Large-scale technology transformation isn’t the only way to build value in the private equity space. Sometimes, the smallest initiatives can deliver the biggest wins.

Technology is no longer a luxury or a line item in the P&L to minimize. It’s the backbone of modern businesses, and an essential enabler of growth, efficiency, and transformation.

But daunting complexity concerns, unclear value and business case, misaligned decision-makers, and integration gaps might hinder your path to creating value. Sound familiar? The good news is that creating value with technology doesn't always have to be big to move the needle.

We’ll cover recent shifts in PE growth, barriers to technology adoption, and four strategies to create more value in your firm.

Private equity: then and now

Private equity saw a downward trend¹ in activity and value throughout 2022, and continuing decline of fundraising activities² into 2024. All this came after a sharp rise in interest rates from 2022 to 2023 (500-point interest rate jump in the US), which demolished PE firms’ previous crutch of cheap leverage.

From 2012 to 2022, the private equity industry had comfortable, steady growth because they could borrow inexpensive debt and reap the rewards of multiple expansion as a primary growth driver.

But today, the message is clear: multiple expansion no longer works as a sole revenue strategy in today’s market. To propel a recovery in 2025, firms must shift their focus from multiple to margin expansion, which will propel value creation as a growth driver. And we’ve seen that shift most successful through technological advancements and operational improvements.

Barriers to technology in private equity

Picture this: you’ve just acquired a mid-market portfolio company. Leadership is in flux, priorities are scattered, technology has historically not been a priority, and everyone struggles to figure out what is next.

Jumping straight into a massive, multi-year technology overhaul feels daunting and risky. Here’s why:

4 quick wins to create value in private equity

In transitions such as buyouts, where leadership changes and cultural shifts dominate, aligning on technology priorities can be challenging. This is where quick wins come into play. They are easy to implement, deliver immediate results, and build trust among stakeholders – all while setting the stage for more ambitious projects down the line.

1. Automate manual workflows to reduce errors and save time

Imagine cutting your document processing time by more than half. The time savings from one task brings value in more capacity for staff to focus on higher-stakes work. Other processes ripe for automation and time savings in private equity include:

• Data collection and management
• Contract management
• Customer management
• Cash flow estimations
• Auditing and compliance
• Anti-fraud checks
• AP Automation

We can also look to Siemens for yet another example of automation potential. The multinational technology company automated its AP function³ internationally to extract data from over 1 million invoices, reducing manual effort by 60% and processing time from days to hours. On top of time savings, Siemens also realized a 40% reduction in processing costs.

Automation can also reduce human errors. For example, a simple, automated test script prior to a software release can alert you of any errors beforehand.

Finance departments can use customer service automation tools to implement automated dunning procedures and compress cash collection cycles without making expensive phone calls for low dollar amount invoices. Leading companies have reported up to 40% reductions in customer-facing costs with GenAI automation tools, due to the simplicity of automating simple questions.

Additionally, one B2B software company has reduced onboarding time for new customers by automating data entry tasks by leveraging ChatGPT Operator, resulting in faster time to value and lower implementation fees for the customer.

2. Maximize conversion rates with CRM technology

Margin expansion increases how much profit you can make in a deal. One way to drive that expansion is to automate, inform, and streamline your customer interactions, which a CRM platform can assist with.

We see with this recent report from Salesforce that implementing a CRM platform can enhance conversion rates and drive annual pipeline growth:

Think of the effect like compounding interest. Notice how small uplifts in conversion rates substantially increase enterprise value (EV)?

The right conversations around tech are equally important to the tech itself. It’s easy for investors and board members to get lost in technology translation, so it’s vital to assign tangible value benefits to new technology before pitching or implementing them. You can do this by ensuring your business and tech teams build a mutual understanding about which business metrics you aim to influence.

3. Optimize and scale cloud usage

While the cloud centralizes data and speeds up operations, especially for M&As⁴, it comes with significant annual costs — in the millions, depending on your organization’s size. But when you regularly review your cloud activity and test unused database areas, you can identify opportunities to cut costs.

For example, we identified an estimated 20% cost-savings opportunity to be realized by pre-purchasing storage & other cloud commitments from a large, well-known cloud provider. Another example is to identify areas to migrate infrequent jobs to serverless offerings to reduce cost by only activating resources when they are needed.

4. Improve operations with data-backed decisions

Data visibility and analytics have a positive trickle effect on all your operations. For example, data access and accuracy promote trust and transparency with your investors.

You can also use data from existing work processes to identify inefficiencies and improve them. Analytics into key metrics like contract value, contracts per agent, acquisition cost, and cycle lengths can help you improve employee training, fund structures, and performance strategies.

Enable your business and create value with technology

Small moves aren’t always flashy, but they work. And they work fast. The ROI can surprisingly be high, proving their value while building confidence and a momentum of successes for future investments.

Aligning PE investors and PortCo CIOs on the importance of technology value creation is crucial for realizing the full potential of tech investments. By focusing on quick wins and adopting a mindset that views technology as a key business enabler, organizations can accelerate value creation and achieve significant savings.

Remember, the goal is not just to minimize IT spend, but to maximize its impact on the company’s overall value.

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