
Private Equity Experience
Demystify the world of private equity with insider knowledge.
Join hosts Ed Barton, Rory Liebhart, and Emily Sander - seasoned professionals who have worked from all angles as C-suite leaders, private equity managing directors, and investors.
In this podcast, they break down complex private equity concepts into everyday language. You'll gain a clear understanding of the PE landscape, key players, and market dynamics. Expect practical insights on deal-making, growth strategies for founders and management teams, and exit strategies. Plus, hear real-world examples and real-time breakdowns of trending news stories.
Whether you're a seasoned pro or just starting out, considering selling your company to a private equity firm, or simply curious about this lucrative world, this podcast will help you navigate the private equity landscape with confidence.
Private Equity Experience
The AI Revolution in Private Equity: Diligence, Operations, & Value Creation | PE + AI
Artificial Intelligence (AI) is no longer a futuristic concept—it’s actively reshaping the landscape of Private Equity (PE) right now. In this can’t-miss episode of The Private Equity Experience, hosts Emily Sander, Ed Barton, and Rory Liebhart dive deep into how AI is creating immediate, tangible value in the PE ecosystem.
The discussion kicks off with a rapid-fire round of questions about trusting AI in our personal lives, but quickly moves to how AI is transforming core business functions.
In this episode, you will learn:
Operational Engineering with AI: Ed Barton shares the insight that AI is taking the ability to operationally engineer a business to another level. Learn why PE firms should hunt for "people-heavy" businesses run by "Luddites" where AI can be applied quickly for massive operational leverage and a faster jump in valuation.
Diligence and Cost Savings: Rory Liebhart shares his personal experience saving "tens of thousands of dollars" on professional services and legal fees by utilizing basic AI tools like ChatGPT.
The New PE Investment Thesis: Where are the smartest investments happening? The hosts break down the "picks and shovels" opportunities—investing in the infrastructure that supports AI's growth, such as data centers, power generation, and internet service providers, as a lower-risk investment strategy compared to direct AI companies.
The Future of Human Reliability: Ed offers a fascinating prediction that AI's reliability will soon surpass human instinct, transforming how businesses must adapt in the next decade.
Whether you are a PE investor, a portfolio company executive, or a founder considering a sale, this discussion provides actionable insights on how to leverage the AI revolution for maximum value creation.
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Who Are We?
Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).
Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.
...Alright. Here is our rapid fire questions. The first five are yes and no, and then the next two are open-ended, but we'll keep'em brief and then segue into our topic here.
rory-liebhart_1_09-17-2025_150731:out and
emily-sander_1_09-17-2025_150732:Alright,
rory-liebhart_1_09-17-2025_150731:uh, simultaneously and I, or,
emily-sander_1_09-17-2025_150732:go for it. Shout away. Would you let AI choose your outfit for a big meeting?
rory-liebhart_1_09-17-2025_150731:Yes.
emily-sander_1_09-17-2025_150732:Would you trust AI to plan your vacation? Would you let AI pick the next book you read?
sweet-eddie-b--yes-no-_1_09-17-2025_150731:No.
emily-sander_1_09-17-2025_150732:Would you let AI write your best man speech?
rory-liebhart_1_09-17-2025_150731:Yes.
emily-sander_1_09-17-2025_150732:Would you let AI drive your car while you nap in the back?
rory-liebhart_1_09-17-2025_150731:yes.
emily-sander_1_09-17-2025_150732:Open-ended? Question number one. If AI gave you advice, would you ever follow it over a humans?
rory-liebhart_1_09-17-2025_150731:Oh, yes. Mm-hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:It depends on the human that gave me the
rory-liebhart_1_09-17-2025_150731:Depends. Yeah. I
emily-sander_1_09-17-2025_150732:Good call.
rory-liebhart_1_09-17-2025_150731:depends. Yeah. But, but the answer is yes, I would.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yeah.
emily-sander_1_09-17-2025_150732:Okay, second one. What's something AI should never do?
