Private equity has always been about navigating a landscape full of tempting possibilities, with only a few truly worth pursuing. So where does AI fit into this equation? How do you separate its use cases—the fleeting, from the fundamental? Traditionally, success in private equity relied on relationships and hands-on portfolio management. But now, the industry is turning to digital tools that are rewriting the playbook.
Abhishek Nanda, a seasoned M&A, private equity, and strategy professional who has spearheaded high-stakes transactions representing over $5 billion in combined enterprise value, sees AI as a true catalyst. By rethinking deal sourcing and portfolio management with AI, Nanda believes private equity can shift beyond traditional methods. His approach shows how firms can leverage the technology to uncover new growth opportunities, sharpen decision-making, and ultimately drive smarter, faster investments.
Deal Sourcing: Broadening Horizons & Reducing Risk
Effective deal sourcing remains the foundation of successful private equity and M&A deals, but firms are now grappling with the challenge of balancing quantity with quality. With fewer deals in the market and questions about recent investment performance, the pressure is on to make fewer but higher-quality investments. AI has become mission-critical in the sourcing process, expanding the scope of information that firms can feed into their deal sourcing. Beyond financial statements and market reports, AI scours news articles and social media to identify high-potential opportunities that would otherwise go overlooked.
“AI helps percolate relevant information to the top much more quickly,” Nanda explains. The technology allows firms to uncover new signals around product quality, customer feedback, and employee trends, and make the selection process smarter. “For example, AI-based tools can efficiently scan public and proprietary data sources to provide a unified view on what customers are saying about a particular product or service. This information can be used to filter deals up front and help teams focus on higher quality opportunities.” AI-generated leads, paired with personalized outreach, expand the pool of opportunities and accelerate engagement with decision-makers.
Due Diligence: Speed, Depth, & Accuracy
Traditional due diligence can be notoriously slow—with 80 to 90% of the world’s data unstructured, teams wade through the prerequisites, like financials, legal documents, and market research. AI, however, dramatically expedites this process. Generative AI tools, for example, can analyze everything from customer contracts, market reports, customer interviews, compliance records, and news articles, identifying potential opportunities and risks far more quickly.
“AI helps us catch red flags early, meaning we can allocate due diligence spending more effectively and make decisions faster,” says Nanda. Beyond speed, AI’s value lies in its accuracy, as it cross-references structured financial data with insights from contracts and compliance checks, ensuring nothing crucial is missed. This deeper insight into a target’s operations and potential risks allows firms to assess investments comprehensively, making the entire diligence process more resilient and reliable.
Portfolio Management: Driving Value Creation
Once a deal is closed, the focus naturally shifts to operational performance and value creation within portfolio companies. AI can play a transformative role in both reducing operating costs and creating new revenue streams for portfolio companies. “Investors can leverage AI to dramatically increase efficiency in areas like customer support, software development, and negotiation of legal contracts,” says Nanda. He expands on this perspective in his contributions to Forbes, highlighting how a renewed emphasis on operational expertise and strategic initiatives is crucial for driving value in today’s market—a focus that AI amplifies by revealing new efficiencies and untapped growth opportunities.
Nanda adds that smart investors will go a step further, enabling portfolio companies to leverage AI for product and customer service innovation. “Software companies are now using AI to offer paid ‘co-pilots’ which allow customers to increase efficiency by asking questions and automating tasks as they are using a software product.” By using AI to differentiate their offerings, private equity firms can help their portfolio companies access stronger revenue streams and customer engagement.
AI as the New Strategic Asset
From deal sourcing to due diligence to portfolio value creation, AI enables faster deal cycles, smarter decision-making, and more profitable outcomes. Nanda emphasizes that firms that integrate AI into their investing and M&A processes will continue to drive better returns and lead the charge in redefining operational expertise and strategic initiatives.
