Technology Value Creation During AI Transformation

Artificial intelligence is beginning to reshape how companies develop products, serve customers, automate operations, make decisions, and compete.

For institutional investors, this creates both a value-creation opportunity and an underwriting challenge.

Technology assumptions that appeared reasonable several years ago may no longer represent the most effective path forward. At the same time, simply introducing AI or investing more heavily in technology does not automatically create value. Technology can accelerate a strong operating model—but it can just as easily scale inefficient processes, reinforce outdated architecture, or multiply the wrong results.

In this webinar, SBC Capital will examine how institutional investors participating in deal-by-deal private equity co-investments can evaluate technology and AI opportunities at the level of the individual company, based on the technology environment that exists at the time of the investment.

Rather than relying on a technology thesis established years earlier for an entire blind-pool portfolio, deal-by-deal investing allows investors to assess each acquisition against the current state of AI, software architecture, automation, data, customer expectations, and competitive dynamics.

The discussion will focus on how technology can be incorporated into the investment thesis and translated into a practical, company-specific value-creation roadmap.

---

AI Is Changing the Context in Which Companies Create Value

The next several years are likely to bring substantial changes in the capabilities, economics, and accessibility of artificial intelligence.

These changes will propagate far beyond companies that identify themselves as technology businesses.

AI has the potential to affect:

• product development;
• software engineering;
• sales and marketing;
• customer service;
• analytics and decision-making;
• administrative processes;
• knowledge management;
• supply-chain and operational workflows;
• workforce requirements;
• and the competitive positioning of entire industries.

For private equity investors, the question is therefore no longer simply:

"Does this company use AI?"

The more important questions are:

Where can technology materially improve the economics of this particular business?

Which capabilities should be modernized, automated, replaced, or preserved?

How does the current state of technology change the original investment thesis?

And ultimately:

What technology roadmap is most likely to create enterprise value during the expected holding period?

---

Technology Multiplies the System You Already Have

Technology is an accelerator.

That means applying powerful technology to the wrong process can simply produce the wrong outcome faster and at greater scale.

Automating an inefficient workflow does not necessarily make the underlying workflow intelligent.

Adding AI to a poorly designed customer journey does not necessarily improve the customer experience.

Increasing technology expenditure without understanding the underlying business problem does not necessarily create enterprise value.

The first question therefore should not be:

"What technology should we implement?"

It should be:

"What business outcome are we trying to create?"

Only then should investors and management determine which technology provides the most appropriate means of achieving that outcome.

---

Avoiding Technology Lock-In

Another important risk is technology inertia.

Management teams naturally tend to solve new problems using technologies, architectures, and operating models they already understand.

That can create situations in which significant additional capital is invested into an existing platform even when newer approaches could deliver the required capability faster, more efficiently, or with materially greater flexibility.

For example, the relevant question should not simply be whether a business uses PHP, Next.js, or any particular technology stack.

PHP itself may be entirely appropriate for many applications.

The investment question is whether the existing architecture remains appropriate for the company's future requirements.

A modern application architecture may provide advantages in areas such as API integration, AI-enabled functionality, development velocity, user experience, automation, scalability, and deployment—but modernization should be driven by the value-creation case rather than by technology fashion.

The objective is therefore not to adopt the newest technology.

It is to prevent legacy assumptions from constraining future value creation.

---

Why Deal-by-Deal Investing Matters During Rapid Technology Change

Blind-pool private equity funds may invest capital over several years.

During periods of relatively gradual technological change, an investment strategy developed at fund formation may remain broadly applicable throughout that deployment period.

During periods of rapid AI transformation, however, technology capabilities and competitive economics can evolve considerably between investments.

Deal-by-deal private equity co-investments provide a different perspective.

Institutional investors can evaluate each acquisition against the technology environment that exists at the time the investment is being considered.

This allows the investment committee to examine:

• the company's current technology maturity;
• its exposure to AI-driven disruption;
• opportunities for automation and productivity improvement;
• technology-related competitive advantages and vulnerabilities;
• modernization requirements;
• data availability and quality;
• product-development capabilities;
• potential technology investment requirements;
• and the expected contribution of technology to the overall value-creation plan.

The result is a technology thesis that can be developed specifically for the company rather than assumed across an unidentified future portfolio.

---

From Technology Assessment to Value Creation

Technology becomes relevant to private equity when it can be connected to measurable business outcomes.

A technology value-creation strategy may include opportunities to:

• Increase revenue through improved products, digital channels, personalization, or faster product development.
• Improve margins through automation and productivity improvements.
• Accelerate execution by reducing manual work and shortening decision cycles.
• Improve customer experience through better digital interfaces and AI-assisted service.
• Modernize products and platforms where existing architecture restricts growth.
• Improve management information through better data infrastructure and analytics.
• Reduce technology risk associated with obsolete systems, fragmented architecture, or key-person dependency.
• Create new capabilities that were previously uneconomic or technically impractical.
• Strengthen competitive positioning as customer expectations and industry economics evolve.

The objective is to connect each technology initiative to the underlying investment thesis and ultimately to enterprise value.

---

What We Will Explore

The webinar will examine several areas institutional investors should consider when evaluating technology-driven value creation in individual private equity transactions:

AI Readiness

Where can AI realistically create value today, and where is implementation premature or unlikely to generate an attractive return?

Technology Architecture

Does the company's existing technology platform support the future business strategy, or will it become a constraint on growth and transformation?

Product Roadmap

How should the product roadmap change as new AI and software capabilities become available?

Automation and Productivity

Which workflows can be redesigned or automated, and what impact could that have on operating leverage and margins?

Data and Knowledge

Does the company possess the data, documentation, and institutional knowledge required to take advantage of modern AI systems?

Technology Investment Prioritization

Which initiatives should receive capital first, and which technology projects should be avoided?

Execution Capability

Does management have the internal capability to deliver the transformation, or will additional leadership, technology expertise, or program-management support be required?

Value-Creation Measurement

How should investors connect technology initiatives to revenue growth, margin improvement, risk reduction, and ultimately enterprise value?

---

The Objective

The objective of this session is not to promote AI adoption for its own sake.

It is to examine how institutional investors can make better technology-related investment and value-creation decisions during a period of unusually rapid technological change.

Deal-by-deal private equity co-investments provide an opportunity to evaluate those decisions at the individual-company level—considering the technology available today, the capabilities likely to emerge during the investment period, and the specific economics of the business being acquired.

The central question is therefore not:

"How do we add AI to this company?"

It is:

"Given what technology makes possible today, how should this company create value tomorrow?"