Private equity’s generative AI opportunity is here

Authors: Vishveshwara Vasa, Bhakti Kundu, Farrukh Botirzoda

In a world where technology evolves at the speed of light, many of the new world challenges can be directly addressed with the emergence of disruptive technologies¹. Generative artificial intelligence (AI) is at the forefront of disruptive technologies, paving the way for innovative solutions to address ever-evolving needs across various industries. For private equity, generative AI could provide a significant competitive advantage.

Private equity’s generative AI capabilities are changing what’s possible

Private equity firms can harness the power of AI in two significant ways: Generative AI-led product engineering and generative AI-based investment decision-making processes. By leveraging generative AI, private equity firms can streamline product engineering processes and gain valuable insights into customer needs, making it easier to develop products that are more cost-effective, faster to market, and better aligned with customer expectations. Simultaneously, AI-based private equity investment processes can automate repetitive tasks and provide more accurate insights into market trends and investment opportunities, giving firms a distinctive edge in making strategic investment decisions.

Private equity firms can look at two distinct generative AI-based capabilities in dealmaking and product engineering as follows:

Generative AI to optimize deal lifecycle

Private equity firms have traditionally relied on investment banks to help them with potential investment targets. However, this process can be time-consuming, prone to human error, and costly. Generative AI has the potential to revolutionize the way private equity firms do business by streamlining the private equity investment process and providing more accurate insights into market trends and investment opportunities. With Deloitte’s innovative workbench powered by open-source large language models, private equity firms can transform the way they conduct business. Generative AI in deal lifecycle has potential advantages in four distinct areas:

Generative AI-led product engineering

Private equity firms can get ahead of the curve and increase their competitive edge by using generative AI to rethink software development². Today’s product development can be riddled with inefficiencies, errors, and security issues due to reliance on manual and repetitive tasks. By using generative AI, product engineering can be streamlined, automated, and optimized, making it easier to develop products that are faster to market, more cost-effective, and better aligned with customer needs.

Generative AI-based product engineering can help accelerate product engineering through Generative AI-based tools in each phase of product development:

Taking the next step in private equity generative AI

Amid ever-evolving, highly competitive tech environments, private equity firms should consider innovative approaches to remain competitive. By combining AI capabilities in investment decision-making and product engineering, private equity firms can optimize their investment portfolios by identifying appropriate products to invest in at the right time, which can create value for investors and customers alike. Overall, generative AI presents significant opportunities for private equity firms to innovate, improve efficiency, and stay ahead of the curve in a rapidly changing market. One way forward is to work with an adviser like Deloitte that has demonstrated experience and the ability to innovate in the generative AI space through end-to-end solutions.

References:
1.Anushree Verma et al., “Emerging tech: Top use cases for generative AI,” Gartner, July 2023.
2.Deloitte, “AI is helping to make better software,” 2021.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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