What Happens When You Apply AI with a Private-Equity Mindset

Private equity creates value by buying established businesses and improving how they run. The same approach can be applied with AI.

The thesis is simple. Acquire “boring” companies and use AI to make them operate better.

Why This Works

Most small and mid-sized companies still rely on spreadsheets and manual processes. They are slow to adopt software. AI gives them the chance to skip steps and modernize fast.

Here are three ways this plays out.

1. Automate in Increments

Do not overhaul the entire workflow. Start by automating 10 to 20 percent. Build trust. Prove impact. Then repeat.

Small wins compound. Over time, they transform operations.

2. Build Micro-Solutions

Generic SaaS often forces companies to bend their process to fit the software. With AI, you can create tailored solutions at low cost.

Examples:

• Custom models for niche documents

• AI agents for a unique sales funnel

• Automations built on proprietary data

Micro-solutions fit like a glove and solve problems directly.

3. Align Incentives

Private equity thrives when incentives align. AI adoption can follow the same model.

Pricing can be tied to outcomes. In some cases, equity partnerships can share efficiency gains across both sides. This reduces friction and builds trust.

The Leapfrog Analogy

Kenya’s M-Pesa story illustrates the opportunity.

In 2007, Safaricom launched a mobile money platform. It allowed people to transfer funds and pay bills without a bank account. At the time, Kenya lacked broad landline and banking infrastructure.

By skipping ahead, M-Pesa leapfrogged entire stages of development. Today it serves more than two-thirds of Kenyan adults and processes 31 percent of Kenya’s GDP.

Many private equity-backed companies are in the same position today. They do not need to slog through a decade of SaaS adoption. They can skip straight to AI-enabled operations.

Why This Matters

The technology is ready. The barriers are not technical but cultural. Leaders must be willing to rethink how work gets done. That is the hardest part.

Closing Thought

Applying AI with a private equity mindset is not about hype. It is about turning solid businesses into stronger ones through steady, targeted change.

The leapfrog opportunity is here. The only question is whether leaders are ready to make the jump.