How does a company drive growth, increase efficiency (margin/EBITDA) and stay ahead right now? By using technology as a growth lever. The recent democratization of AI is creating a wave of new M&A opportunities and pushing the necessity of technology-savvy executives to the forefront.
Many of today’s digital business strategies are designed to increase productivity through intelligent process automation. This is sparking interest in investing and/or acquiring businesses that will allow companies to remain competitive and leverage AI-innovations. Companies specializing in this new frontier including digital automation processes, robotic process automation, process data technology, generative AI technology, natural language processing, data integration, and hybrid integration platforms, are in demand.
In order to execute digital transformations, both Private Equity (“PE”) firms and their portfolio companies need to have the right people at the helm. Half the battle is having talent who understand how to properly leverage and utilize this new AI innovation to create value. At Lancor, we have been helping PE firms increase the value of their existing portfolio companies by connecting them with the right tech leaders (C-suite and Operating Partners) and implementing practical solutions.
One consistent ask from our PE clients centers around how Operating Partners and investing professionals add value across their entire portfolio of companies. Other PE clients place Chief Technology Officers (“CTO”) into each of their portfolio companies to drive automation and efficiency within the specific asset.
We have placed both the Operating Partner level technologist and an asset specific CTOs in the lower middle market, traditional middle market and at portfolio companies with double digit billions in revenue. While concern over the additive cost is likely at the forefront of every reader’s mind, it’s crucial to recognize that automation and AI are actually consistently lowering costs. Many clients love to see revenues increase, but it is the profitability or EBITDA that actually is more important. AI and technology can help determine which revenue dollar to chase.
Technology expertise is also a point of differentiation for PE firms when competing for an asset. Cutting edge thinking paired with technology expertise and an action plan, sets a firm apart. This also leads to a far better partnership with the portfolio company’s existing leadership. Forward-thinking businesses want to team up with PE firms who bring an understanding of today’s tech trends, not just capital, to drive better returns.
At Lancor, we understand that the true value of a business lies in executive management. We are front and center a value creation firm. Transformation through technology, needs to take place immediately and requires PE firms to proactively have leadership with the right expertise. For example, when the internet first launched, there were “internet companies” and “others.” Recently, companies are characterized as “tech enabled business service” companies, identifying them as the firms that appreciate how to use cutting edge technology like AI and BI. Today, every company, in every industry, needs to understand and leverage technology.
If you’re interested in moving your business forward, or helping PE portfolio assets use technology to drive better and faster returns, we are here to help!
