Private Equity Using Tech to Fuel Next-Level Portfolio Value Creation

By Randy Hamilton

C6B69858-EE9B-44D1-BC1B-4C3498C29E25To create the most value for their investors, private equity firms need to identify and act on opportunities quickly. Using a combination of financial and operational resources, PE firms can help their portfolio companies reach new heights. This article will discuss how private equity firms can fuel next-level portfolio value creation through innovation and new technologies.

Value Creation in Portfolio Companies

Value creation has always been instrumental in securing higher returns in private equity. Most firms create value in their portfolio companies by cutting costs and increasing revenue via sales and marketing optimization and expansion. The latest value creation tool for Private Equity firms is digital— turning their focus to enabling portfolio companies through technology to innovate, accelerate, and generate strong returns. 

What Automation's Worth

Technology is changing the way we live, work and play. One of the most cost-effective ways to accelerate scale, change, and time-to-value in a portfolio company is to embrace automation and advanced technologies. McKinsey research shows that 85% of companies have accelerated digitization, with 67% explicitly accelerating AI and automation adoption. 


The most significant impact on organizations is the use of intelligent automation, which has successfully contributed to improved top-line growth and bottom-line optimization, impacting organizations' operational and financial performance. Intelligent automation technologies include robotic process automation (RPA), artificial intelligence (AI), computer vision, and natural language processing (NLP)— all of which have proven track records in transforming the way businesses operate. 

To learn more about Intelligent Automation, read our article, "Intelligent Automation: Private Equity’s Key to Hidden Alpha.”

Low digital maturity companies are typically so caught up in organizational issues that they can never build or execute automation strategies. PE firms, however, have significant decision-making influence in their portfolio operations and are uniquely positioned to drive digital initiatives and agendas. PE firms can help drive strategies that streamline, innovate, and bring the necessary talent to help execute in defined timeframes. 

Top benefits of automation include:

  • Operational efficiency and productivity improvements
  • Product and service innovation
  • Grow revenue
  • Better customer experiences
  • Cost savings
  • Improved internal decision-making
  • Enhanced employee training and upskilling
  • Reduced time to market
  • Reduced risk
  • Higher talent retention and improved recruitment

Value Creation Through Innovation and the Customer Experience

Customer experience is the new competitive differentiator. Some companies are using new technologies to improve existing systems, while others have found ways of introducing entirely new experiences that unlock business value and capabilities. Rather than simply maintaining the status quo, innovators use artificial intelligence and automation to find new ways to deliver value to boost retention and growth.

To learn more about the importance of customer experience, read our article "There are No Secrets to Great Customer Experience.”

According to a global CX study by Oracle, 74% of senior executives believe that customer experience impacts the willingness of a customer to be a loyal advocate. 


Top reasons portfolio companies need to focus on innovation and CX:

  • Customer experience is the number one brand differentiator
  • Customers who rate a company as delivering a "good" experience are 34% more likely to purchase more and 37% more likely to recommend
  • Companies with a CX mindset drive revenue 4-8% higher than the rest of their industry
  • Companies that lead in CX outperform laggards by nearly 80%
  • 1 in 3 customers will leave a brand they love after just one bad experience

Once you start applying automation and AI to customer data shared across multiple departments and divisions, you not only gain a better understanding of your customer, you'll have the ability to take it to the next level. Areas such as hyper-relevance and hyper-personalization, anticipating and preventing issues before they happen, providing a far more responsive level of service and self-service, digital decisions, expecting how customer needs will change, and more. 

To learn more about digital decisions, read our article on "Automating Decision-Making.”

Are the companies in your portfolio simply continuing in the same direction, or are they taking the initiative to drive value with innovation and new and improved customer experiences?

We Help Build Portfolio Value

We work with private equity firms with services designed to create truly differentiated value for themselves and their portfolio companies. Accelerate growth, reduce costs, and elevate performance with Originate.

Drop us a note to learn more about how Originate can build your future!