Unlock value with generative AI: A guide for private equity portfolio companies


  • Consider a GenAI strategy that identifies the portcos that are most ready and integrates GenAI seamlessly into your value creation plan.
  • A GenAI model has the potential to generate, improve, analyze, summarize and troubleshoot text, software code and data — all with remarkable accuracy.
  • GenAI usually isn’t primarily about cost cutting — it's about building capacity, productivity and augmentation.

If you’re helping to implement a value creation plan for a private equity portfolio company, you would be wise to consider a generative AI (GenAI) strategy — one that both identifies the portfolio companies that are most ready for GenAI and integrates GenAI into your value creation toolkit.

GenAI is starting to create exponential value. When the conditions are right, a GenAI model can generate, improve, analyze, summarize and troubleshoot text, software code and data — all with remarkable accuracy. Because GenAI is scalable and doesn’t have to be built from scratch, the ROI can come quickly. A private instance of a pre-trained GenAI model can be easily scaled across entire business functions (marketing, engineering, sales) via natural language prompts.

For some companies in your portfolio, GenAI’s mix of power, scalability and speed may already be disrupting business models. In others, it could be a differentiator for your portco. The right strategy can help you assess which companies do and don’t need GenAI and deploy it effectively.

Identify where GenAI can create the most value

GenAI usually isn’t about cost cutting — though it can pay for itself and then some. It’s more commonly about capacity, productivity and augmentation. This value can come in products, services and customer experiences as well as internal functions. In our experience with GenAI, private equity firms’ portfolio companies typically fall into three categories: where GenAI is a must-have, where it’s a should-have and where it isn’t a priority right now — other, simpler digital tools are more appropriate.

GenAI is set to change the industry in which these companies operate

In some sectors, leading companies are actively building GenAI and shaking up their respective industries. If competitors don’t do the same, they may soon fall behind. Typically, these sectors involve business models dependent on specialized but indexable knowledge or sophisticated but repetitive tasks that deal with the use and interpretation of languages. Here are a few examples.

  • Call centers / customer service. How do you revolutionize an industry that requires highly trained workers and faces high turnover? Give those workers a GenAI assistant that can help scan and synthesize policy training documents and past examples of successful answers delivered to customers. Use GenAI to push the right information to the right people, reducing the need for training and helping all employees offer the high-quality service that previously only the most experienced could provide. Increasingly, GenAI can also power customer-facing chatbots that are genuinely informative and easy to use.
  • Software development. GenAI is transforming the entire software development life cycle — helping developers produce more code more quickly, with fewer bugs and less need to offshore work. GenAI is drafting personas, developing user stories and generating code. It’s generating documentation, which makes collaboration, troubleshooting and onboarding new people easier. GenAI is scripting test use cases and synthesizing test data, as well as identifying bugs and offering suggestions to resolve them. GenAI for software development still needs a human augmenting it — but human coders now also need GenAI to assist them.
  • HR, tax, legal and finance. What service providers in these and related areas do is precisely what GenAI can often do so well: summarize, analyze and provide easy Q&A access to unstructured data such as tax regulations, financial reports, contracts or employee performance evaluations. GenAI can, for example, take a spreadsheet full of data (such as workforce performance across a team or organization) and generate plain language analysis. It can write first drafts of subpoena responses, tax reports and other documents. Since a single model can often do all these tasks and others too, its impact can be both rapid and transformative.
  • Educational services. GenAI can offer students of all ages certain educational experiences — at a reasonable cost — that unaided humans can’t match. A GenAI-powered chatbot can be available 24 hours a day anywhere in the world. It can access a vast amount of information, synthesize it at speed and offer it in a format customized for each student’s needs. The students can ask questions to better understand a difficult concept — and the chatbot will answer. These chatbots can also help human teachers prepare more insightful lessons and answer questions more quickly. Educational companies that use GenAI — and deploy their own brand resources to help enable accurate, relevant content — will enjoy a large competitive edge.

