Reading Time: 3 minutes
In today’s private equity landscape, the real edge lies in information: how quickly you can access it, how accurately you can interpret it, and how decisively you act on it. That is why data analytics and artificial intelligence are no longer optional. They are reshaping how firms source deals, operate and organize internally, and scale their portfolio companies. According to FTI Consulting’s 2024 AI Radar for Private Equity Survey, 75% of responding private equity firms already incorporate AI into their investment process and portfolio value creation efforts, or plan to do so within the next 12 months.
As competition for deals intensifies and macro uncertainty increases, speed and confidence are critical. At Tideshift Capital Group, we have seen firsthand how data and AI can amplify performance at every stage of the investment lifecycle. Below, we share a few insights from our experience.
1. Smarter Deal Sourcing and Diligence
AI driven tools are transforming how firms discover and evaluate investment opportunities. By enhancing market research and mapping competitive landscapes, analytics help identify relevant companies earlier with greater precision in forecasting exit values.
During diligence, access to detailed operational and customer data enables deeper assessments of churn risk, pricing sensitivity, customer behavior, and exposure to operational inefficiencies. Internally, analytics platforms enhance execution by improving pipeline visibility, strengthening underwriting discipline, and enabling scenario modeling to test assumptions in real time.
2. Driving Value Throughout the Hold Period
Once a company is acquired, the focus shifts to execution. Data plays a critical role in helping teams monitor key performance indicators, identify root causes of performance changes, and adjust strategies early. Broader data sources and better tools allow investors to uncover customer trends, guide product decisions, and maintain a competitive edge.
Embedding data and analytics into portfolio company operations makes value creation more sustainable and measurable over the life of the investment. Several consulting firms are providing these services and are scaling rapidly.
Our view is simple: firms that can turn data into insight, and insight into action, will outperform.
3. AI in Portfolio Companies: From Hype to Results
Many companies claim to use AI, but few have it and are able to translate it into meaningful outcomes. That is where access to quality data and the ability to apply it effectively become essential.
The strongest data rich companies understand that usable information is the foundation for intelligent systems. With clean and structured data, portfolio companies can leverage AI in high impact areas such as predictive sales, intelligent segmentation, fraud detection, risk intelligence, and dynamic pricing. Agentic AI also enables automation across workflows, from invoice processing to customer service. McKinsey research estimates that AI adoption in core business functions can increase EBITDA by 20% or more, particularly in data-rich industries like software, tech-enabled services and industrial tech.
The key is identifying where AI delivers real value, not just novelty. In our experience, this means embedding a data strategy into the broader operating model, from executive reporting to systems that collect and continually refine new information over time for better decisions.
Looking Ahead
As AI matures, the gap will widen between companies that treat it as a trend and those that build it into their core functions. For Tideshift, the opportunity for founders and management teams is not just about adopting tools, but it is about investing in companies that have access to and use data as a strategic asset.
The next wave of alpha will not come from incremental improvements or financial engineering. It will come from investing in intelligence, both human and artificial.
About Tideshift
Headquartered in Boston, Tideshift Capital Group is a private investment firm that has been purpose-built to acquire data-rich, growth-focused vertical software and tech-enabled services businesses in the lower-middle market. Our investment focus targets companies generating $7 to $30 million in annual recurring revenue, that are either breakeven or profitable and have a clear path to 20%+ growth. With a sector-focused approach, the firm targets attractive investment opportunities in North America through buyouts, corporate carve-outs, and majority equity positions in companies in transition. By leveraging the firm’s unique heritage blending investment and operational experience, Tideshift’s distinctive approach propels value creation and is grounded in product-led growth, embedding AI and data and deploying an extensive network of engineering, AI, sales, and marketing resources at scale to create impact velocity. More information is available at www.tideshift.com and on LinkedIn.