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Procreate.
rory-liebhart_1_09-17-2025_150731:Agreed. Yeah.
emily-sander_1_09-17-2025_150732:It kind of is, in a way though. It's like breeding and spreading itself.
rory-liebhart_1_09-17-2025_150731:Become, become
emily-sander_1_09-17-2025_150732:Oh.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:yeah, that's, that's the, that's the Skynet thing that we just can't
emily-sander_1_09-17-2025_150732:Some.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:so it
emily-sander_1_09-17-2025_150732:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:procreate.
emily-sander_1_09-17-2025_150732:Got it. All right, so AI is like already reshaping our daily lives and our personal lives. Now let's talk about how it's shaping the diligence process, operations, and even ownership structures in private equity. Maybe to start off, like what is it evolving from? So like baseline, what? What does PE structure look like?
rory-liebhart_1_09-17-2025_150731:Well, I, I think I would, I would go to say pe. PE in all of the industries, PE sort of represents, surrounded by professionals, professional, um, bankers, lawyers, accountants, and the like. So a lot of professional level. Uh, talent out there are very critical up to the baseline for PE now, things have changed a bit. Uh, I can personally attest to saving thousands and thousands of dollars on legal fees by utilizing some very, very basic tools, in, in JA, GBT and some of the other platforms out there. And so from that standpoint, I think. You know, every business, um, can see value in using these tools. I mean, after all, you know, we're all about. Leveraging technology and leveraging innovation. This, we've never seen anything like this before. And you know, as as Lud I, as I am, as rudimentary as I am as a technologist, I have lit quite literally spent or saved tens of thousands of dollars on things that I would've otherwise paid a professional services firm to do for me. So, um, I think in some ways the game is changing in that respect. In some ways you can say it's. Getting less expensive to conduct business in other, other areas. There's some unintended consequences you have to be looking out for, and a whole other business thesis to potentially talk about.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yeah, I think the, the bigger elements as it pertains to private equity. know, they're, they're traditionally the private equity folks are looking for, you know, how do I extract value in a business? How do I find businesses that are undervalued or that I can add a bit of financial engineering or technol technology in order to be able to really leverage this business into the next, kind of, the next level of its, of its value and growth I think private equity has over the last few years been there's, you know, we've talked about it numerous times where it's been difficult to get deals sold the, the hold periods have been longer, the interest rates have been up, the, you know, there's been some challenges there. I think with AI coming on board, what it's really, what it's really doing is taking that ability to operationally engineer a business. To another level. So I
rory-liebhart_1_09-17-2025_150731:Yeah,
sweet-eddie-b--yes-no-_1_09-17-2025_150731:if I was private
rory-liebhart_1_09-17-2025_150731:doubt. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:I'd be looking at what businesses, you know, you just were, you were just kind of calling yourself a Luddite, Rory. And I'd be going, where else? Like when I'm talking to a founder, knowing what AI is capable of doing. So if we've got businesses that are. People heavy
rory-liebhart_1_09-17-2025_150731:Yep.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:and those, those resources, you know, historically private equities looked at it, what can I do to, you know, provide unique property as far as technology that can substitute for people? So you're tech enabled services,
rory-liebhart_1_09-17-2025_150731:Mm-hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:and those kind
rory-liebhart_1_09-17-2025_150731:Yeah,
sweet-eddie-b--yes-no-_1_09-17-2025_150731:now I was in private equity, I'd be looking at what can I use, you know, what businesses are out there that are being run by Luddites that I can apply.
rory-liebhart_1_09-17-2025_150731:exactly. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:into, to be able to operationalize AI into that business, to improve efficiency, to improve accuracy, and to really operationally leverage that business to another valuation level and do it quickly.'cause again, that that's something, you know, that can be applied very quickly and it's a very skinny technology application versus building something, you know, for, for ip.
rory-liebhart_1_09-17-2025_150731:Yeah, no doubt. And then also, you know, thinking about from an investment standpoint, what kinds of businesses can you invest in that support the proliferation of ai? So, I mean, we hear a lot about. center, uh, and compute power and other things like that. I mean, there are so many ancillary ways in which, uh, AI requires different components or different, uh, resources to, to basically be effective. So like figuring out where those niches are, and that's what PE. PE funds are really good at is figuring out niche, niche investment strategies, you know, but I think it'd be interesting to talk about because if you're thinking about investing in AI companies themselves, that seems like a more of a venture game today, um, than anything. Now PE I can see being very in direct investments in AI companies. know, when there is sort of mispriced value. And, you know, so distressed investments, so, so many places to go in this. But, you know, I feel like it's, it's very much a venture slash strategic, uh, buyer's game on AI companies themselves. But, you know, eventually it will, PE will be involved directly too, whether it's circumstantial or, you know, the sector matures a lot more than it is at today.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yeah, I think the, the AI companies, you're absolutely on point. think the picks and shovel side of it. Kind of going to the,
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:you initially said, there's the data centers, there's the. generation. There's, you know, those elements. That's area is where, yep.
