Good morning, {{First Name}}! This week AI is facing its next test in private equity: turning adoption into measurable returns. We’re looking at why the biggest opportunity may come after diligence, how to tell real pricing power from inflation-driven increases, and why equity values are running well ahead of liquidity.
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Join PE150 and Caplink for our AI & Data Insight Breakfast in London. Register here.
DATA DIVE
AI’s Real PE Opportunity Starts After Diligence
Private equity is racing to put AI into diligence, but the bigger prize may be what happens after the deal closes.
57% of respondents now integrate digital levers while building the value creation plan, versus 29% who primarily introduce them during thesis development and diligence. Meanwhile, 61% already use AI in due diligence and more than half use it in post close integration. The technology is increasingly spanning both sides of the transaction.
The problem is continuity. Sponsors generate mountains of customer research, pricing analysis, competitive intelligence, and operating assumptions before signing. Too often, that intelligence gets stranded in decks, models, and data rooms instead of becoming the operating plan.
Strategic takeaway: AI’s real value is not producing diligence faster. It is turning diligence findings into owners, KPIs, milestones, and measurable initiatives before Day One. The firms that connect underwriting directly to execution can turn deal intelligence into a repeatable value creation system. (More)
TREND TO WATCH
AI’s Next Test: Show Me the Money
AI is moving from adoption to accountability. EY finds 50% of CEOs saw productivity gains from AI-enabled tools over the past year, and 48% are reinvesting those gains into growth and transformation. Yet only 16% have strong visibility into AI costs and returns.
For PE, that gap is the opportunity. AI is becoming less about adding tools and more about proving EBITDA impact through leaner workflows, higher output and smarter capital allocation. Meanwhile, 51% of CEOs plan acquisitions over the next year, suggesting M&A could become another shortcut to acquiring AI capabilities.
The next AI winners won’t be those using it the most—they’ll be the ones that can show where it hits the P&L. (More)
You’re invited: Where AI Meets Private Equity
Artificial intelligence has moved beyond experimentation. The real question for private equity firms is no longer whether to adopt AI, but how to turn it into measurable value across the investment lifecycle.
On November 18, PE150 and CapLink Group will host the AI / Data & Insight Private Capital Breakfast, an invitation-only gathering at London's May Fair Hotel that will bring together operating partners, deal teams, portfolio executives, and technology leaders to discuss what AI adoption actually looks like inside private equity.
The morning will feature three practitioner-led discussions:
AI Into Value Creation — How leading firms are transforming AI from dashboards into repeatable value creation playbooks across portfolio companies.
AI Across the Investment Lifecycle — Practical applications spanning sourcing, due diligence, investment decisions, and portfolio management.
Building the AI-Enabled Private Equity Firm — The operating models, data strategies, and organizational capabilities required to scale AI successfully.
Interested in attending? Register or request the full agenda here.
Interested in sponsoring? Email [email protected]
DILIGENCE CORNER BY 150 DILIGENCE
Can This Business Survive a Price Increase?
A history of successful price increases does not necessarily prove pricing power. The key diligence question is whether customers will continue buying when prices rise—or shift to alternatives.
Investors should test five areas: customer dependence, switching costs, competitive intensity, pricing history, and contract structure. Together, these indicate whether higher prices can be sustained without damaging retention, volumes, or renewals.
This distinction matters because inflation can disguise weak pricing power. When an entire industry raises prices simultaneously, customers may have little choice but to accept them. Strong pricing power is more evident when a company can increase prices independently while maintaining demand.
For private equity investors, customer interviews, win-loss analysis, historical pricing data, and competitor benchmarking can test this directly. The conclusion can materially change assumptions around revenue growth, EBITDA margins, valuation, and the investment thesis itself.
MACROVIEW
Equity Values Are Outrunning Liquidity
US equity valuations have moved materially ahead of broad monetary liquidity. The ratio of S&P 500 market capitalization to M2 has risen to roughly 3.0x in 2026, compared with about 1.9x in 2001, implying an increase of approximately 55.9% versus the post-dot-com reference point.
The comparison should not be read as a standalone bubble signal. M2 is not a fundamental valuation anchor like earnings or cash flow, and today’s market leaders are generally far more profitable than many technology companies at the height of the dot-com cycle. Still, the divergence is notable. During 2020–21, rapid M2 expansion helped absorb rising asset prices; since then, money-supply growth has slowed while equity capitalization has accelerated.
The implication is that further upside is increasingly dependent on earnings growth, productivity gains, lower discount rates, or continued multiple expansion, rather than on liquidity growth alone. (More)
