Read Private Equity International's story on AI diligence and value creation, and why many funds (and their LPs) worry about value realisation from AI across the portfolio. While most funds focus on efficiency uplift and incremental improvement, we see the biggest opportunities in creating net new (commercial) offerings that are underpinned and enabled by GenAI. This said, these more "innovative" offerings are much harder to deliver, and require participation of the entire business, so many funds are still shying away from including them in base and/or target cases.

“On the opportunity side… more often than not we find the incremental opportunities for efficiency are lower than what people would think, even if you get 70-80 percent efficiency uplift in some core workflow,” says Tobias Haefele, founder of AI advisory firm Riplo and former AI adviser to Hg.

“Even if – to make the archetypical example in accounting or audit or professional services – you were to assume we can now audit a company 80 percent faster, that might translate into lower single-digit EBITDA margin uplift improvements, because only 60 percent of your company is actually auditors. It doesn’t move the needle anywhere near as much as you thought it would.”

Launched last year, Riplo helps private equity firms understand how AI could impact portfolio companies either pre-acquisition or pre-exit. It completed a £2.3 million ($3.1 million; €2.7 million) pre-seed funding round in June led by Cherry Ventures with participation from Blue Lion Capital, founders of QuantumBlack, and angels from McKinsey, OpenAI and Hg Capital, per a statement.

“The big opportunities we’re often used to identify is in creating net new software, net new offerings or commercial propositions,” notes Haefele. “But the PEs, in spite of all the rhetoric, find it a lot harder to actually get involved in meaningful value creation and innovating because it’s hard to bake that into it.”

This isn’t to understate the potential for AI to influence returns. A June analysis of 471 PE-backed companies by McKinsey found that companies with the most advanced AI adoption traded at median revenue multiples of 31x, with broadly AI-enabled companies boasting median revenue multiples roughly 130 percent higher than firms using AI only opportunistically.

However, Boston Consulting Group research from January found that most PE firms saw limited AI-related returns in 2025 despite widespread experimentation. It argued that true value creation among PE-backed assets must come from reshaping businesses and inventing new offerings, rather than simply deploying co-pilots.