rory-liebhart_1_09-17-2025_150731:reg tech, all that stuff.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:can be playing today or is playing today. So where you've got venture, maybe going, working the, okay, here's a company that's trying to come up with the latest, you know, algorithm to hoover up a bunch of data and be able to build the, the better, the better AI infrastructure. got all the. Infras, the true bricks and mortar infrastructure play, the data centers, the power generation, the the, um, internet service providers, those kind of things are all kind of wired right now for. For pun intended for private equity, private equity investment. And that's an easy, that's an easier way to, I shouldn't say easier. That's a far lower risk later stage investment that doesn't, that should see significant benefit from the growth of AI generally, isn't solely reliant upon that
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:much lower risk premium than you would have in a typical AI direct investment.
rory-liebhart_1_09-17-2025_150731:True. Yeah. And I guess on similarly in that vein, I think, you know, every company you, know, almost every company that you hear, uh. You know, a, a vision roadmap for on what they're trying to do involves some level of AI implementation, whether that's, you know, for internal processes and, and optimization or, you know, from a product standpoint. And so, as we talked about in our book, and I, and we've certainly talked about it on this podcast, you know, PE invests in different stages of businesses, A lot of times growth equity. So it's like past your seed round, past your venture round. But, you know, prior to being mature. So it's a growth equity investment. I, I can see a scenario where, you know, companies have a pe funds have a lot more opportunity to invest in the growth stage of any given type of business that's got an AI roadmap where they may not have five years ago. you know, maybe it, maybe it's a just a, maybe it's a tech enabled services business that serves healthcare. Well, they, they need, they need capital for CapEx purpose, they need for product development, for front end development, things like that. And so PE is always gonna be there as a, as a means to, to access that kind of capital, whether or not they're trying to be the next anthropic or, you know, open AI or something like that. They don't have to be an AI company to use AI tools. And just like any other software development or. You know, hard infrastructure development, you need capital and lots of it to implement these things. But some of these companies are gonna need it, uh, and maybe somewhat distressed because if they don't do it, they're gonna be out of business'cause their competition is doing it. So, um.
emily-sander_1_09-17-2025_150732:W Well, you had mentioned that PE companies might be looking at businesses that are more conducive to AI or something like that, that can utilize AI in a good way. So what, what, what would be some examples of that? Or do you see PE firms trending in that direction where it's like, yeah, we're gonna leverage it? By gobbling up companies or going after companies where we can see AI taking them to the next level, to the next business valuation very easily.
rory-liebhart_1_09-17-2025_150731:Well, I'll let Ed go first. I know he is. Got a couple on the tip of his tongue.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:I, I was gonna say, you've got a, so I'll use a couple of the, the businesses that I'm, I'm involved with as an example, I'll, I'll use, you know, accounting, accounting services.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:The accounting services businesses has been for the last decade, getting a lot of attention. Legal services in Europe, et cetera, from private equity because they're high cash flow businesses. They tend to be people oriented, but they're high cash flow businesses. They've got good connections. You know, it's a, it's a low capital intensive business from the standpoint of bricks and mortar. And so you've seen private equity, buying up, accounting firms, rolling them up, those kind of things. had a call earlier this week with a company that says, essentially we've got AI. That will interface with certain tax software and allow it to, you know, basically read, read your PDFs that have been uploaded by your
rory-liebhart_1_09-17-2025_150731:Mm-hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:pre-populate 95% of the information for the return. So now it becomes a, you know, it takes you 10 minutes to do a tax return versus two hours to do a tax return.'cause not only have we looked at it from the standpoint of, you know, the pure, the, the pure, like. OCR type technology and just dump the stuff in. But we're also looking at application of tax law. You know, what's the most advantageous way to take this
rory-liebhart_1_09-17-2025_150731:Yep.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:deduction, whether it's on this schedule or this schedule, um, whether it should be, whether a business should be structured in a certain way or whether an asset should be depreciated, um, bonus depreciation or 1 79. And so there's, there's things like that that AI is worth. Now, when we looked at it, we said the cost of this is. our type of business, given the number of returns we do, we do less than a thousand returns a year. The cost of it was not, you know, didn't, the juice didn't, worth a squeeze. But two years from now, three years from now, that's a different story. And changing up, if I'm sitting here as a, let's say a Jackson Hewitt or an h and r block and I've got, you know, multiple franchisees. Who have, you know, are basically at the, what I would call the value end of the
rory-liebhart_1_09-17-2025_150731:Mm-hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:and not charging a ton to be able to process those returns. And their highest cost is a combination of retail, retail, storefront, and, and personnel costs. If I've got the ability to invest in AI in a software package like that with a, you know, kind of all you can eat. And I can sell that back to the franchisees. It's significant value and, and PE plays in that space right now all the time.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:that's an area where you could drive two thirds of the cost out of a accounting business if you've got the, if you've got the right type of AI to be able to handle the bookkeeping, the payroll processing, the, the application of basic tax law and filling out tax forms.
