Private Equity’s Value Creation Playbook: Emerging Best Practices by Middle Market Leaders Use of AI to Drive Value and Mitigate Risk

By James Lindstrom, Founder & CEO of BuildRI

In my role as founder of BuildRI, and having served as CEO of several companies, I’ve seen the power of technology to accelerate value creation. The integration of artificial intelligence (AI) is undoubtedly one of the most transformative developments in recent years, with profound implications for private equity’s future. BuildRI’s research recently noted that while the industry giants like Blackstone, KKR, and Carlyle are making headlines with their ambitious AI projects, investment is underway among some of PE’s middle market firms to enhance their AI capabilities and gain a competitive edge.

BuildRI’s research team has identified that firms like Platinum Equity, Berkshire Partners, and Alpine Investors are making strides in AI adoption. Our research indicates that these firms have been strategically investing in AI talent and technology, recognizing its potential to reshape the industry. In fact, all three firms have recently hired AI-dedicated professionals, a clear sign that they are serious about harnessing the power of this transformative technology.

While the big players have the resources to build comprehensive AI ecosystems, smaller firms are finding their own niche. By focusing on targeted AI applications that align with their specific strategies, they’re likely achieving remarkable results and mitigating potential risks across their portfolios.

Building Your Firm’s AI Program: A Pragmatic Approach

So, how can your PE firm get in on the AI action? It doesn’t require a massive budget or an army of data scientists. Here’s a pragmatic approach that even the busiest PE executive can implement:

  • Identify Your AI Champion: Find a senior leader within your firm who is passionate about AI and can rally the troops. This person should be able to articulate the potential of AI to drive value and secure buy-in from stakeholders.
  • Start Small, Think Big: Begin with a pilot project that addresses a specific, manageable goal, such as automating a time-consuming task or improving the accuracy of your financial models. Focus on quick wins that demonstrate the tangible benefits of AI to your team and stakeholders.
  • Embrace Experimentation: The AI landscape is constantly evolving, so it’s important to be agile and adaptable. Encourage your team to explore different AI tools and applications to find the ones that best suit your firm’s needs.
  • Collaborate with Experts: Partner with AI vendors, consultants, or academic institutions to tap into their expertise and resources. Leverage their knowledge to accelerate your firm’s AI adoption and avoid common pitfalls.
  • Build a Data-Driven Culture: Encourage your team to embrace data-driven decision-making and provide them with the training and tools they need to succeed. Foster a culture of experimentation and learning, where employees feel empowered to explore new ways of leveraging AI to drive value.

The AI Advantage: A New Era of Opportunity

AI is not a magic bullet, but it has the potential to significantly enhance value creation. By harnessing the power of AI, your firm can:

  • Uncover hidden investment opportunities: AI-powered tools, such as Grata or ZoomInfo, can analyze vast amounts of data to identify promising investment targets that may have been overlooked using traditional methods.
  • Streamline due diligence: AI can automate the analysis of financial statements, legal documents, and market data, reducing the time and cost of due diligence while improving accuracy.
  • Optimize portfolio management: AI-driven insights can help PE firms monitor portfolio company performance, identify areas for improvement, and make data-driven decisions to maximize value.
  • Enhance operational efficiency: AI can automate routine tasks, optimize workflows, and improve decision-making, freeing up valuable time and resources for more strategic activities.
  • Mitigate risk: AI can help identify and assess potential risks across a portfolio, enabling proactive risk management and mitigation strategies.
  • Attract and retain top talent: By embracing AI, your firm can position itself as an innovative leader in the industry, attracting top talent who are eager to work with cutting-edge technology.

The imperative to leverage artificial intelligence is rapidly becoming a defining factor for success in the private equity landscape. Firms that proactively incorporate AI into their operations are likely to achieve a significant competitive advantage in the years ahead. For more information on trends in the private equity landscape, reach out to our team at