here's what happens when a private equity firm acquires a mid-market company and decides it needs AI.

they call mckinsey. or deloitte. or bcg. the consultants spend 3 months interviewing staff, mapping processes, and writing a 60-page strategy deck. the deck recommends AI. the PE firm tries to hire a CTO. 6 months later, nothing has shipped.

this pattern repeats across the industry. and the numbers prove it.

the data on PE and AI is ugly

mckinsey's november 2025 state of AI report surveyed nearly 2,000 participants across 105 countries. 88% of organizations report regular AI use. but nearly two-thirds are still in the experimenting or piloting stages. only about a third have begun to scale. and only 39% report any measurable effect on enterprise-level EBIT.

for PE specifically, a citizens bank survey from december 2025 found only 23% of PE firms say at least three-quarters of their portfolio companies use AI. up from 8% in 2024. 97% of PE firms say it's attractive if a target company already has a successful AI strategy. the demand is there. the execution isn't.

gartner predicted at least 30% of generative AI projects would be abandoned after proof-of-concept by end of 2025. their june 2025 update raised the stakes: over 40% of agentic AI projects will be canceled by end of 2027. most are "early stage experiments driven by hype and often misapplied."

bcg found 74% of companies struggle to achieve and scale the value of AI initiatives. the consulting firms selling AI strategy aren't solving the problem.

why consultants fail at AI execution

consulting firms are built to diagnose. they write recommendations. they don't write code.

the PE operators managing portfolio companies are spreadsheet people. they optimize headcount, cut costs, negotiate vendor contracts. they don't know what a RAG system is or how to deploy an AI agent.

so you end up with a strategy that nobody on the ground knows how to execute. the portfolio company keeps running on the same manual workflows it had before the acquisition.

enterprise AI strategy assessments run $150K-$500K+. and what do you get? a deck. not a working system. the mckinsey report found that out of 25 organizational attributes tested, workflow redesign has the single biggest effect on an organization's ability to see EBIT impact from AI. only 21% of organizations have redesigned workflows around AI. the rest are layering AI on top of broken processes.

the firms that get it right embed technical teams

PE firms with dedicated operating partners achieve 1.7x higher EBITDA improvements compared to firms relying on management teams or external consultants alone. PwC reports that 47% of PE value creation now comes from operations, up from 18% in the 1980s.

vista equity partners is the model. $100B+ in assets under management. roughly 100 operating professionals in their consulting group. that's about a 1:1 ratio of operating to investing professionals. 80% of their portfolio companies are deploying AI. they don't advise on AI. they install it.

thoma bravo runs $181B+ in assets across 555+ software investments with 25+ operating partners. all software and tech veterans. not consultants. builders.

the pattern is the same at every firm doing this well. the technical team is embedded from day one. not hired 6 months later after a strategy deck.

what embedded AI looks like in practice

week 1-2: the team maps every core workflow. lead flow, onboarding, operations, reporting. they sit with the people doing the work and document what's manual, what's slow, and what's breaking.

week 3-4: they build the first automation. always the highest ROI workflow. usually lead response or onboarding. deploy it, train the staff, measure the result.

month 2-3: they scale. more workflows, more systems. each build is cheaper than the last because patterns repeat across similar businesses. the insurance agency renewal workflow looks like the property management lease renewal workflow. same logic, different data.

month 4-6: the tools built for one company start looking like products. the internal system that handles intake for one insurance agency works for 50. that's where boring businesses become product companies.

the window is about 3 years

gartner's strategic predictions for 2026 forecast that by 2028, 90% of B2B buying will be AI agent intermediated. 33% of enterprise software will include agentic AI by 2028. the firms embedding AI teams now will own the returns for the next decade. everyone else will be paying market rate for what used to be a competitive edge.

we build AI systems for mid-market businesses and embed as their technical team. flat fee or retainer. shipped in weeks.