How AI Is Reshaping Private Equity: Insights from Lumenalta’s Latest Research

Artificial intelligence is making waves in private equity, and firms are taking notice. Investors are using AI to speed up due diligence, improve deal sourcing, and make more informed decisions. But while the technology is gaining traction, it’s not a seamless transition. New research from Lumenalta reveals that while AI is helping firms move faster and smarter, challenges like cost, integration, and talent shortages are slowing adoption.

AI’s Expanding Role in Private Equity

Lumenalta’s report, based on a survey of private equity professionals, shows just how much AI is shaping the industry. The vast majority—92%—of respondents say AI has a positive impact on valuing acquisition targets. That means firms aren’t just using AI to refine their investment models; they’re also factoring AI capabilities into how they assess companies they might acquire.

The findings highlight AI’s growing influence beyond valuations. It’s also proving useful in deal sourcing, risk assessment, and portfolio management. Nearly three-quarters of respondents say predictive analytics is a major driver of value, showing how firms are leaning on AI to anticipate market trends and potential red flags.

At the same time, not everyone is moving at the same pace. The research shows that while many firms are seeing AI deliver measurable returns, others are struggling to integrate it into their existing operations.

The Push and Pull of AI Adoption

Private equity has always been an industry that thrives on data, but AI changes the scale of what’s possible. Machine learning models can process millions of data points, identify trends humans might miss, and help firms act with greater confidence. This explains why so many firms are making AI a bigger part of their strategy.

But Lumenalta’s report makes it clear that adopting AI isn’t as simple as flipping a switch. Cost is one of the biggest barriers. Some AI-powered solutions require a significant upfront investment, and 46% of respondents say they have trouble measuring the technology’s return on investment. Without clear benchmarks, some firms are hesitant to fully commit.

Then there’s the issue of talent. AI may automate parts of the investment process, but it still requires skilled professionals who understand how to use it. That’s why 66% of firms say AI expertise is now a priority for new C-suite hires, and 76% report creating AI-focused executive roles. The demand for AI-literate professionals is rising, but firms say they’re struggling to find people with the right mix of technical skills and industry experience.

Efficiency Gains Meet Ethical Questions

Beyond the logistical hurdles, AI in private equity raises broader questions about ethics and oversight. AI-driven investment models rely on vast amounts of data, but how that data is used—and whether it introduces unintended biases—remains a key concern.

Private equity firms are also watching how regulators respond. With AI’s role in decision-making expanding, there’s growing attention on compliance, particularly around data privacy and the use of AI in risk assessment. The report suggests that while firms are eager to embrace AI’s efficiency, many are proceeding cautiously, ensuring they maintain human oversight over critical decisions.

Where AI in Private Equity Goes from Here

Lumenalta’s research leaves little doubt that AI is here to stay in private equity. Firms that integrate AI effectively stand to gain a competitive edge, improving speed, accuracy, and operational efficiency. But the report also makes it clear that AI isn’t a cure-all. Firms still need strong leadership, strategic decision-making, and experienced professionals who can interpret AI-driven insights in the right context.

The industry’s challenge isn’t whether to adopt AI—it’s how to do it in a way that enhances investment strategies without losing the human judgment that has always been central to private equity success.

For a deeper look into AI in private equity, explore the Lumenalta whitepaper on its evolving role in the industry.