Private equity firms pride themselves on driving value creation within their portfolio companies. Beyond just providing capital, they often emphasize expertise—whether it’s operating efficiency, industry insights, or financial optimization. However, one critical area consistently overlooked in the value creation process is technology expertise.

The Missed Opportunity in IT Strategy

Private equity firms are typically excellent at evaluating financial health during due diligence, often conducting thorough quality of earnings (QoE) assessments. Yet, the quality of technology (QoT) is rarely scrutinized with the same rigor. In our experience, this oversight leaves significant efficiency gains and cost savings untapped.

After acquisitions, portfolio companies are often left to manage IT decisions independently, leading to inefficiencies and missed opportunities for transformation. Traditional IT approaches—like reliance on on-premises infrastructure and server-heavy systems—persist long after investments are made, creating barriers to scalability and modernization.

The Cloud as the Foundation for Transformation

Many private equity firms are eager to explore advanced technologies like artificial intelligence (AI) and workflow automation to improve efficiencies. However, these initiatives cannot succeed without a foundational shift in IT strategy.

To unlock the benefits of AI and modern automation, step one is migrating data to the cloud. On-premises servers or private data centers hinder innovation because they lack the scalability and accessibility required for AI processing. Moving to a cloud-first infrastructure allows for:

• Faster access to data for AI workflows.
• Increased agility for scaling operations.
• Improved collaboration across offices and teams.

Without this foundational move, AI and other transformative technologies remain out of reach.

The Financial Case for Modern IT

One of the common misconceptions about modern IT strategies is that they require significant capital investment. In reality, the opposite is true.

We’ve seen that the traditional IT approach is often as expensive—or more expensive—than modern, cloud-first alternatives. For example:

• Partnering with providers like Stringfellow or similar cloud-based IT solutions can result in up to 30% cost savings compared to traditional IT models.
• These savings are achieved while also increasing efficiency, making acquisitions, office expansions, and employee onboarding more seamless.

By adopting a cloud-first strategy with a proven IT partner, portfolio companies experience:

• Faster scaling during mergers and acquisitions.
• Simplified onboarding for new offices or employees.
• Reduced IT overhead and greater ROI.

Implementation Without Heavy Lifting

Another barrier for private equity sponsors and portfolio executives is the perception that switching IT providers or modernizing infrastructure is a cumbersome process. However, this is no longer the case. Today’s solutions can be deployed quickly and with minimal disruption:

• Migration Timeline: Most clients see full migrations completed in 60 days or less.
• No Infrastructure Investment: Modern IT solutions require minimal hardware and rely heavily on cloud-based tools.
• Cost-Effective Onboarding: Providers like Stringfellow don’t charge onboarding fees, ensuring attractive payback periods.

What Private Equity Needs to Know

To unlock maximum value creation, private equity firms need to view IT as a lever for efficiency and scalability, not just a back-office function. By partnering with modern IT providers, firms can:

• Enhance portfolio company performance through streamlined operations.
• Reduce IT costs while increasing ROI.
• Build a foundation for AI, automation, and other transformative technologies.

The tools available today are not only cost-effective but also quick to implement. For private equity groups focused on improving portfolio performance, technology must become a central part of the value creation strategy.

By embracing modern IT approaches, private equity firms can better position their portfolio companies for growth, increased multiples, and more lucrative exits. It’s time to elevate IT to the same level of importance as finance and operations in the private equity playbook.