Technology is no longer a support function—it’s a strategic growth lever. For private equity sponsors, the firms driving outsized returns in today’s market are those transforming technology assets into engines of EBITDA growth and enterprise value creation.
In fact, PE-backed companies have delivered median EBITDA growth of 11%. At the same time, advanced data and AI strategies are fueling cost decrease up to 28% and revenue increase up to 44% across key verticals, from manufacturing to healthcare.
The signal is clear: firms that prioritize and operationalize their technology strategy aren’t just improving performance—they’re reshaping portfolio outcomes.
The New Value Formula: Where Technology Drives Multiples
Traditional value creation levers—operational efficiency, financial engineering, and market expansion—remain essential. But they no longer differentiate. Competitive edge now belongs to firms that treat technology as a value accelerator, not a back-office enabler.
Top-quartile performers are using cloud architecture, AI analytics, and intelligent automation to compress timelines, expand margins, and enhance exit multiples. The laggards? Still managing IT like a cost center and missing opportunities hidden in their own data.
Three Technology Levers That Move the Needle
1. IT Asset Management: Uncover Hidden Margin
Across the portfolio, 20–30% of software spend is wasted on underutilized licenses, duplicative systems, or bloated infrastructure. Strategic IT asset management transforms this spend into savings—and strategic reinvestment.
- Visibility and Control: Real-time dashboards track software usage, renewals, and cloud consumption.
- Lifecycle Optimization: Systematic procurement and decommissioning reduce TCO and extend asset life.
- Risk Mitigation: Robust tracking protects against audit penalties, security lapses, and regulatory noncompliance.
Value Impact: Average IT asset optimization can reduce total spend by 15–20%—freeing budget for growth initiatives.
2. Strategic Cost Optimization: Fund the Future
Too many companies approach IT cost-cutting defensively. Smart portfolio companies view it as a reinvestment engine.
- Vendor Rationalization: Consolidating platforms can save 10–15% on licensing fees.
- Cloud Optimization & License Rationalization: Rightsizing infrastructure, reclaiming unused licenses and renegotiating contracts yields another 5–10%.
- Outcome Alignment: Cost savings are redeployed into data infrastructure, automation, and customer platforms.
What Differentiates Winners? They don’t just cut—they reallocate toward value creation priorities.
3. Data Readiness: Enable AI at Scale
As generative AI and advanced analytics move mainstream, data readiness is the defining barrier to adoption—and the biggest unlock for value creation.
- Governance & Compliance: Strong data stewardship ensures GDPR, HIPAA, and evolving AI governance alignment.
- Quality & Enrichment: Clean, structured data sets drive reliable forecasts and customer insights.
- Scalable Infrastructure: Cloud-native platforms provide the agility and compute power required for AI workloads.
By 2025, companies with strong data foundations are expected to outperform peers by 20% in revenue growth.
Embedding Technology Across the Investment Lifecycle
Technology value creation doesn’t begin post-acquisition—it should be embedded in every stage of the investment process:
Pre-Close Due Diligence
- Assess target tech stack maturity, cyber posture, software liabilities, and AI readiness.
- Uncover red flags early (e.g., security gaps, licensing risks) and quantify tech-enabled upside.
100-Day Planning
- Develop IT roadmaps aligned with value creation targets.
- Prioritize initiatives like cloud migration, data platform builds, and automation pilots.
Continuous Monitoring
- Implement systems to track IT performance, compliance, and cybersecurity posture.
- Conduct regular audits to ensure alignment with changing business priorities and regulatory requirements.
Overcoming the Execution Barriers
Technology transformation isn’t plug-and-play. It requires experienced execution to navigate these headwinds:
- System Integration Complexity: Prioritize by value and risk. Use phased rollouts to preserve operational continuity.
- Cybersecurity Risk: Embed end-to-end frameworks that include proactive detection, response, and coverage.
- Regulatory Pressure: Stay ahead of jurisdictional requirements with expert-led governance structures.
- Change Management: Build internal momentum with cross-functional training, KPI alignment, and executive sponsorship.
E78: A Technology Advisory Built for Private Equity
At E78, we help private equity firms and their portfolio companies transform technology from cost line to value lever.
- Technology Due Diligence: Identify integration risks and technology-driven growth opportunities before close.
- Expense Management: Deliver average IT savings of 15%, unlocking capital for strategic reinvestment.
- Data & AI Enablement: Build scalable data platforms and AI capabilities that drive real-time decision-making.
We speak fluent private equity. Our cross-disciplinary team combines deep investment experience with enterprise-grade technology acumen—so we don’t just audit systems, we engineer outcomes.
Move First. Move Fast. Win More.
Private equity is entering a new era of technology-led value creation. The winners won’t be those who wait—it’ll be those who act decisively and deploy tech like a true lever of return.
Let’s talk. Connect with E78 to accelerate your next transformation and capture the full value of your portfolio’s technology potential.
