Artificial intelligence is transforming private equity, shifting from a support tool to a central driver of value creation. KPMG experts Cherie Gartner and Gavin Geminder say AI now underpins successful strategies, with portfolio companies seeing gains in revenue, decision-making and productivity.
The core opportunity lies in boosting EBITDA through cost efficiencies and revenue growth. Gartner stresses that embedding AI across operations builds sustainable competitive advantages. Geminder adds that firms must move beyond cost-cutting, using generative AI tools as indispensable parts of value creation plans. Quantifying AI’s contribution remains a challenge. General partners must demonstrate impact by aligning performance indicators with AI-driven improvements, providing transparency for investors and supporting continuous learning.
KPMG’s AI Pulse surveys show accelerating executive commitment. Eight in ten executives see generative AI as critical for market share and competitive edge, while nearly half of CEOs now lead AI initiatives—a 34 per cent quarterly increase linked to stronger performance. This direct leadership is vital as rapid AI advances disrupt business models and force firms to reassess value creation strategies.
Private equity’s fear of missing out has shifted to a fear of irrelevance. The pace of innovation demands firms adopt AI proactively to protect investments. Experts recommend tailored AI roadmaps, internal awareness campaigns, and a mix of in-house talent and external partnerships. Gartner and Geminder expect a surge in AI hiring similar to ESG recruitment, combined with alliances with technology providers.
Governance and ethics are central. Surveys show 82 per cent of executives prioritise data quality, transparency and risk management in AI adoption. Effective frameworks foster trust with investors and customers, while clear ethical guidelines improve employee engagement and customer satisfaction, said Geminder. Cybersecurity is also a growing imperative, ensuring AI use remains safe and responsible.
Beyond governance, AI is transforming deal sourcing, due diligence and portfolio management. It accelerates discovery by analysing market data, enhances due diligence with predictive analytics and document automation, and improves portfolio oversight through real-time monitoring. Operational gains include supply chain optimisation, workforce planning and automation of repetitive tasks, freeing resources for strategic priorities.
AI presents immense opportunities but demands constant adaptation. “The risk of rapid obsolescence is real,” said Gartner. “Only firms that lead rather than lag in AI adoption will thrive.”
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