Key Takeaways
- • A Boston Consulting Group survey of 100 senior PE investors in 2026 found only 22% say a portfolio company's digital readiness influences go/no-go decisions, and just 29% integrate digital value creation planning at pre-deal diligence.
- • The average PE holding period is now 6.6 years according to McKinsey, long enough that legacy ERP systems inherited at entry can erode years of compounding value.
- • EY's mid-2026 Private Equity Pulse found 76% of PE firms now cite AI, automation and data infrastructure as areas of increased focus, but the author argues data foundations must come first.
- • Transformation deadlines such as expiring transition services agreements (TSAs), acquisition integrations and product launches make implementation speed a value constraint.
- • A Harvard Business School working paper showed increases in digital investment after PE entry correlate with stronger sales and employment growth, and clean, AI-ready data can support a higher exit valuation.
Summary
In an opinion piece for Forbes, Murthy Maddali, SVP and Managing Director at Techwave for West Europe, argues that private equity firms should treat digital transformation as a continuous discipline running from diligence through exit rather than as a discrete project. He cites a Boston Consulting Group survey of 100 senior PE investors in 2026, in which only 22% said a portfolio company's digital readiness influences go/no-go decisions and only 29% integrate digital value creation planning at the pre-deal diligence phase. According to the author, many firms may be inheriting digital foundations they do not fully understand, and may discover remediation costs in year two, when they compete directly with growth initiatives.
During the hold period, the author notes that McKinsey puts the average PE holding period at 6.6 years, a window in which legacy enterprise resource planning (ERP) systems can cost companies years of compounding. He cites EY's mid-2026 Private Equity Pulse, which found 76% of firms now cite AI, automation and data infrastructure as areas of increased focus. The author argues sequencing matters, since AI depends on the quality of underlying data and portfolio companies still closing their books in spreadsheets lack that foundation.
The article identifies inflection points such as the expiration of a transition services agreement after a carve-out, post-acquisition systems consolidation, and market entry or product launches as moments when transformation becomes a deadline. The author contends the traditional bespoke ERP implementation, with an 18- to 24-month timeline, is poorly suited to PE hold periods, and recommends pre-configured, industry-aligned implementations with defined scope, costs and timelines.
On exit, the author cites a Harvard Business School working paper showing that increases in digital investment after PE entry are associated with stronger sales and employment growth. He argues that a company with cloud ERP, documented automation and real-time visibility commands a digital premium in EBITDA multiples and reduces acquirer concerns about post-close remediation. The piece is an opinion column and presents its conclusions as the author's own view.
During the hold period, the author notes that McKinsey puts the average PE holding period at 6.6 years, a window in which legacy enterprise resource planning (ERP) systems can cost companies years of compounding. He cites EY's mid-2026 Private Equity Pulse, which found 76% of firms now cite AI, automation and data infrastructure as areas of increased focus. The author argues sequencing matters, since AI depends on the quality of underlying data and portfolio companies still closing their books in spreadsheets lack that foundation.
The article identifies inflection points such as the expiration of a transition services agreement after a carve-out, post-acquisition systems consolidation, and market entry or product launches as moments when transformation becomes a deadline. The author contends the traditional bespoke ERP implementation, with an 18- to 24-month timeline, is poorly suited to PE hold periods, and recommends pre-configured, industry-aligned implementations with defined scope, costs and timelines.
On exit, the author cites a Harvard Business School working paper showing that increases in digital investment after PE entry are associated with stronger sales and employment growth. He argues that a company with cloud ERP, documented automation and real-time visibility commands a digital premium in EBITDA multiples and reduces acquirer concerns about post-close remediation. The piece is an opinion column and presents its conclusions as the author's own view.
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