rory-liebhart_1_09-17-2025_150731:Yeah, totally agree. I would, you know, another one I would say is, know, anything that's customer service related. You know, I think we've seen this for a long time, you know, as far as like companies, big companies you know, a chat bot and things like that. But it's becoming so sophisticated and I've, you know, in the industry I'm in or have been in, you know, I see it a lot on the collection side, you know, so people interact. So it's what, what these tools can do is increase. Success when you do connect with a, with an individual, and it can also through scoring and other. Analytics based processes, it can identify which ones to engage, which, which ones are gonna be worth your time. So you no longer need a human to like be thinking about and running, you know, manual models to figure out how to score the potential of making a connection. And once you're in the connection, you then you're also a human. So depending on whether you woke up on the wrong side of the bed, you may not be as friendly. But the AI is never going to be, that. AI is always going to continue to learn and figure out exactly how to manipulate the other person on the other side to get the outcome. It, it's programmed to get. It's insane, but it's here. And I think you can see both in the, in the case of a recovery agency or you know, collections firm or a debt buying firm or something like that, you're gonna see. Increase collections, decrease cost, double whammy, double positive. so I, that's just one example. But think about any other human interaction. Human to human interaction where the one, one human in that interaction can f up the whole to a bad outcome. You know, that could very possibly be reduced or, you know, mostly eliminated if you have a AI program for empathy. But yet persistence. All, all of these things, but. It's just, it's just, it's just getting like a super human you know, tool in place and you don't have to pay for it other than the infrastructure and the, basically the hosting costs for that. I mean, it's, it's very scalable.
emily-sander_1_09-17-2025_150732:Yeah, I had a, I was just talking on a podcast. We were talking about chiefs of staff and ai and there's this one tool that basically can collect and suck up all of the Slack messages and the emails and the phone calls. And one of the things it does, which is good for a chief of staff is it says, here's your stated. Top three priorities and here's where people are actually spending their time.
rory-liebhart_1_09-17-2025_150731:Hmm.
emily-sander_1_09-17-2025_150732:And it gives you that delta or that, um, congruence. So, um, and that's huge for just like, it's a little bit intangible, but if you want business valuation and people to be driving toward the same thing, knowing where people are actually spending their time and what people are actually worried about. It has this, you mentioned empathy, like people seem to be concerned about this thing, they're uncertain about this thing, and it can tell you that by. The data points it picks up. Do you guys think that, uh, how do you think that PE firms are using AI themselves for maybe a due diligence process or, or even a search process? Like, I gotta suck up all of these potential.
rory-liebhart_1_09-17-2025_150731:Well, I can,
emily-sander_1_09-17-2025_150732:Yeah.
rory-liebhart_1_09-17-2025_150731:I'll state it from one angle. It's real, real close and personal to me these days and, you know, I'll let Ed jump in, but I, I just, so much of what goes into a PE group or even an operating company of a PE. Group, like an operating company owned by a pv PE group is, is basically putting together materials that tell your story and that those are, those can be artifacts that you store in a data room that can be, uh, some sort of a, confident information, memorandum, sim, all this stuff. you have historically relied on is some, some, you know, really beaten down mid-level employee to, to do all this research, model it out. And, you know, our populated data room, we'll, we'll now you can go get a, a total addressable market value for what, whatever you can conceive of with citations and statistics the, within 15 seconds. Whereas that, that poor son of a gun is going to have been spending night after night trying to cobble this all together just to show the CEO and then have the CEO say, no, it needs to be bigger. So my point here is to say. So much of the groundwork, the fundamental work that you're paying literally hundreds of thousands of dollars a year to an employee to do, can be done, you know, in seconds. Truly. I know because I've done those things and
emily-sander_1_09-17-2025_150732:It feels like this story is semi autobiographical for you.
