PE firms are already boosting growth, margins, and strategic value with AI

Private equity investors are always looking for ways to grow their portfolio companies (“PortCos”) faster and more efficiently. Generative AI (“GenAI”) has emerged as a powerful lever—not just a buzzword anymore, but already a driver of real total enterprise value ("TEV"). I thought they'd be later to the game though. Thinking about it, not doing. I was wrong.

While in San Francisco, I recently sat down with Chris Taylor, CEO of Fractional AI, a firm that combines the strategic depth of an MBB consultancy with the executional muscle of a Silicon Valley product and engineering team. Their case studies speak for themselves, and if you’re not thinking about AI yet, you're certainly behind. If you're not implementing it, you may soon be. Things are moving way faster around me than I'm used to. Here's why it's helping.

1. Accelerate Growth Without Hiring

Unlock capacity and serve more demand

Many PortCos hit a growth ceiling due to staffing shortages. GenAI helps teams do more with less—automating time-consuming tasks and freeing up capacity to take on more business.

Change.org is the world's largest platform for social change, enabling anyone to start campaigns and mobilize support. Change.org monitors 70,000 posts per month and their team of 3 marketers need to match petitions with relevant journalists. Matching normally takes 2-3 hours each. Now it takes the team 2 minutes and they get a list of 40+ relevant journalists covering similar topics.

2. Launch AI Features That Drive Usage

Create sticky, differentiated experiences

Tech-enabled companies can use GenAI to build features that dramatically improve usability and expand the addressable market.

Airbyte partnered with Fractional to build “AI Assist,” a natural language tool that lets users generate data connectors instantly. It triggered a spike in usage and accelerated product-led growth.

3. Create Entirely New Revenue Lines

Use GenAI to open new business models

AI doesn’t just improve what you do—it can change what you sell.

Superintelligent used GenAI to conduct agent readiness audits without hiring consultants to conduct strict survey questions. What normally would've costs their customers thousands to complete, Superintelligent is now able to offer for just $500 now and allows Superintelligent to reach millions annually.

4. Expand Strategic Valuation Multiple

Become the outlier in a strategic acquisition

Buyers pay more for defensible IP and future-ready capabilities. GenAI can be the edge that elevates your PortCo above the rest.

Sincera used GenAI to map fragmented adtech data to Shopify’s taxonomy. That proprietary capability contributed to an acquisition by The Trade Desk.

5. Improve Margins Through Automation

Cut costs with smarter workflows

GenAI can replace or augment manual back-office tasks across ops, finance, and sales—improving margins without cutting corners.

A mid-market eCommerce company eliminated an offshore data processing team, saving $1M annually by automating scraping and ingestion workflows.
Another PE-backed services firm used GenAI to auto-summarize RFPs and draft responses—cutting proposal time from 3 days to 30 minutes.

How Should PE Firms Implement This?

Don’t experiment blindly. Move fast, with a plan.

❌ Ask ChatGPT to “figure it out”

This reminds me of the phrase, a goal without a real plan is just a wish.

❓Hire an AI-focused CTO

This is a great option and my preference if you just bought the portfolio company. However, if you already have a CTO in place, that's a risky decision to swap out leadership. PE-focused Executive Search firms I've talked to have told me they cost $450k to $600k salary with 3x equity package. That's a recurring expense you can't adjust out of the EBITDA.

✅ Partner with operators who specialize in GenAI

Fractional AI provides due diligence, strategic planning, and actual implementation. They’ve got a lot of reps with growth-stage PE firms and scaled PortCos to new ARR in under 90 days. I'm honestly jealous that paying them is considered an EBITDA adjustment because consulting is not necessarily recurring.

“Our clients don’t want slide decks. They want revenue,” says Chris Taylor, CEO of Fractional AI.

Final Thought

It was surprising for me to see the rate of adoption, but GenAI has started reshaping what great execution looks like in private equity. Whether you want to grow revenue, improve margins, or create an IP moat that drives a premium exit, it’s worth your attention now.

If you're not sure where to start, talk to Chris at Fractional AI. I don’t get paid for saying that. I always try to do my homework but I haven't found others like them yet, but I'll keep looking. Accenture's Gen AI Studios and Palantir Foundry seem way more focused on corporate and government-use cases.