A recent report by technology consulting firm West Monroe concludes that private equity has officially moved past AI experimentation. It argues that what was once a “nice to have” is now a hard expectation, and LPs are no longer tolerating loose strategies or one-off pilots. They want proof of value, repeatable processes, and clear evidence that AI is being institutionalized across the firm.
“AI started as an exploratory effort, something that might be helpful, and it has quickly become an expectation,” said Jeremy Bruck, a partner on the PE analytics team at West Monroe. “Firms are no longer debating whether to use AI; they’re figuring out where to start, where to focus, and how much to invest.”
Heading into 2026, West Monroe said in its 2026 Private Equity Outlook that the industry is splitting into three tiers of AI maturity.
The bottom 25 percent, or Tier 3, have only the basics in place, such as enterprise tools, proper governance and scattered usage. AI improves productivity, but workflows and decision-making remain largely manual.
The middle 50 percent, or Tier 2, is deploying context-enabled solutions. These firms are customizing AI to fund-specific workflows, leveraging proprietary knowledge to generate outputs aligned with their investment strategies. Institutional adoption is taking hold, and AI is increasingly embedded across the firm.
Finally, Tier 1, which is the top 25 percent of firms, has built fully-integrated platforms powering everything from sourcing and screening to underwriting and investment committee preparation. These leaders are transforming multi-step investment processes, scaling AI across portfolios, and capturing measurable competitive advantages.
“Some firms are pushing beyond productivity tools to transform workflows, like speeding up investment committee memos that involve multiple teams,” Bruck said. “And a smaller but growing group is redesigning their operating model entirely around what AI makes possible.”
LP scrutiny is intensifying. Investors want concrete evidence: where AI has created portfolio value, how it influences underwriting and whether it can enhance exit pricing. Governance is under the microscope, too, as LPs demand that AI-driven results be repeatable, not one-off successes.
“There’s an increased expectation that this is someone’s job, not a hobby,” Bruck said.
The West Monroe report said firms are hiring AI specialists tasked with portfolio support, internal operations, or both, making AI an enterprise capability rather than a pilot experiment.
By mid-2026, institutional AI adoption will be the norm, according to West Monroe. Tier 1 firms will enjoy structural advantages, running faster, more consistent processes and demonstrating measurable outcomes.
“Almost every PE firm is doing something with AI now,” Bruck added. “Very few are ignoring it. The question is whether they can scale from tools to transformation.”
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