced and validated against a control period or comparable cohort?
☐ YES ☐ NO ☐ UNKNOWN
CLAIM 3: AI embedded in customer-facing workflows
Does documented human oversight exist for each AI-influenced customer decision and has the model been tested for output consistency within the last 90 days?
☐ YES ☐ NO ☐ UNKNOWN
CLAIM 4: Proprietary AI capability or competitive moat
Is the underlying model or training data owned by the portco, or licensed from a vendor with a contract which permits inclusion in sale materials?
☐ YES ☐ NO ☐ UNKNOWN
CLAIM 5: Regulatory compliance of AI deployments
Has the portco's AI governance posture been assessed against applicable law in each jurisdiction where it operates, and documented for buyer review?
☐ YES ☐ NO ☐ UNKNOWN
If the portco can't produce documentation for any of the claims in the CIM, the claim needs to be removed or immediately validated. If your GP's Head of Value Creation hasn't had this conversation with your portco CAE yet, that’s your first priority.
When the stakes exceed your internal capacity:
AI Exposure Diagnostic: A 2-hour strategic evaluation for risk, compliance, and legal leaders to identify your highest-priority governance gaps and deliver a 90-day remediation roadmap.
12-Week Governance Sprint: Translate regulatory requirements into audit-ready policies, control frameworks, and accountability structures.
Ongoing Advisory Retainer: Embedded judgment for policy updates, vendor assessments, and board prep as regulations and technology evolve.
Reply with "Diagnostic" or “Sprint” to schedule a conversation for next month.
Chris Cook writes Judgment Call weekly for compliance and risk officers navigating AI governance.
Former IBM Vice President and Deputy Chief Auditor. Published in the AI Journal, speaker at Yale.
Chris Cook
Managing Partner & Founder
Blackbox Zero
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