Although relatively late to the game compared to other industries, PE is experiencing a revolution driven by artificial intelligence (AI). Sponsors are discovering that generative AI – which can quickly analyze large unstructured data sectors to identify patterns and extract valuable insights – can be used in a variety of contexts to transform their investment decisions and compliance efforts. To that end, PwC has estimated that assets managed by algorithm-driven and AI-enabled digital platforms will surge to almost $6 trillion over the next three years, which is nearly double the figure recorded in 2022. That aligns with Deloitte’s prediction that 25% of PE firms will be using AI to augment their portfolio valuations over the next five to seven years. As AI and data analytics are helping PE sponsors generate value in their portfolio companies and improve their overall compliance efforts, the technology is also creating cultural and technological challenges that legal and compliance professionals must confront. In a guest article, JMAN Group associate partner Christian Davis describes how AI and data analytics can shape the future of value generation and compliance in the PE industry, as well as the steps legal and compliance professionals need to take the stay ahead of that evolutionary curve. See “Driven by AI, Private Funds’ Use of Alternative Data Continues to Grow, Survey Finds” (May 30, 2024).