The rapid growth of AI is changing the private equity playbook in many ways. The biggest impact perhaps is on how sponsors are leveraging AI to fuel value creation at portfolio companies.

The numbers reflect that change. In a recent survey by Boston Consulting Group of 100 senior PE investors, 57% said digital levers are core to value creation planning. Additionally, PE-backed companies that had built cutting-edge AI capabilities across functions produced nearly twice the return on invested capital as companies that did not.

This shows that tech and AI transformation now define how PE firms create value, particularly as they hold assets for longer than average amid a tough exit environment. In Asia Pacific, for example, the number of companies held for more than five years rose by 18% year-on-year in 2025. PE firms are doubling down on value creation in the interim, increasingly with an AI lens.

AI transformation

• AI is now a core value‑creation lever at PE firms, with digital tools driving stronger returns
• Workflow automation and tech restacking are reshaping services‑driven portfolio companies
• An AI adoption gap is widening as PE firms modernize assets but remain cautious internally

The flurry of partnerships and agreements signed in the past year highlight where PE firms are heading.

In late May, private markets firm EQT announced a new partnership with Google Cloud to accelerate AI transformations among its 300-plus portfolio companies. Earlier in the same month, PE firm Blackstone (alongside Hellman & Friedman and Goldman Sachs) tied up with Anthropic to form a new AI services company that will work with mid-size firms to accelerate their AI transformation.

In April, software-focused investment firm Thoma Bravo – well known for its buy-and-build strategy to drive margin growth via automation and product enhancement – also launched a strategic partnership with Google Cloud to help enterprise software companies in its portfolio accelerate their AI transformations. Additionally, Thoma Bravo's cybersecurity portfolio will partner with Google Cloud to identify and mitigate security risks with AI.

That’s not all. In June last year, Vista Equity Partners rolled out a first-of-its-kind Agentic AI Factory, a platform to scale agentic AI across its enterprise software portfolio. The aim is to use cutting-edge AI tools for everything from operational restructuring to go-to-market enablement.

In the case of software investor Hg, the focus has been on vertical roll-ups of software-as-a-service providers where AI can automate repetitive workflows across tax, legal and compliance. In November 2025, the firm launched its Hg Catalyst program that puts developers into portfolio companies at Hg’s own expense to accelerate AI product builds to create further value.

On the services side, growth investor New Mountain Capital combined three of its portfolio companies in May 2025 to create Smarter Technologies, an AI-driven platform focused on automating the healthcare revenue cycle management space.

In another case, a PE firm that acquired a traditional business process outsourcing business has integrated agentic service models to improve accuracy and efficiency, while trimming costs.

It’s clear AI is a gamechanger for PE-backed companies. Yet, while sponsors are encouraging portfolio assets to adopt AI, they are rather conservative in how they use AI internally.

The AI paradox

Most PE firms are not using AI extensively for dealmaking yet. Some are embedding digitization technology into their investment and value-creation approach. But many others are defaulting to solutions like Microsoft Copilot for daily tasks thanks to its strong security baseline, but still not leveraging its full potential for other use cases.

A clear gap is emerging, whereby sponsors are asking management teams to embrace AI‑driven transformation while maintaining a relatively cautious stance internally.

Will that dynamic change? Over time, the gap will need to close. As AI becomes integral to underwriting, risk assessment, and operational due diligence, PE firms will need to embrace AI and modernize their own systems.

Forward-looking PE firms are already starting the AI transformation process sooner rather than later – the same way they start exploring AI-driven value creation or exit pathways within weeks of acquiring an asset. Applying portfolio management playbooks internally will help ensure sponsors stay ahead of the curve. What matters now is how firms act on this shift.

What this means for PE firms

As AI adoption accelerates, PE firms face a clear shift in how they operate, both at the portfolio level and internally. The question is no longer whether to adopt AI, but how to do so in a way that drives consistent value.

• Prioritize AI use cases that directly impact value creation and exit readiness
• Build repeatable AI operating models across portfolio companies
• Strengthen internal capabilities to match portfolio-level ambition
• Prepare for more data-intensive diligence and underwriting processes

The ability of PE firms to execute deals efficiently, and manage growing volumes of complex information as dealmaking becomes more data-driven, will become a key differentiator.