Artificial intelligence isn’t just a buzzword in private equity anymore—it’s becoming an essential tool. Firms are using AI to identify deals faster, refine valuations, and optimize portfolio management. But while AI promises efficiency, it also raises questions about implementation, talent shortages, and how much investors should rely on machine-driven insights.
Lumenalta’s latest research offers a closer look at how AI is reshaping private equity. Their survey of industry professionals highlights both the advantages and the challenges firms face when integrating AI into their workflows.
How Private Equity Firms Are Using AI
Lumenalta’s research makes it clear that AI is already playing a major role in deal-making. According to the survey, 92% of private equity professionals report that AI positively influences acquisition valuations. This isn’t just about number-crunching—AI helps firms analyze market conditions, spot growth patterns, and flag potential risks.
Beyond valuations, AI is proving useful in deal sourcing. Instead of relying on traditional networking and research, firms are using AI to scan massive datasets, identify investment opportunities, and assess potential targets in ways that weren’t possible before. Predictive analytics is also a key factor, with 73% of respondents citing it as one of the most important applications of AI in their portfolios.
Challenges to AI Adoption in Private Equity
While AI is proving valuable, implementing it comes with hurdles. Lumenalta’s research points to three major challenges firms are facing:
- Costs and ROI concerns – AI technology isn’t cheap, and 46% of firms struggle to measure its return on investment. While AI can improve efficiency and reduce manual work, some firms are hesitant to invest heavily without clear financial benchmarks.
- Finding the right talent – AI isn’t just plug-and-play. Firms need professionals who understand both private equity and AI-driven tools, and that talent is in short supply. The demand is so high that 76% of surveyed firms have created AI-focused executive roles, and 66% are prioritizing AI skills in new C-suite hires.
- Integrating AI with legacy systems – Many firms still rely on older software and traditional workflows. Half of the respondents reported difficulties in merging AI-driven insights with their existing technology stacks, slowing the pace of adoption.
Balancing AI and Human Expertise
One of the biggest questions surrounding AI in private equity is how much firms should rely on it. AI can process data at speeds no human team could match, but it doesn’t replace the experience, intuition, and strategic thinking of investment professionals.
Lumenalta’s research suggests that firms seeing the most success with AI aren’t replacing human decision-makers—they’re using AI to enhance decision-making. AI highlights potential risks and opportunities, but it’s still up to investors to interpret the insights and make the final call.
The Future of AI in Private Equity
Lumenalta’s report makes one thing clear: AI is here to stay in private equity. The firms that integrate it strategically—balancing automation with human expertise—are likely to gain the most. As AI technology advances and firms refine how they use it, the focus will shift from just adopting AI to using it effectively.
