AI in Value Creation

• Private equity has an AI mandate problem, not an AI strategy
• Two categories of AI value creation actually show up in results: proprietary IP and closing revenue leakage
• AI can cut support costs 30 to 50%, procurement costs 5 to 10%, and lift sales productivity 20 to 40%
• 88% of portfolio companies are increasing AI investment, but only 6% have redesigned how work gets done
• 53% of LPs now rank a GP's AI plan among their top manager-selection criteria
• 83% of PE-backed companies have an AI pilot underway, but only 18% tie it to a real value creation lever
• Formal AI training for the leadership layer drives 2.3x faster adoption and 67% higher return

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Operating Model and Leadership

• Operating partners without a board seat and budget authority function as expensive consultants
• The best PE-backed COOs treat the board deck as a leading indicator and build systems, not heroics
• PE board meetings are an audit of the last 30 days and a strategy session for the next 90
• PE-backed CFOs who fail to push back and manage up lose credibility with their sponsors
• Founder-friendly PE branding can mask an accountability structure that shifts the moment the deal closes
• Boardroom dynamics, not competition, have been the most consistent driver of enterprise value destruction
• Average PE holding periods have stretched to roughly 6.6 years, driving demand for Chief Transformation Officers
• CEO readiness is shifting from "is this a proven PE CEO" to "is this the right CEO for this value creation era"

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Deal Execution and Integration

• 71% of PE firms are cleaning up their portfolios and 55% are shopping for carve-out assets, per KPMG
• A carved-out finance function has to be built from nothing once the TSA runs out
• A functioning Integration Management Office creates coordination, accountability, visibility, and escalation
• Diligence rarely surfaces the operational realities that determine whether a value creation plan can execute
• Team and culture diligence still gets far less rigor than financial diligence
• A pricing exercise at one small-cap company found 30% of customers were being supplied below cost
• Client relationships tied to a departing founder can start evaporating within roughly 15 days of close
• Carve-out CFOs must run day-to-day finance while building the standalone F&A organization under pressure

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Market Signals and Research

• McKinsey's Global Private Markets Report 2026 now characterizes the industry as "mature"
• A PE deal now needs 10 to 12% annual EBITDA growth to return 2.5x over five years, up from 5% a decade ago
• 58% of firms now deploy value creation resources within the first 100 days, almost double last year
• 65% of firms say less than half of their value creation plans over the past two years were fully realized
• M&A jumped from 8th to 1st priority for PE leaders in a year, yet only 25% see near-term value from it
• Value creation reached 84% of BluWave's LP project activity against 16% for diligence in Q2 2026
• Clearlake Capital partnered with Databricks and West Monroe to build fund-level data and AI infrastructure
• Bregal Unternehmerkapital acquired MDT technologies, betting on EU building-renovation regulation
• Novastone Partners acquired Jillson & Roberts, with operator Padraig Lawlor stepping in as CEO

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Thanks to Elliott T. Friedman, Aaron G., Riaz Siddiqi, Carsten W., Philipp Kraft, Alex Reichenbach, Nick Leopard, Joe Kitson, Lee McCabe, Francisco Lara, Mark Jansen, Tim Gerrells, Kit Lisle, Brady Harris, Will Bellinger, Gustavo Alba, Eiffat Karp, Dieunor Michel, Michelle Stuntz, Luke McKeever, Dr. Sascha Haggenmueller, GORD REYNOLDS, Eric Cowie, Uttaran Chakrabarti, Sveta Ramani, Lea Evers, Wayne Marhelski, Sean Mooney, Mario Damasceno, Sebastian Esser and Torge Barkholtz and everyone else who contributed insights to this edition.

Find the full list of posts and voices on LinkedIn: https://www.linkedin.com/pulse/best-linkedin-cw-32-33-private-equity-value-creation-thomas-allgeyer-qlete/?trackingId=Gy37hdiia2dBIqvJSO6%2BYA%3D%3D