rory-liebhart_1_09-17-2025_150731:yeah, yeah, I, I, I wish I had these tools. 15 to 20 years ago is what I'm saying.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Rory was
rory-liebhart_1_09-17-2025_150731:I was the guy and, and so it, it's, it's really, it's wild. I mean, I surprise myself sometimes that I'm just like, dude, there's no way I'm gonna get the information I need. The way I want it, the way I would've like toiled for hours and hours to get no 15 seconds put in. comes down to how you prompt it. If you know exactly how to prompt it correctly through that experience, that, that, that is important, get what you need. Um, and it's impressive and it's better than I could do for sure. So my point is, think about all the thousands po thousands upon thousands of individuals doing this work for funds, for operating companies, for any business out there, uh, related to pe. You know, they just saved a lot of time and money. By having these tools at their disposal. So you gotta watch out for hallucinations. You need to know enough to be able to like spot bullshit. Um, that does come from experience and trusting, trusting what you see. But you know, it's, it's pretty powerful and you can like, like a lot of things in life. It could be like 80% there and then you can do the last 20% and like, call it could.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yep. Yeah, I was, I was gonna say the, I was almost on the other side of that coin, Rory, which is where, I've seen AI used, where I've utilized it to some extent, has been on the buy side
rory-liebhart_1_09-17-2025_150731:You sure? Absolutely. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:so here's a bunch of data. Summarize this
emily-sander_1_09-17-2025_150732:Hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:and it cut. It does come down to the prompt. Take a look at, I'm, I want you to look through this set of PDFs and find for me things that look like X or look or identify for me various risk factors that need to be, need to be identified as part of this insurance package or as part of this. Personnel package or you know, there's, take a look at these personnel files and identify for me any missing information or any, any behavioral characteristics or any, and that's
rory-liebhart_1_09-17-2025_150731:that's where it gets really impressive stuff.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:look in a, in a data room. And one of the strategies that I had always used in a data room, um, which, you know, it, it of gets blown up in this, is I would put. More than enough information in a data room basically going, look, I'm gonna give you everything by giving you everything. There's needles and haystacks that become harder to find.'cause a haystack is a lot bigger
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:AI basically takes a torch to the haystack and leaves you just with the needles and a bunch of ashes when you're, when you've got the, when you approach it that way. And so that's really a, a big change. The other part, kind of going back to your hallucinations, there's a few things. As a college professor I've learned on. To identify with ai.
rory-liebhart_1_09-17-2025_150731:we go. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:is a hallucinations and the like. That person never said that. It's almost like, you know, the internet said, you know, Abraham Lincoln type of thing. No, there. The other one, and I, and I'm actually looking at some of the show notes, um, is the double spaced. The double spaced hyphen is, is there's, the only way to get a double spaced hyphen is actually like alt spaced.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Three, seven or something. And so when I look at, uh, some of my students,
rory-liebhart_1_09-17-2025_150731:yeah. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:the, the,
rory-liebhart_1_09-17-2025_150731:That is funny.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:the issues that you tend to go, okay, this was AI, is can't type that. You show me how you can type that, that's that character.'cause you can't type it. And AI tends to overuse filler words. So adjectives and adverbs tend to be. Much, much, much higher use and
emily-sander_1_09-17-2025_150732:It also likes to delve into things
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yeah.
emily-sander_1_09-17-2025_150732:like who uses the word delve that frequently, but my goodness, we are delving into a lot of different topics.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:some, I use some pretty weird words. I mean, my, my vocabulary is a little bit esoteric anyway, but it's things like this. So as a professor, like when I teach a, when I teach a class, I go, I, I want a financial analysis, a narrative, and the models. I look at it and it's got a bunch of these double space hyphen things. I'm like, know, Chatt PT did your analysis on, and so as a result, you're the, the best thing you can do is probably throw yourself on, on the, the sword and go, yeah, let me redo it, I'm gonna end up giving you a C for complete. And that doesn't look good in a master's
rory-liebhart_1_09-17-2025_150731:Yeah. Yeah. But I, you know, it's
emily-sander_1_09-17-2025_150732:Yeah.
