Technology is reshaping private equity (PE) by enabling portfolio companies to achieve operational efficiency, revenue growth, and higher valuations. As firms navigate rising interest rates and extended holding periods, Chief Information Officers (CIOs) are transitioning from traditional IT roles to strategic leaders who address challenges like legacy systems, cost pressures, and M&A complexities. The technology function is now emerging as an indispensable partner in driving sustainable value creation and competitive advantage.
IT Cost Optimization: Streamlining for Efficiency
In recent years, technology budgets have risen significantly, making cost optimization a critical focus for private equity firms. According to EY’s Private Equity Pulse: Key Takeaways from Q1 2025, 87% of general partners are working with portfolio companies on supply chain impacts, and 75% are prioritizing liquidity and working capital, reflecting a broader trend of cost management that often encompasses IT spend. Effective strategies such as comprehensive spend audits, vendor consolidation, and leveraging predictive analytics for vendor negotiations can achieve 20% or more cost reductions, directly enhancing capital efficiency.
Auditing software licenses and cloud subscriptions can eliminate redundancies, while strategic sourcing of foundational technologies like cloud infrastructure or cybersecurity solutions supports scalability. E78 leverages advanced analytics in its IT Cost Optimization and Strategic Sourcing services to streamline vendor relationships and drive measurable savings, illustrating how targeted tools can optimize IT asset management.
Mergers & Acquisitions: Technology as an Integration Accelerator
In 2024, add-on acquisitions comprised 40% of PE deal value, highlighting technology’s critical role in M&A. CIOs play a pivotal role in due diligence by assessing technology infrastructure, cybersecurity risks, and system compatibility to mitigate legacy tech debt. Developing seamless integration plans, including data migration and system harmonization, ensure operational continuity and scalability, which are vital for commanding premium valuations.
Scalable IT architectures enable CIOs to demonstrate clear ROI to buyers, often resulting in higher exit multiples. For instance, harmonizing ERP systems across merged entities can enhance supply chain visibility. E78 supports CIOs through its M&A services, designing scalable IT systems that mitigate risks and boost exit valuations, underscoring the importance of technology in deal success.
Technology Operations: Modernizing for Scale
Many portfolio companies face scaling challenges due to legacy systems. Modernizing IT infrastructure with solutions like enterprise resource planning (ERP) or enterprise performance management (EPM) drives value. Portfolio companies that leverage advanced digital capabilities achieving 20–30% higher valuations due to enhanced operational efficiency and scalability. Improved supply chain visibility, cost efficiencies, and margin expansion are key outcomes.
Cybersecurity and governance are critical to protect data and ensure compliance, while cloud optimization and automation enhance resilience. Collaboration between CIOs and CFOs aligns technology with financial goals, such as reducing costs or improving cash flow. By implementing robust cybersecurity frameworks and cloud solutions, firms can prepare for growth and safeguard assets.
Digital Transformation: Enhancing Productivity and Innovation
Digital transformation enables portfolio companies to innovate and compete. Platforms integrating best-of-breed solutions—such as collaboration tools or security software—improve productivity and control IT spend. Centralized marketplaces provide visibility into technology purchases, ensuring strategic alignment. AI-driven transformation further enhances value by personalizing customer experiences or optimizing supply chains.
Overcoming talent gaps and legacy systems often requires partnerships with technology providers. E78’s Nexus Marketplace, for example, offers access to over 600 third-party solutions, enabling CIOs to integrate tools that drive top-line growth and efficiency, demonstrating how platforms can accelerate digital initiatives.
The Strategic CIO: A Catalyst for Returns
The office of the CIO in PE-backed companies navigate tight timelines and resource constraints, yet their leadership drives higher returns. Strategic CIOs contribute by:
- Implementing solutions to fuel revenue growth
- Optimizing IT costs to enhance EBITDA
- Managing M&A to maximize exit value
- Leading digital transformation to maintain competitiveness
Collaboration with CEOs and operating partners aligns technology with investment strategies. By blending technical expertise with business acumen, CIOs transform challenges into opportunities for growth and efficiency.
Looking Ahead: Technology as a Competitive Edge
As PE firms face a complex market, technology is a key lever for value creation. IT cost optimization, strategic M&A integration, modernized operations, and digital transformation drive EBITDA growth and premium valuations. Firms that empower CIOs to lead strategically will gain a competitive edge.
Partnering with experienced providers can accelerate outcomes. E78’s focus on IT cost optimization, M&A integration, and digital transformation amplifies value creation. By prioritizing technology, PE firms can achieve operational excellence and thrive in a dynamic landscape.
