• In 2021, the Technology, Media & Telecom, and Industrial Manufacturing sectors led in deal value — together constituting 60 percent of PE's total — primarily driven by the pursuit of digital transformation and tech capabilities. (Source: KPMG)
  • Digital trends have changed the way we do business. Emerging technologies such as artificial intelligence (AI), machine learning and data intelligence have transformed all industries.
  • As such, digital transformation is here to stay and therefore adoption in PE will be critical to success. Apart from making potentially profitable investments in digital/tech companies, PE firms are poised to benefit from digitalization to facilitate their own investment processes and streamline the administration and management of potential acquisitions.
  • CXOs can play a leading role in the development and implementation of a successful digital strategy to improve and modernize business models to maximize returns and inform decision making.

When assessing the value of digitalization, PE investors must consider its benefits in two segments: prior to deal-making and post-acquisition. Technologies such as data intelligence can optimize the investment process during the due diligence phase. Post-acquisition, when efficiency optimization is key, automation and digitalization can help in a number of ways: from cutting costs and enhancing the overall customer service experience to optimizing operations and addressing cyber threats.

Why Digital Transformation?

Digital transformation has infiltrated all industries and this momentum is expected to continue over the coming years. According to Statista, global digital transformation spending is forecast to reach $2.8 trillion by 2025.

Trends such as artificial intelligence, machine learning and data analytics have significantly streamlined operations, enhanced product offerings, and maximized returns. From leading banks launching a digital platform for syndicated loans to leveraging big data to help PE firms find their next investment, it is evident that the digital world can provide returns in more ways than one.

Digital Value Creation: Where to Start

In today’s digital age, PE firms must consider leveraging today’s trends to maximize their portfolio investments. A CXO can play a pivotal role in ensuring that digital transformation is part of a company’s investment thesis and assessing how its technological capabilities (or lack thereof) would impact a potential add-on acquisition.

87% of companies think digital will disrupt their industry but only 44% are prepared for it