rory-liebhart_1_09-17-2025_150731:I've like, again, I think about business world, what matters and things like that. I mean, I could, I could see a lot of reduction in cost for legal fees and the like, right. So I, I've literally put contracts. You know, redacted for, you know, party names and stuff like that, but put it through these tools and said, tell me how I'm gonna get screwed here. will give you a point by point analysis of like, how to negotiate a, a contract. So it's like, it's on the one hand, it's like, wow, I'm being efficient. On the other hand, I'm like, wow, I don't feel like I'm using my mind like I should. But that aside, I think there's just gonna be things like that that just. Shortcut, turnaround time shortcut, you know, um, cost expenditures. Now, what does that mean for pe? So like, transition, like how does this change the business model for pe? I, I could see a scenario, and I'm not saying, uh, it's gonna be reality or not, where, you know, people start to question, you know, the fee structures a little bit. Say like, what am I really paying for if the human capital here. You know, behind these firms is sort of being taken over in some cases by ai. So you could see, you could see some level of like fee rationalization perhaps, but it would, you know, you know, a rising title sink or raise ships. It'll all kind of work together probably. So I don't know if there'll be a, necessarily a relative but I do think that LPs are going to be very in pe. Investing in ai because everybody, everybody kind of. Tends to think toward, you know, what are the, what are the things happening now and in the future? And this is, this is going to be that topic for some time. So I think that there'll be a tremendous amount of LP interest in having PE funds, um, invest their capital into these areas.'cause they feel like if they don't, they're missing out.'cause if you look again, look at the companies that are doing really well that are publicly traded, it's just like, you know, the valuations make no sense. And to me anyway, um. here we are. So, I think it could, I could possibly affect the economics of the private equity industry, but also there's no doubt in my mind that there's gonna be continued, tons of capital going into the, uh, PE that focus on supporting this part of the industry. Yeah, for sure.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:I think, I think coming to one of Emily's questions, I do think that you're gonna see. You know, we talked a bit about the preparation of the data room and the information, and then really the analysis of the data
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:can speed those processes along and kind of point you in a different direction. I also think that it is, AI continues to improve and it's, you know, AI is really machine
rory-liebhart_1_09-17-2025_150731:Mm-hmm. Yeah,
sweet-eddie-b--yes-no-_1_09-17-2025_150731:it's, you know, and, and so that goes back a couple decades
rory-liebhart_1_09-17-2025_150731:does. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:as far as kinda what the, the base understanding of it is. The As it continues, as the AI providers continue to build data sets, continue to have access to additional information. I do think the, you know, one of the things PE is really good at is finding the needles in the haystack as far as the. small private companies that are, you know, undervalued that are, you know, and right now they're doing the, you know, let me smile and dial. I actually think it'll facilitate more of that as companies that might not be on the radar able to, and are able to come up on the radar because more and more information will be able to be identified earlier on companies that are up and comers.
rory-liebhart_1_09-17-2025_150731:Totally. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:More data around that company's performance markets and where they're,
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:shopping and, and who they've got as clients.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:think PE should be using that to, to farm and harvest a, a target list. Now, AI is not gonna get them the, the contact. That's still gonna be a human, a human outreach, I think.'cause at the end of the day, you're still gonna end up, we haven't gotten to the point where the chat bot's gonna do all the work. Um, and relationships, human relationships are gonna be critically important. I think that sales process is still gonna be, is still gonna be human from the, from the PE side. But I think a lot of the analysis, the searching, the, the, you know, identifying and the, the narrowing down the risk factors and, you know, for analysis are gonna be AI driven. And private equity is gonna be even more of a how do I sell? Myself to the, to the founder, how do I sell my business to the next buyer? And less of the, how do I analyze, build models, do those kind of things because I think AI will take a bunch of that over. How do I find, I think AI will take a bunch of that
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:and it's gonna be far more of those soft skills that are more difficult to automate or AI into.
rory-liebhart_1_09-17-2025_150731:Yeah.
