How Private Equity Firms Are Using AI to Transform Investment Operations

December 8, 2025

By: Wiss Team

Wiss Team

Private equity firms face a stark reality: adapt to artificial intelligence or risk obsolescence. According to a recent EY insight report published November 3, 2025, the pressure isn’t theoretical—50% of PE respondents believe generative AI and agentic AI will have the most transformative impact on their industry over the next three years.

The report, titled “How PE survives AI: Three areas where firms are being transformed today,” outlines how leading firms are moving beyond experimentation to operational integration across investment cycles, fundraising, and firm management.

AI-Driven Deal Sourcing Reshapes Target Selection

Traditional deal sourcing relied on relationship networks and manual data analysis. AI changes the equation entirely. Leading PE firms are building proprietary “sourcing engines” that scan vast datasets, identify patterns humans might miss, and rank potential investments based on both hard metrics and historical patterns.

“AI-driven sourcing tools can streamline internal processes and ingest more data than humans ever could, so you can consider more targets, better identify them, and dedicate your people’s time to top prospects,” the report notes.

These systems continuously improve through machine learning, allowing investment teams to evaluate more prospects while conducting deeper analysis on carefully selected opportunities. The shift from volume constraints to quality focus represents a fundamental advantage in competitive deal environments.

Due Diligence Acceleration and Enhanced Decision-Making

AI’s impact on due diligence proves equally significant. EY’s benchmark testing shows productivity gains of 35%-85%, with some diligence tasks compressing from weeks to days. Competitor analysis and internal financial analysis particularly benefit from automation.

Some firms have taken the unprecedented step of including AI platforms as non-voting investment committee members. These systems analyze deals and market data, challenge groupthink, and help committees avoid blind spots—essentially serving as a systematic contrarian voice that tests investment theses before capital deployment.

Portfolio Company Value Creation at Scale

Beyond deal-making, AI drives portfolio company performance. The report highlights firms using AI to analyze location and consumption data for retail site selection, enabling rapid expansion informed by AI-driven forecasting. In software development, AI has the potential to reduce programming time by over 50%.

More sophisticated firms practice “AI cross-pollination,” investing in AI-native companies across industries from warehouse robotics to software development, then integrating those technologies into other portfolio companies. Results include automated logistics, increased throughput, and reduced labor costs—translating to improved EBITDA and exit multiples.

Fundraising Efficiency in Challenging Markets

With total capital fundraising down 35% since 2023, AI provides a competitive advantage in LP relationship management. Leading firms deploy AI to identify and target potential investors—institutional limited partners or private wealth clients—by mining historical fundraising data, prior investments, and market trends.

“AI-powered data platforms can map the global private wealth landscape—including registered investment advisors, broker-dealers, family offices, endowments, and foundations—to find potential LPs,” according to the report. The technology can identify prospects like family offices that just gained liquidity from portfolio company exits, enabling highly targeted outreach.

Implementation Strategy: Start with Strengths

EY’s guidance for firms exploring AI adoption emphasizes strategic focus: “Apply AI the way you would put in a value creation plan as a portco. Winners know where their strengths are, lean into the change, and are willing to apply the sophistication and discipline of value creation into their AI programs.”

The report recommends starting with conversational AI chatbots, prompt libraries, and role-based training to build organizational capability before expanding to domain-specific tools for legal, compliance, and specialized functions.

The conclusion is unambiguous: “Without a move into AI, your firm will be competing without a full toolkit and you’ll likely be left behind.”

Source: EY, “How PE survives AI: Three areas where firms are being transformed today,” November 3, 2025. Available at: [https://www.ey.com/en_us/insights/private-equity]

Understanding how AI is transforming investment operations and valuation analysis? Wiss provides advisory services for private equity firms and institutional investors navigating technology integration, portfolio company value creation, and transaction support. Our team helps clients evaluate emerging technologies and implement solutions that drive measurable results. Contact our advisory team to discuss how expert guidance can enhance your investment operations.