Is AI a threat or strength?

Exit-seeking private equity investor commissions AI & data vendor due diligence to better understand and position the opportunities and risks of AI to its energy simulation software portfolio company's growth and value potential

Complexity / Current state

To inform the Information Memorandum, PE shareholders request DataDiligence to conduct a vendor due diligence to better understand and position the opportunities and potential risks of artificial intelligence to the business’ growth and value potential.

Recommendation / Use case

Company exhibited effective and enhanced maturity across multiple dimensions, including data quality, data infrastructure, and data processes and leadership - positioning it well to effectively combine traditional optimisation and simulation with AI and generative AI.

Outcome

Successful exit - at a compelling valuation - to two, global megafund private equity investors.

The Company is a leading global provider of energy market simulation software. From molecule to meter, seconds to decades, neighbourhoods to continents, the Company is tackling the huge challenge of transforming and operating the energy market.

Having been private-equity owned for a number of years, the shareholders were looking to realise their investment via a sale process. Consequently, they sought to draft and distribute a comprehensive information memorandum to prospective buyers, which accurately demonstrated the Company’s competitive differentiation and value potential. Core to this positioning, the private equity shareholders wanted to test and address the opportunities and potential risks of artificial intelligence to the business.

The evolution of AI, and the more recent emergence of the power of generative AI, has impacted business across the global. DataDiligence was asked to assess the Company’s maturity and offer recommendations to close any gaps. Specifically, we dived into:

is AI an opportunity of a threat
the quality of data to fuel AI systems
how AI-ready was the incumbent infrastructure
what were the capabilities, processes and practices of the AI talent and leadership
what value creation opportunities might AI present in the short and long term.

With a proven history of innovation and data best practice, the Company demonstrated effective and enhanced. Particularly noteworthy was the Company’s simulation-ready data, and hard to replicate metadata. Meaning, data sets, mathematical methodologies, data infrastructure, and talent were all poised for AI application, plus other advanced analytics, and machine learning.

Overall, the Company demonstrated strong resilience and growth drivers, with the application AI simulation presenting exciting and material opportunities to augment the Company’s market-leading position.

The shareholders held a competitive sale process, resulting the successful exit of the Company to two, global megafund private equity investors.