Private Equity & Artificial Intelligence — Here to Stay

Posted by | Nilesh Sharma

Artificial Intelligence (AI) continues to have an outsized impact on every aspect of our work. Companies across different industries are using AI to accelerate innovation, improve decision-making, and enable more personalized engagement with customers. The ability to automate and enhance processes has positioned AI as an essential tool for firms looking to stay ahead in today’s data-driven markets.

Indeed, AI’s influence on mergers and acquisitions (M&A) is also rapidly evolving, with many players increasingly adopting AI and Generative AI applications across a host of functions. AI has become a critical asset in the M&A process, especially for middle-market firms, streamlining key stages in the deal lifecycle including target identification, due diligence, and deal execution. This helps firms gain a competitive edge across sectors and has emerged as one of the key considerations for middle-market firms contemplating inorganic growth. AI tools are evolving rapidly, allowing firms to streamline data analysis, identify aligned targets, and enhance their decision-making processes.

Fuld recently reached out to over 100 private equity firms across Europe, the Middle East, and North America to assess the growing impact and adoption of this emerging technology on their operations. Our survey findings confirm this emerging trend and reveal significant insights into how PE firms are integrating AI into their workflows.

Increased Application in Deal Sourcing & Due Diligence

Of the 100+ firms surveyed (restricted only to deal professionals), 52% confirmed using AI applications for critical functions such as deal sourcing and due diligence.

AI-powered platforms are revolutionizing document reviews by automatically categorizing and analyzing vast volumes of data and information, thereby streamlining due diligence and potentially improving both the accuracy and depth of analysis.

Furthermore, 61% of the firms surveyed confirmed using advanced analytics platforms to support informed decision-making within deal sourcing by identifying opportunities and assessing the potential for AI-driven disruption within acquired businesses.

Varied Sourcing Models

While the application of AI and AI tools continues to increase within the private equity space, sourcing models vary significantly. 45% of firms prefer to work with their own established enterprise vendors, while approximately 9% are partnering with emerging technology and AI startups to meet their needs.

Larger PE firms with assets under management (AUM) exceeding US$10 billion have begun building in-house capabilities and creating proprietary models to meet their specific requirements. In our survey, nearly 13% of firms reported using in-house models.

Usage Across Functions

A common theme across all firms was the widespread usage of AI across critical areas of work—from reporting to cybersecurity. A large majority of the firms surveyed have been quick to capture low-hanging fruit when it comes to using AI tools. Nearly 69% have implemented automated reporting and analytics dashboards, while another 55% are using

AI-powered research and market intelligence for operations.

Additionally, 51% of firms are using AI for digital collaboration and workflow platforms. Even critical areas such as cybersecurity and data protection solutions have emerged as areas where private equity firms are deploying AI tools, with 21% of surveyed firms reporting such usage.

Conclusion

The survey results paint a clear picture: AI adoption in private equity is no longer a question of “if” but rather “how” and “how quickly.” With more than half of surveyed firms already integrating AI into core functions like deal sourcing and due diligence, the technology has moved from experimental to essential.

The varied approaches to AI implementation—from established vendor partnerships to in-house development—suggest that firms are taking strategic, tailored approaches based on their size, resources, and specific needs. As AI tools continue to evolve and mature, we expect to see even broader adoption across all aspects of private equity operations.

For PE firms that have not yet embraced AI, the window for competitive advantage may be narrowing. Those that act decisively to integrate AI into their operations stand to benefit from improved efficiency, enhanced decision-making capabilities, and ultimately, better investment outcomes. The message is clear: in the rapidly evolving world of private equity, AI is not just here to stay—it’s becoming indispensable.

Tags: AI & Analytics, Artificial Intelligence, Financial Services, private equity, Private Equity Research