AI IS NOW KEY FOR PRIVATE EQUITY
There’s a lot of talk right now about the AI “trough of disillusionment,” as businesses face the messy realities of large-scale AI integration. But no one doubts that AI is here to stay. It’s already driving significant value — not just in the digital and tech sectors but also in old-school industries. Confidence is still sky high; according to Stanford’s 2025 AI Index Report, private AI investment in healthcare and manufacturing sectors alone topped US $20 billion in 2024, four times more than in 2023.
And we’re only getting started. AI is already slashing costs, boosting revenues, and sparking product innovation.
Walmart uses it to tweak prices in real time based on demand. Siemens applies it for predictive maintenance. Construction group Vinci uses AI drones to automate site inspection. Private equity (PE) increasingly backs those companies in traditional sectors that are using AI to reinvent their business models. For example, Bain Capital is investing in HealthEdge on claims processing and payment, Vista Equity is backing Amtech on manufacturing maintenance/production scheduling, and Thrive Capital is backing Crete Professionals Alliance on automating auditing and financial reporting.
This trend will continue. As AI increasingly becomes core to new value creation in traditional industries, PE firms must ensure they have the right capabilities and understanding to leverage its potential across their portfolios.
BRINGING AI INTO EVERY STAGE OF THE DEAL
Of course, AI isn’t just about creating more value in portfolio companies. It’s also shaking up the entire deal process, and there’s no shortage of tools to help (see Figure 1).
Tools are available for every step, including target search and analytics, due diligence acceleration, legal and compliance checks, post-transaction monitoring, and end-to-end lifecycle management. Consider target search: AI tools can improve the customization and scalability of search requests, extend the search beyond official databases, automate large-scale analytics, and improve insight and interpretation, including probabilistic interpretation of metadata and qualitative information. Searches that would have taken weeks can potentially be done in just a few days. This means more time to focus on strategy and innovation rather than modeling and number crunching. That’s certainly a win. Several firms are already using AI tools to enable deals that would otherwise be out of reach, including Italian bank UniCredit.
How UniCredit uses AI for smaller transactions
UniCredit launched an AI-driven platform called DealSync to identify and facilitate M&A transactions. The system is designed to tap into smaller opportunities that traditionally fall outside the radar of larger investment banks due to their lower deal value and associated fees. Leveraging its existing client base, DealSync aggregates inputs from employees across corporate and wealth management divisions and routes potential M&A opportunities to investment bankers. So far, focusing on SMEs (small and medium-sized enterprises) in Italy and Germany, the platform has produced about 2,000 leads and 500 mandates. UniCredit earns fees when successful matches are made and deals close and also benefits from deal financing.
Despite the buzz, most PE firms are still only at an early stage with embedding AI, and there are still some bumps along the road. One of the biggest issues is AI’s lack of explainability. Another is its tendency to make errors and convey them with just as much confidence as facts. Controlling data ownership and confidentiality are other challenges that need careful management.
The solution to all this is developing new skills. Upskilling is the essential priority for PE firms today. Along with AI fundamentals training, upskilling means developing strong expertise in:
Some AI software suppliers offer upskilling services alongside their products. For example, supplier EQT provides an advisory team alongside its Motherbrain platform, an in-house AI platform used for deal sourcing, market mapping, and trend detection. One effective tactic it uses is to create “AI translators” to bridge the gap between data scientists and deal teams. Product-agnostic support from an independent adviser can also be really valuable, especially for large-scale AI integration involving multiple tools.
DON’T WAIT
We are still at the beginning of the AI revolution. But new tech growth is rarely a steady, slow burn; it’s usually exponential. Firms that move too late risk getting left behind when the pace accelerates. PE has a big opportunity — now’s the time to build the muscle, embrace the tools, and make AI work for you now and in the future.
By Alexander Nedelchev, Phillip Deutschler, Milena Rund, Kilian Bergmann
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