Private equity firms across the U.S. are adopting artificial intelligence at a historic pace — and the returns are showing up faster than expected. According to the Lumenalta AI in Private Equity study, 92% of professionals report that AI improves how they value acquisition targets. Many are seeing measurable returns within the first two years of deployment.
This shift reflects more than a trend. AI is becoming an embedded force across the private equity lifecycle — influencing how firms evaluate risk, accelerate due diligence, and boost the value of their portfolio companies. In 2023 alone, private equity firms invested $2.18 billion into AI-enablement across their portfolios.
AI isn’t just a cost cutter, it’s a value engine. Survey respondents named data analysis (80%), accounting and payments (64%), and customer support (54%) as top areas of AI implementation. These use cases are now considered fundamental to operational efficiency and long-term scalability.
Predictive analytics stood out as the top-performing AI technology. Nearly three-quarters of professionals said it has driven significant value in their portfolios. Tools that forecast churn, optimize inventory, or anticipate market shifts are helping firms make proactive decisions and reduce risks early.
The Lumenalta survey also revealed that this operational shift is extending to executive leadership. Around 76% of firms have created new AI-focused C-suite roles, and 66% prioritize AI experience when hiring portfolio company leaders. AI readiness isn’t just a checkbox, it’s becoming a core competency that shapes both investment decisions and internal structure.
The speed of return on AI investments is another key finding. About 34% of respondents saw measurable ROI within one to two years, while 24% reported results in six to twelve months. An additional 14% saw gains in under six months, showing that the timeline for return is shrinking.
Even with the high cost of custom AI deployments — some reaching up to $500,000 — the time savings and performance gains are making a compelling case for adoption. According to the study, 73% of firms expect AI to save them 20%–29% in time or money over the next five years.
However, not all firms are advancing at the same pace. The study outlines clear barriers to adoption, including integration challenges (50%), high implementation costs (48%), and a shortage of skilled talent (46%). These obstacles reflect familiar trends seen across industries adopting AI but are especially acute in private equity where timing and efficiency are everything.
Another notable insight from the Lumenalta research: AI readiness now directly affects deal viability. Over 25% of respondents reported passing on otherwise attractive investments due to concerns about a target company’s lack of AI capabilities. Meanwhile, 79% of portfolio companies have already implemented AI solutions in the last two years, signaling widespread acknowledgment that AI impacts enterprise value.
AI is also driving efficiencies inside private equity firms themselves. Internal tasks like screening potential investments, market sentiment analysis, and process automation are being enhanced through AI platforms. The study found that these tools are often adopted first by junior team members, who use enterprise-grade platforms to parse marketing materials, financials, and risk indicators faster than ever before.
As the industry evolves, the gap between AI adopters and laggards could widen quickly. The Lumenalta study found that 93% of professionals expect AI to have a moderate to significant impact on private equity over the next decade. These expectations are backed by a growing share of firms allocating large percentages of their investment portfolios to AI-heavy businesses.
AI no longer sits at the edge of the investment strategy. It’s influencing how deals are sourced, how diligence is executed, and how portfolio value is built and measured. What was once considered futuristic is now foundational.
In a field that prizes data, speed, and returns, the case for AI is becoming undeniable. Private equity firms that embrace AI not only stand to optimize operations but position themselves as more attractive partners and stewards of growth in an increasingly tech-driven economy.
The question now facing investors isn’t whether to use AI — it’s how fast they can move.
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