As artificial intelligence (AI) continues to reshape industries, private equity firms are increasingly exploring how it can be applied to optimise their operations. While AI has the potential to deliver game-changing results—driving efficiencies, uncovering insights, and automating routine tasks—the path to its successful adoption is nuanced. Private equity, with its intricate workflows, confidential data, and emphasis on expert judgement, presents both opportunities and challenges for AI integration.
At its core, private equity thrives on the power of proprietary data and in-depth knowledge. AI’s potential to analyse vast datasets in real-time could give firms a competitive edge, particularly when it comes to identifying market trends, valuing companies, and enhancing operational efficiencies within portfolio companies. For lenders like us, who work closely with private equity firms, there’s an ongoing interest in how AI could reshape fund lifecycles, impact valuations, and open new avenues for deal-making.
However, there’s an important balance to strike. The true value of AI comes not from adopting it blindly, but from embedding it strategically into existing processes, with human expertise still playing a central role.
Combining institutional knowledge with AI
One of AI’s most exciting promises is its ability to centralise and analyse proprietary data. In the private equity space, firms are sitting on years, if not decades, of institutional knowledge—data from past deals, portfolio performance, and market trends. AI tools, such as those offered by Filament Syfter, can help firms consolidate this data, extracting value that might have been previously overlooked.
Migrating internal knowledge to platforms like SharePoint, as some private equity firms have begun doing, is the first step toward building a strong AI-driven framework. By combining this proprietary data with real-time market data, AI can offer private equity professionals the insights needed to advise portfolio companies on areas such as operational improvements or strategic moves.
AI for efficiency
Efficiency is a constant goal in private equity, where managing multiple portfolio companies requires streamlining operations. AI has the potential to improve efficiencies in areas such as accounting, compliance, and reporting. However, the readiness for AI adoption varies significantly across firms and their portfolio companies. While some are at the forefront of AI adoption, others are still exploring its benefits.
This divide underscores the importance of customisation. AI solutions cannot be “one-size-fits-all”—the key is to tailor tools based on the specific needs and maturity levels of each firm or company. Furthermore, private equity firms must ensure their data is accurate, clean, and relevant before any AI implementation. Without a solid foundation, AI risks amplifying errors or producing insights that aren’t actionable.
A partnership between AI and expertise
For private equity firms, the future lies in the partnership between AI and human expertise. While AI can process data at a speed and scale unimaginable for humans, the real power emerges when it is combined with the expert judgement of private equity professionals. It’s about asking the right questions of the data and understanding where to apply those insights.
In the coming years, as AI technology—like the GenAI platforms being developed today—continues to advance, the private equity landscape could evolve dramatically. However, those that will reap the most rewards will be the firms that approach AI with both optimism and caution, integrating it thoughtfully into their data-driven decision-making processes.
We recently hosted a breakfast briefing in our Soho office, in partnership with Filament Syfter, to explore how AI, especially GenAI, is shaping private equity and optimising the fund lifecycle. Many thanks to Filament Syfter for their insights and to everyone who joined us.
If you’re interested in attending our next breakfast briefing or you’re a private equity firm looking to partner up to fund a growing business, we’d love to chat. Please reach out to the team at [email protected].