emily-sander_1_09-17-2025_150732:If, if you were a PE firm and you had to pick one place to invest in ai, where would that be? So for example, if it's a, let's apply this to our due diligence process and make that. Uh, more targeted if it's, lemme get an AI expert at the fund level to go help us at all of our portfolio companies. I was just talking on this again, this podcast this morning where one of the chiefs of staff got the job because she positioned herself as I'm gonna be the chief of staff and I'm going to, um. Spearhead the thought leadership around ai, AI for our company in the industry, and I'm going to make decisions around where we should deploy this in our organization. And she was like, I'm gonna do this. And they were like, yes, that's exactly what we need. Come on board. But for a PE firm, for, for a PE fund, would you do that? Like in. In each portco, would you do it in your due diligence process? Would it be, I'm gonna gobble up some AI companies and hopefully one of them will go. Like, if you had to pick one, where would you, what would you do?
rory-liebhart_1_09-17-2025_150731:I'll go first and it's a great question. I, I think it's actually of around what Ed just mentioned to me. I would be using the tools as best I can to. Let's say optimize the target company funnel for which I'm pro prospecting for businesses to go buy. And so how, what I mean by that is so much information on private companies out there now and you can benchmark data attributes against other companies that maybe have a similar, you know, kind of industry segment or you know, whatever kind of commonalities you can watch. you can do it for companies that have maybe gone a full life, you, you basically track small prospective companies and their attributes compared to the successful ones that have done really well and gained tremendous valuation. You can say, okay, this has the, basically the, the, the building blocks of being great. So I'm gonna focus my effort on this and build the relationships there rather than like say, okay, I've got companies here. Cross different, how do I, how do I start? I just throw an army of people at'em and you know, whatever. But I think it would, it's just to me, it to basically optimizing a sales funnel based on data. You know, like take, take the human element out of it that piece of it as much as possible and say, what attributes can I compare to other successful outcomes? And if I see the common denominator attributes, let's focus on those things. You know, figure that out. I mean, that, that's, that's where I think the most value creation can be.
emily-sander_1_09-17-2025_150732:It might even be able to back test like, Hey, feed it this stuff. What would it like? Success factors.
rory-liebhart_1_09-17-2025_150731:into that. I mean, nothing, there's no literally no boundaries at this point. The only boundary is what comes, what, what you can validate is truth or bullshit when you get the output.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yeah. I, I would, I would actually take a different approach. I actually think that is probably the, that's gonna make the private equity firms. More effect, more effective. I think what will actually improve their return is gonna
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:that level of analysis within their portfolio companies and really going, okay, where can we optimize?'cause again, if you're going part of a private equity firm's strategy, is to go from an eight x to a 15 x multiple on a business. And then how can I throw additional dollars against that multiple? And there may be, and again, I, I've, my, my largest client is essentially an insurance in, in the insurance industry. And can they process claims using AI and remove two thirds of their pro, two thirds of their claims processing cost? What would it take to do that? a lot. I mean, it's, there's a, it's, and
rory-liebhart_1_09-17-2025_150731:brainer.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:a huge. It's not a huge investment relative to the savings. And so, you know, it's, it's how do you prioritize that against everything else, like any other business, but there's an opportunity there. Same thing with on the, on the other side, if I'm looking at how do I invest, you know, Emily's like, well, do they invest in a, in a, you know, one of the AI companies and hope that one hits? I'm one if, you know, I, I walk the walk, so this is what my portfolio looks like. I'm in that specialize in. centers and power suppliers. So, so basically the, the utilities
rory-liebhart_1_09-17-2025_150731:Yep.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:areas that are high growth for data centers. So
rory-liebhart_1_09-17-2025_150731:Na. Natural resources. Yeah,
sweet-eddie-b--yes-no-_1_09-17-2025_150731:yep. So I'm like, where, where are those kind of, where's the picks and shovels?
rory-liebhart_1_09-17-2025_150731:yeah,
sweet-eddie-b--yes-no-_1_09-17-2025_150731:if, if the're
rory-liebhart_1_09-17-2025_150731:yeah. Infrastructure. Yep.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:if I'm wrong, they're still gonna do fine.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:they're, and if I'm right, they're gonna do better than fine. you know, I'm, I'm more risk averse
rory-liebhart_1_09-17-2025_150731:I am with you on that. Yep.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Than a typical, uh, typical person. So, but I'm, that's where my, you know, and I get the dividends, so God bless.
