Private Equity: Value creation measures show results significantly faster than in the previous year / The most successful funds link the pace to fixed standards and AI

• The most successful funds deploy revenue-adjacent levers such as pricing, sales, market expansion, and customer retention almost twice as often as the rest (46 versus 26 percent)
• Almost a quarter of the most successful funds (23 percent) work with highly standardized measures, compared to only ten percent among the less successful ones
• AI still has significantly more potential: only just under one in three (31 percent) considers its implementation to be "efficient" so far

Interventions in financial management and cost control show results most quickly: 82 percent of respondents see results in their portfolio companies within twelve months from optimizing working capital and liquidity, followed by cost reductions, personnel efficiency measures (73 percent each), and price adjustments (72 percent). The acceleration is visible across all regions and fund sizes, which is why the study classifies it as a structural change.

"Value creation today must be achieved quickly and become visible very early in the holding period," says Gero Güllmeister, Senior Managing Director and Board Member of FTI-Andersch, the restructuring, business transformation, and transactions advisory unit of FTI Consulting. "Among the leading funds, we observe that they have increasingly standardized and, in part, automated all relevant measures. Performance improvement then begins on day one after the acquisition. Investment pressure – but also performance pressure – has continued to rise globally. Those who cannot deliver quickly lose investor confidence. Artificial intelligence is a new lever here to better meet these demands."

What the most successful funds do differently

The index compares funds whose portfolio companies, by their own account, exceeded their financial targets on average in the past year (40 percent of respondents) with the remaining participants. The frontrunners turn to revenue-adjacent levers significantly more often: 46 percent deploy pricing, sales, market expansion, and customer retention very frequently, compared to 26 percent among the others. They work with highly standardized approaches more than twice as often (23 versus ten percent). The largest individual gap between the two groups appears in the personnel efficiency lever: 53 percent of frontrunners exceeded expectations here, compared to 27 percent of the others. In AI, deployment rates are similar across both groups, but 19 percent of frontrunners exceed the financial targets of their AI applications, versus five percent of the others. According to the study, the difference is made by a clear strategic focus, dedicated AI specialists, and governance structures that concentrate the technology on a small number of high-impact levers.

"The most successful funds deploy artificial intelligence as an operational amplifier for levers they are already pulling. The finance function identifies earlier where liquidity is tied up in working capital, the procurement manager finds savings potential in the supplier network or in C-parts that remained hidden manually," says Gero Güllmeister. "Anyone who wants to sell a portfolio company at a premium must demonstrate that AI has arrived as a technology in day-to-day operations and in the financials. And that works best when the managers of the portfolio companies are successfully using it themselves."

Despite rapid results: AI deployment remains a challenge for now

Even though AI is already leading to measurable results significantly faster this year than last: 31 percent of respondents rate AI implementation as efficient or "largely" efficient, 48 percent as mixed, and 21 percent as difficult. Only one percent speaks of a very efficient introduction and implementation, compared to eleven percent for established technologies used in administrative processes.

Many funds currently concentrate AI on a few proven application areas such as pricing, cost structure, and workforce planning, and see results there quickly. As a result, AI often runs in individual use cases within individual portfolio companies. A rollout across all portfolio companies of a fund, by contrast, is in many cases still pending. The pattern is most evident in pricing: no lever is more frequently enhanced by AI, and no lever has gained more in usage year-on-year (plus 18 percentage points). At the same time, pricing ranks among the most difficult levers to implement according to the report.

"For funds with German portfolio companies, the window is narrow. Valuations are softening in many sectors, and those who want to demonstrate value creation only during the sales process lose pricing room," says Gero Güllmeister. "Particularly in Germany, it is therefore critical to generate early visible operational results over the next two years. The frontrunners demonstrate that speed and discipline go hand in hand. In this environment, German PE funds in particular can show what they can achieve through automation and AI."

About the Study / Methodology:

FTI Consulting surveyed 555 decision-makers from private equity firms in 14 countries worldwide, of whom 36 percent are based in the Europe, Middle East and Africa (EMEA) region. Nine core value creation measures for portfolio companies and two supporting factors, including artificial intelligence (AI), were assessed across dimensions such as frequency of use, implementation, time to impact, and target achievement. The results are based on respondents' self-assessments regarding their portfolio companies.

The full study can be found here.

About FTI-Andersch

FTI-Andersch is a management consulting firm that supports its clients in developing and implementing sustainable strategies for the future, performance improvement, and restructuring. FTI-Andersch actively supports companies that are facing strategic, operational, or financial challenges and change processes – or that wish to proactively align their business models, organizations, and processes for the future. Its clients include, in particular, medium-sized companies and corporations that operate internationally. FTI-Andersch is part of the FTI Consulting Group (NYSE: FCN), which has more than 8,100 employees worldwide.