{"id":6088,"date":"2023-12-07T18:33:12","date_gmt":"2023-12-07T18:33:12","guid":{"rendered":"https:\/\/palladiumdigital.co.uk\/news-and-insights\/?p=6088"},"modified":"2023-12-07T18:33:12","modified_gmt":"2023-12-07T18:33:12","slug":"cracking-the-code-ai-impact-on-priavete-equity-deals","status":"publish","type":"post","link":"https:\/\/palladiumdigital.com\/beta\/cracking-the-code-ai-impact-on-priavete-equity-deals\/","title":{"rendered":"Cracking the Code: AI\u2019s Impact on Private Equity Deals"},"content":{"rendered":"\n\n\n

Last month, Palladium and Next 15 hosted an event called \u2018Cracking the Code: AI\u2019s Impact on Private Equity Deals\u2019 at our London HQ. We were delighted to host several esteemed panellists, including Jonathan Peachey<\/strong>, Chief Operating Officer of Next 15, Rich Klee<\/strong>, Product and Tech Director of Palladium Group, Helen Hunter<\/strong>, Chief Product Officer for multiple FTSE 100 companies, and Nicola Gray<\/strong>, Investment Partner at Epiris. James Prebble, Chief Executive Officer of the Palladium Group, hosted the thought-provoking session.\u00a0<\/p>\n\n\n\n

It was a terrific event that yielded many interesting opinions, and we\u2019d like to thank everyone who attended. And, of course, we\u2019d like to say a big thank you to the panellists, who shared plenty of fascinating insights with the audience.<\/p>\n\n\n\n

Initial Reactions to AI Developments<\/h3>\n\n\n\n

The discussion got off to a lively start. After reflecting on the tidal wave of optimism, scepticism, buzz and opportunity with ChatGPT, James asked the panel about their initial thoughts on AI. Jonathan Peachey, COO of Next 15, explained that he was a techno-optimist and had been tracking AI for some time. When ChatGPT was released, Jonathan was excited at the possibilities it offered and drew attention to its impact compared to other innovative but perhaps over-hyped technologies, saying, \u201cYou can\u2019t overlook it in the same way as blockchain and VR.\u201d Helen Hunter, Chief Product Officer for multiple FTSE 100 companies, explained that in the FTSE 100 businesses she works with, \u201cthere is an underlying hunger to unleash capability to drive efficiency\u2014algorithms don\u2019t get hungry and bored.\u201d\u00a0\u00a0<\/p>\n\n\n\n

Nicola Gray, Investment Partner at Epiris, explained that the company was embracing the change, using it to augment processes as opposed to automation. She predicted that AI tools would work with humans in the loop at least over the next 10 years. Commenting on his initial reactions, Rich Klee, Product and Tech Director of Palladium Group, said: \u201cWe\u2019re in the middle age of AI currently, and unlocking opportunity depends on the nature and ambitions of individual businesses.\u201d<\/p>\n\n\n\n

Exploring AI Use Cases<\/h3>\n\n\n\n

James pivoted the conversation to AI and private equity use cases, noting that the AI trajectory is only going to get faster, with more adoption for a range of business sizes. Jonathan discussed an emerging use case within Next 15, where they are using AI to conduct pain point interviews with synthetic personas to work out the target areas for customer pain. He said, \u201cYou can do quite a lot with synthetic personas that allow you to work out where the target area for customer pain is, and then do a far smaller number of interviews at the end\u2026 typically we might do 400 to 500 interviews to get to the heart of customer pain, and that can be reduced to 40 to 50.\u201d<\/p>\n\n\n\n

Nicola explored the impact of horizontal, sector-agnostic use cases, such as chatbots that take on a customer relations role, answering queries. \u201cThere is some nuance, as chatbots work well with some customer groups but less with others,\u201d she explained. But she also touched on how AI is impacting the M&A process. For example, Epiris use AI to replicate the capabilities they want within portfolio companies to build a model to identify bolt-on acquisitions, all the way through to targeting and comms.<\/p>\n\n\n\n

Reflecting On AI Threats and Challenges\u00a0<\/h3>\n\n\n\n

James then turned the discussion to the challenges, threats and barriers to AI adoption, which yielded some interesting viewpoints from the panellists. Helen made a vital point about a holistic approach to AI implementation, saying that initiatives fail when they\u2019re conceptualised as a technology play. \u201cThese initiatives need engineering chops, legal counsel to ensure the ethical standpoint is sound, that you\u2019ve thought through IP and complex issues of ownership,\u201d she said, adding that it’s easy for opportunities to become reductive very quickly.<\/p>\n\n\n\n

Agreeing with Helen\u2019s point, Rich emphasised that it\u2019s all about change management and education to ensure people don\u2019t become disillusioned. Highlighting the role of education, he said: \u201cIt\u2019s vital for firms to put effort into education because you\u2019re not going to get the benefit without a skilled craftsman using it.\u201d<\/p>\n\n\n\n

What Does the Future Hold for AI and Private Equity?<\/h3>\n\n\n\n

James asked the panel what they think the future holds for AI in the deals process. Rich is the first to respond, saying: \u201cAI will gradually creep into more of the deal process. At the moment, there is still a trust issue\u2014as there should be\u2014as hallucinations are still not well understood in large language models and generative AI. As people gain confidence and trust, it\u2019ll become more and more integrated.\u201d The discussion demonstrated that some firms are further along in the process than others, as Rich said that he knows of a firm that gives their GPT a vote on the investment committee.<\/p>\n\n\n\n

But he also reassures the audience about the future of AI, stating that rapport and human emotion will still be important for some time. Helen builds on this point, saying: \u201cInventions make us faster, better and more accurate, but the ability to see round corners and conceptualise a problem nobody knew existed is, for me, the optimistic view of the human race.\u201d<\/p>\n\n\n\n

AI and Private Equity Deals: Panellist Conclusions<\/h3>\n\n\n\n

To bring the panel to a close, James asked the panellists what advice they\u2019d give portfolio companies and funds about where to focus their attention. The advice the panellists gave was similar\u2014lean into AI because it’s moving fast. Go in with an open mind, but make sure you\u2019ve got access to a secure GPT environment and focus on education to avoid disillusionment.<\/p>\n\n\n\n

Jonathan ends the insightful discussion with a vital point for private equity firms and their portfolio companies to take heed of: \u201cAI is a little like fracking because it gives you the opportunity to get organisational information in a new way. AI models are available to everybody\u2014the only moat you have is data that is definitively yours.\u201d<\/p>\n\n\n\n

It was a fantastic event, gleaning many vital insights that private equity firms and portfolio companies to mull over wherever they are in their AI implementation journey<\/a>. Don\u2019t worry if you didn\u2019t make it to the event because you can <\/strong>watch the i<\/strong><\/a>nsightful discussion on YouTube<\/a>.<\/strong> <\/p>\n\n\n\n\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":3,"featured_media":6091,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[5,43],"tags":[],"class_list":["post-6088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/posts\/6088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/comments?post=6088"}],"version-history":[{"count":0,"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/posts\/6088\/revisions"}],"wp:attachment":[{"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/media?parent=6088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/categories?post=6088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/palladiumdigital.com\/beta\/wp-json\/wp\/v2\/tags?post=6088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}