rory-liebhart_1_09-17-2025_150731:Mm-hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:I'm, so that's, that's where I would be looking from an investment perspective is kind of not the cutting edge. That's, like you said, I think Rory, that's a venture play. It's really the, okay, who's layers behind that
emily-sander_1_09-17-2025_150732:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:providing, you know, going back to the internet age in, in 20, in 2000.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:The, the smart, you could, you could have hit on Google, but you probably didn't, and you probably missed on a, you know, pets.com, even a Yahoo, some of those kind of things. But the ones that did well, who was in Cisco, who was in Oracle, who was in kind of, who was in the, the areas behind that, that were able to, to, you know, really leverage themselves into the infrastructure those folks did. Well, they may not have. Hit the lottery ticket that some folks did with some of the investments, but they did extraordinarily well,
rory-liebhart_1_09-17-2025_150731:Yep.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:a significant period of time.
rory-liebhart_1_09-17-2025_150731:Yep. And add some leverage. Do even better. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yep.
emily-sander_1_09-17-2025_150732:Back to Rory's example. What was, what was coming up for me when you were saying that is could you have some AI screening for the founder? The founders fit for the PE company. And the reason I thought about this is because we're in the throes of football season and the combine, they like do a psychological analysis of quarterback and like are, how tall are you? How much do you weigh? But also like, do you have your shit together mentally and emotionally? Can you lead a multimillion, if not billion dollar enterprise on your shoulders? That's not just anyone. And I was like, they do all these screenings and tests. And could you not apply something similar to like a founder? Like, are we gonna be able to deal with this guy or gal? Um, could we put some screening up there anyway?
rory-liebhart_1_09-17-2025_150731:about it. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Yeah, I wonder if there's enough data. I wonder if there's enough data to actually get you something reliable there. And I think you, you raise a bigger concern, Emily. Not as opposed to a, so I think you, we look at it from a founder perspective. That's a significant risk
rory-liebhart_1_09-17-2025_150731:Mm-hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:in a PE investment. I'm wondering also then, how far down does that go? So, you know, how far down does that go to the employees? Does that go to your, your, you know, life partner? Does that go to your choice of a doctor? Does that go? So I think a again, and there's a reliance on, on AI that, know, we've talked about hallucination a little bit here, but there's a reliance on imperfect data.
rory-liebhart_1_09-17-2025_150731:Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:I don't think at the end of the day you can pull out, you know, you asked a lot of the the go no go questions or Yes, no questions at the beginning. I think there's still elements there that require human analysis of AI's output in order to be able to action it. I get nervous when we start applying it to the softer the skill, the more nervous I get because I feel like it's likely to be. It's gonna point you in a general direction, which is probably accurate, and, but without putting nuance against it, you're, you may make some very poor decisions.
rory-liebhart_1_09-17-2025_150731:Yeah,
emily-sander_1_09-17-2025_150732:I, I agree right now, and if and when AI gets to the point where. It does make a better decision and you can rely on it 99.9% of the time, then I think that's where it's like, okay, now we're at a tipping point with this thing where people have to start making different decisions around it. But yes. All right. As we wind down here, anything else big that the people should know about with PE and ai?
rory-liebhart_1_09-17-2025_150731:Well, I'd just say the landscape is, I mean, there's, there's, the horizon is just like endless. I mean, I'm, I'm curious, I, I'm curious to see just how much gets progress and even the next 12 months, I feel like even the last. Six to 12 months I've seen things reach new heights. It's, it's quite wild, really. Yeah. Yeah.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:is the
emily-sander_1_09-17-2025_150732:I feel.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:I've seen to the 2000 internet, you know, 1995 to 2001 internet boom likely similar outcome, by the way, um, where you're gonna have some survivors make it through in a bunch
rory-liebhart_1_09-17-2025_150731:I totally agree with that.
emily-sander_1_09-17-2025_150732:Hmm.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:crash and burn. Um, but it's also, I think that transformative, I think you hit on a m there is gonna be a point. Not too distant future where the reliability of AI is gonna be significantly better than the reliability of human instinct. And it's really gonna be how do we adapt to that as as individuals and as business people to be able to of be successful in an environment that I think is gonna be transformed in the next decade.
rory-liebhart_1_09-17-2025_150731:Yeah.
emily-sander_1_09-17-2025_150732:I think this will be a recurring topic for, for, for us certainly in this podcast. We might do part two, part three, even in six months, 12 months time. But, uh, for right now, we'll call it a wrap on the Private Equity Experience Podcast and we will catch you next time. Thanks Rory. Thanks, ed.
sweet-eddie-b--yes-no-_1_09-17-2025_150731:Thanks.