How Bain & Company Uses Generative AI and 'Vibe Coding' to Clone Software During M&A Due Diligence

It is important to note that while news articles explicitly use the term "vibe coding" in Bain's workflow , Bain's own official publications describe building prototypes but do not use that specific term . The broader trend of AI-driven outside-in diligence is well-documented across Bain, McKinsey, AlixPartners, and KPMG .

Implications for Software Company Valuations

The ability to cheaply and quickly build a functional copy of a target's software product has direct valuation consequences. If a potential acquirer can demonstrate that a target's core technology can be reproduced in days or weeks by an AI model, the target's perceived technological differentiation weakens substantially. This gives buyers a stronger negotiating position and a fact-based argument for lower valuations, since the "technology premium" embedded in the purchase price becomes harder to justify .

Implications for Competitive Moats

This practice strikes at the heart of traditional software moats. Many software companies rely on proprietary codebases, complex feature sets, and development velocity as barriers to entry. Vibe coding erodes these barriers: if a SaaS product's core functionality can be replicated by describing it to an AI, the switching cost advantage and technology defensibility that once commanded premium multiples may evaporate . A vibe coding startup founder who sold his company for approximately $80 million publicly warned that these tools are "easy to clone, and that makes them fragile businesses" .

CNBC tested this concept directly in February 2026. Using Anthropic's Claude Code, a team with no professional development skills successfully built a functional alternative to Monday.com, a project management platform valued at roughly $5 billion .

Implications for the Private Equity Deal Market

• Asymmetric information shifts toward buyers. Outside-in prototyping lets PE sponsors technically diligence a target without relying on the seller's codebase, reducing information asymmetry .
• Lower diligence costs and faster timelines. Vibe coding reduces the time and engineering headcount needed for technical due diligence, which could accelerate deal cycles and lower transaction costs .
• More disciplined underwriting. Bain's 2025 M&A report predicted that firms mastering generative AI in M&A would "underwrite more deal value with confidence" and "execute diligence and integration activities more rapidly with fewer resources" .
• Risk of over-correction. If the market broadly adopts this approach, software companies that have genuine hard-tech moats — network effects, proprietary data, deep regulatory barriers — may be unfairly lumped in with those whose moats are thin, potentially mispricing certain deals.

The rise of vibe coding in M&A due diligence represents a genuine shift in deal-making leverage. Buyers equipped with these tools can test a target's technological defensibility before signing a term sheet — and that changes the math on what a software company is really worth.