Why Traditional Value Creation Is Fading and How Tech Is the Answer
The private equity formula is shifting. Once, rigorous cost controls and financial engineering could move the dial quickly. Now, those strategies alone are losing potency.
Stakeholders from LPs to boards want not just performance, but differentiation.
Today, real value comes from a new approach: leveraging technology to create durable and compounding impact.
Why Traditional Levers Are Fading
Traditional approaches : cost reduction, process optimization, and balance sheet maneuvers have become baseline expectations:
Commoditization: Lean operations and aggressive procurement are now routine, making incremental gains fleeting¹.
Margin Compression: Financial tactics add less value as deal multiples rise and arbitrage disappears².
Impact Decay: Year-one savings from legacy tactics often evaporates by year three; the effect is halved as the playbook becomes common knowledge³.
Digital Catch-up: Basic automation and legacy IT can no longer distinguish a company; everyone has the same tools⁴.
For PE leaders, this means it’s no longer a choice to adapt, but a necessity to maintain a competitive edge.
Why Disruptive Technologies Are the Answer
High-performing firms embrace disruptive technologies as their new value engine:
Superior Outcomes: Data from 150+ studies shows tech adoption in PE yields 2–8× greater EBITDA improvement, 3–10× revenue growth, and up to 200× ROI multiples compared to traditional methods⁵.
Sustained Impact: Tech driven initiatives retain about 60% of their value by year three, while traditional methods decline to ~30%⁶.
Examples: AI automation slashes admin costs, dynamic pricing engines boost revenue, and predictive analytics fine-tune sales efforts⁷.
Exit Premiums: Digital differentiation boosts asset valuations at exit, signaling resilience and scalability⁸.
These capabilities are not just enhancements, they’re becoming requirements for enduring outperformance⁹.
How to Get Started: The Digital Blueprint
Successful sponsors follow a disciplined framework to embed technology for real results¹⁰:
Business Alignment: Link tech investments to hard targets, EBITDA, revenue, and capital efficiency.
Digital Foundation: Build robust cloud, data architecture, and clear governance for scalable insight¹¹.
Talent & Teams: Embed digital experts in multi-functional “pods” to drive rapid MVP cycles and learning.
Continuous Tracking: Use dashboards for real-time performance, ensuring agility and accountability.
Reinvest Wins: Leverage early digital gains to spin a flywheel of reinvestment and compounding effect.
Value positioning: Bake differentiation into exit stories to maximize multiples and attract premium buyers¹².
PE firms are already using AI for supply chain, IoT for predictive maintenance, and advanced analytics for market-specific pricing proving that lasting value is built by combining technology with strong, collaborative teams¹³.
The Future of Value Creation Starts Here
The next wave of outperformers will be those who act decisively, adopting technology-first strategies and empowering teams to innovate boldly.
Lasting value is no longer found in repeating the old playbook, but in bringing together the right data, tools, and people to solve tomorrow’s problems today¹⁴.
If you’re considering how to advance your value creation agenda, we invite you to start a conversation with us. Together, we can chart a strategy that not only anticipates disruption but transforms it into a sustainable advantage, tailored for your portfolio, your ambitions, and your needs.
Citations
¹ EY Insights (2025) – Three Tech Pillars Driving Value Creation for PE Portfolio Companies
² FTI Consulting (2025) – Beyond EBITDA: Rethinking Value in Private Equity
³ Coller Capital (2025) – How PE Drives Digital Transformation and Value Creation
⁴ Harvard Business School (2024) – Private Equity and the Adoption of Digital Technologies
⁵ MOST Studios (2025) – Driving EBITDA Growth Through Strategic Digital Transformation
⁶ Complex Discovery (2025) – AI, Cloud, and Cyber: How Tech Is Redefining Value Creation in Private Equity
⁷–¹⁴ Combination of above, supported by EY, HBS, and Coller Capital studies (2024–2025).