GenAI can help deliver exponential value in these companies

Regardless of which sector a company is in, all companies have key processes that GenAI can help automate or augment. These processes may be internal business functions (such as software development and customer services) that face disruption. In the IT maintenance and monitoring space, for instance, GenAI can respond to some incidents, route others to the right specialists, gather and analyze data on threats, simulate threats to test and improve defenses, and generate reports. Similar opportunities are available in scheduling and many back office processes.

What’s unique to GenAI isn’t these capabilities. Other technologies can often deliver one capability or another.


What’s unique to GenAI is its adaptability and scalability: a single GenAI model can be quickly scaled to many users and tailored to a variety of use cases across the organization — if certain conditions are met.

A company must, for example, be on the cloud. It needs centralized data, a secure IT environment and end-to-end data governance. It needs staff with the foundational digital skills and culture that permits rapid GenAI upskilling. Otherwise, GenAI may be too costly to implement unless it’s part of a broader digital transformation.

GenAI can help bring value to companies if they are prepared for transformative change

Some portfolio companies may have IT infrastructure, staffing, and strategy that do not lead to a place where GenAI can be a quick source of value. All of these companies could still find value from GenAI in functions that depend on knowledge work, such as finance, marketing, HR, tax and legal. But if these companies are not yet digitally mature, or if they’re outsourcing much of this work, there may be places to spend your resources in advance of a GenAI.

Other options can more quickly align with value creation plans already being executed. For example, just migrating all of a company’s departments to a single data lake on the cloud, then adding a dashboard and predictive analytics, may unlock high-impact digital value creation opportunities that can then be improved upon by adding GenAI afterwards.

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What to do, right now

To get the benefits from GenAI that you expect — neither missing out on value creation, nor misallocating time and resources — consider these actions.

Find the value: For each portfolio company, assess what GenAI must or can do based on the company’s industry and internal processes. Always take into account GenAI’s scalability. A company with many small processes that GenAI can help enhance may offer more value than one with one large process. Consider the company’s AI readiness with an assessment framework that covers technology, data, governance, culture, strategy and your time frame for the investment. Based on these assessments, decide if each company is a GenAI must-have, should-have or not-for-now.

Build the team: To get the most out of GenAI technology, assign a few people at either the fund level or above the business units at the portco (depending on what makes the most sense for your structure) to experiment with GenAI, focusing on the most disruptive use cases. As they gain experience, they will be able to more quickly stand up a GenAI initiative in a chosen company — and scale it across your portfolio. The same approach that can deploy GenAI in software development, finance, tax, legal or HR can apply to many different companies. You may need to upgrade your data analysis and IT departments, upskill key people and clearly assign GenAI responsibilities such as governance and risk management.

Create trust: To protect data, intellectual property and proprietary processes, you and your portfolio companies will need a secure technology environment, a licensed private version of one of the common GenAI models, and everyday practices, controls and governance that follow a Responsible AI toolkit. With the broad risks associated with GenAI (including data, bias, input and user risks, to name a few), it’s important to build in trust-by-design at the start of the process, and all parts of the executive suite have a role to play.

Deploy — then ‘rinse and repeat:’ Based on your assessment, backed up by your team, and protected by secure technology and practices, deploy GenAI in the companies or business functions that need it most. Many elements of your tech deployment toolkit will apply here too, such as thoughtful change management (complete with a detailed transformation roadmap) and careful management of customer expectations. Your portco might not, for example, want to abruptly replace personalized service with a GenAI chatbot. But as your experience grows, costs and time commitments will fall and opportunities will likely increase. After you apply GenAI to one business function in your organization, you’ll find that similar use cases exist throughout the organization. If you build a GenAI bot to answer questions in your marketing department, for instance, you can use the same technology to build that type of bot for legal, HR and several other departments. GenAI will soon become a trusted part of how you create value — and it can be among the most powerful and repeatable.

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