Private equity is facing new challenges due to the current economic downturn in 2023, with factors like interest rate hikes, market volatility, regulatory changes, increased competition, and supply chain disruptions making it harder for private equity investors to achieve their investment objectives. In order to succeed, it is important for private equity firms and portfolio companies to invest in technologies that can improve their bottom line, with AI being a significant option.
AI can help investors better manage their existing portfolio, conduct due diligence on prospective investments, and collaborate with CEOs and senior executives of portfolio companies to get a better financial grip on their company and expose growth opportunities amidst an increasingly competitive market. By automating manual processes and optimizing workflows, AI can help identify under-performing portfolio companies and increase profitability.
Private equity investors can leverage AI to improve their operations and decision-making processes, such as gathering and analyzing market data, identifying investment opportunities, and performing due diligence. For portfolio companies, AI can bring significant benefits to the c-suite, such as improved efficiency, better decision-making, and increased competitiveness. Surveys show that private equity firms that adopt AI are more likely to see improved performance, with benefits including improved deal sourcing and valuation accuracy, as well as improved portfolio company performance.