AI-Powered Exits: A New Lever for PE to Maximize Value
March 26, 2025 – A recent AlixPartners report highlights that AI can be instrumental in preparing portfolio companies for sale, especially in a soft deal market where well-prepared exits are harder to achieve.
“AI can make preparation for sale faster and more comprehensive,” notes the report. “AI can be helpful in exit preparation, particularly when the deal market is soft and exits are hard to come by – and especially when AI tools are used by experts with deep knowledge of the dynamics of the market and the industries involved.”
This approach, AlixPartners concludes, can lead to a big improvement in the price, and even be the difference between selling and having to hold longer.
AI-Driven Analysis
AI can help sellers showcase a company’s revenue potential by identifying key areas for growth while also flagging potential risks. AI-driven analysis of salesforce effectiveness, pricing strategies, and customer retention can also provide buyers with a clear roadmap to success.
The AlixPartners report notes that “advanced technologies such as AI/ML can be deployed in multiple ways to identify – and quantify – opportunities in salesforce effectiveness, customer churn, pricing, customer service, and other commercial activities.” The report further explains that “analyzing customer acquisition costs, retention rates, and customer lifetime value can uncover ways to generate gains in customer loyalty while also revealing underexploited opportunities.”
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According to Evan Berta, an associate at Hunt Scanlon Ventures, the role of AI in connecting talent strategy to exit preparation is becoming more robust. “Private equity firms should consider how AI can not only enhance revenue insights but also identify leadership gaps that need to be addressed before a sale,” said Mr. Berta. “If a company is positioned for growth but lacks the right executives to execute on those opportunities, buyers may hesitate.”
Identifying Vulnerabilities
Outdated technology is a major concern for buyers, who scrutinize tech stacks for inefficiencies and hidden costs. AI can assist in identifying security vulnerabilities, outdated code, and integration challenges. The report, “CISQ, the Consortium for IT Software Quality, estimates that by next year, nearly 40 percent of IT budgets will be spent on tech debt – and buyers know to look for it during due diligence.” The report also notes that AI can be trained to flag outdated code, conduct security assessments, and assist in the tedious but important process of code refactoring.
M&A Outlook Points to Accelerating Deal Flow
Bain & Company’s just-released M&A report calls 2025 a pivotal year for dealmakers. Leo Cummings, an associate at Hunt Scanlon Ventures, takes a closer look at some of the key findings and explores what companies can do to realign their M&A strategy to capitalize on the shifting landscape.
“Tech talent is just as critical as the technology itself,” said Mr. Berta. “AI can help assess whether the existing IT leadership has the capabilities to support a smooth integration, or if buyers need to plan for leadership changes post-acquisition,” he says.
Red Flags
Buyers want transparency in vendor agreements, lease obligations, and contractual risks. AI-powered contract analysis can also be used to quickly assess thousands of agreements, highlighting cost-saving opportunities and potential red flags. The report explains that “sellers can now apply AI to their existing vendor agreements to uncover critical details related to specific terms, change-of-control clauses, termination penalties, guarantees, and more.” The report provides an example where AI in a novel way was used to process more than 12,000 contracts in less than an hour to examine the client’s landlord and geographic footprint.
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Mr. Berta emphasizes that AI-driven contract analysis is especially valuable for human capital-related agreements. “Executive compensation, non-competes, and leadership succession plans are all areas that buyers will scrutinize during due diligence,” he explains. “AI can help sellers proactively adjust agreements to ensure leadership stability post-transaction, which can make a deal far more attractive.”
3 Competitive Advantages of AI in Exits
AI-driven exit strategies offer three major advantages. First, they make portcos more attractive to buyers by presenting data-backed insights into revenue growth and operational improvements. Second, AI-driven efficiencies enhance the business itself, creating additional value even if a deal doesn’t materialize immediately. Finally, demonstrating AI capabilities signals to buyers that the company is technologically advanced and ready for scalable growth, which are traits that often command premium valuations.
“Buyers are looking for companies that aren’t just financially sound, but operationally scalable,” said Mr. Berta. “A strong talent strategy, supported by AI insights, can help sellers highlight not only financial potential but also leadership and technology readiness for future growth.”
To be sure, AI is beginning to revolutionize private equity exits, offering firms new ways to prepare their portcos for sale and maximize their valuations. By integrating AI into commercial operations, technology optimization, and contract management, firms can enhance deal outcomes and differentiate themselves in a competitive market.
More importantly, firms that leverage AI for talent insights can showcase a leadership team that is prepared to execute on post-deal strategies. As AI adoption in private equity continues to grow, firms that embrace these strategies will have a significant advantage in driving higher returns and executing successful exits.
Reprinted from with permission from ExitUp!
Contributed by Scott A. Scanlon, Co-CEO, Evan Berta, associate – Hunt Scanlon Ventures
