Key Takeaways
- • Bain & Company's survey of private investors representing $3.2 trillion in AUM (September 2024) found a majority of portfolio companies in some phase of generative AI testing, with nearly 20% having operationalized use cases and seeing concrete results.
- • Vista Equity Partners expects AI to lift the software industry's Rule of 40 benchmark to 50% or even 60% within three to five years, and requires each portfolio company to submit quantified generative AI goals in its annual operational planning.
- • Apollo Global Management's center of excellence coordinates AI adoption across its portfolio, with Cengage reporting cost reductions of up to 40% in select content production processes and Shutterfly's AI auto-fill feature generating $5 million in new revenue in its first year.
- • Hg uses the shared problems across its midsize business software companies to scale AI solutions such as refactoring legacy code and mining prospect and M&A databases.
- • Bain characterizes the leading firms as those that invest aggressively in capabilities, treat AI as a tool in service of strategy rather than a strategy in itself, and manage change to overcome employee resistance.
Summary
Bain & Company's 2025 Global Private Equity Report examines how private equity firms are deploying generative AI across their portfolios in its second year of broad adoption. According to Bain's September 2024 survey of private investors representing $3.2 trillion in assets under management, a majority of portfolio companies were in some phase of generative AI testing and development, and nearly 20% had operationalized use cases and were seeing concrete results. Bain notes that most deployments remain in pilot mode, which it views as appropriate given that current models are not suited to every task and firms must identify the right use cases through experimentation.
Bain identifies the leading firms as those that have become committed believers in generative AI's potential, invest heavily in firmwide expertise, and work with management teams to address employee resistance. At the fund level, these firms assess technology strengths and weaknesses, add AI talent, set governance protocols, and challenge portfolio companies to focus on a short list of strategic priorities. Early returns come from using AI to enhance products, grow revenue, and expand margins through operational efficiencies, with build-buy-or-partner decisions made quickly.
Vista Equity Partners is presented as the most aggressive example. Vista expects AI to reshape the Rule of 40, the traditional yardstick for SaaS companies, and believes the new benchmark for growth plus margin will reach 50% to 60%. The firm employs an internal team supporting its more than 85 portfolio companies, requires quantified generative AI goals in annual planning, and runs a GenAI CEO Council and annual hackathons in the US and India. Bain cites Avalara, which used a generative AI tool from Drift (now part of Salesloft) to cut sales rep response time by 65%, and LogicMonitor, whose Edwin AI has generated an average $2 million in annual savings per customer.
Apollo Global Management runs a center of excellence staffed by two partners and an external advisory board, which runs workshops, appraises vendors, and maintains a structured playbook for portfolio companies. Cengage, in which Apollo holds a minority stake, is executing eight AI projects with reported cost reductions of 40% in select content production, 15% to 20% through automated lead generation, 15% in customer care, and 10% to 15% in software development. Apollo's Shutterfly launched an AI auto-fill feature in photo book creation that generated $5 million in new revenue in its first year, and AI-enabled code assist delivered 22% productivity gains in a replatforming project.
Hg, a software specialist, relies on the shared characteristics of its midsize business software companies to spread solutions, according to David Toms, Hg's managing director in charge of research, as described on Bain's Dry Powder podcast. Hg uses generative AI to refactor code from outdated languages and to mine a global company database for sales prospects and M&A targets. The firm targets companies in high-cost labor markets, where software spending is highest, and focuses on software clusters such as accounting, payroll, and industry-specific ERP that can improve workflows for highly paid employees.
Bain identifies the leading firms as those that have become committed believers in generative AI's potential, invest heavily in firmwide expertise, and work with management teams to address employee resistance. At the fund level, these firms assess technology strengths and weaknesses, add AI talent, set governance protocols, and challenge portfolio companies to focus on a short list of strategic priorities. Early returns come from using AI to enhance products, grow revenue, and expand margins through operational efficiencies, with build-buy-or-partner decisions made quickly.
Vista Equity Partners is presented as the most aggressive example. Vista expects AI to reshape the Rule of 40, the traditional yardstick for SaaS companies, and believes the new benchmark for growth plus margin will reach 50% to 60%. The firm employs an internal team supporting its more than 85 portfolio companies, requires quantified generative AI goals in annual planning, and runs a GenAI CEO Council and annual hackathons in the US and India. Bain cites Avalara, which used a generative AI tool from Drift (now part of Salesloft) to cut sales rep response time by 65%, and LogicMonitor, whose Edwin AI has generated an average $2 million in annual savings per customer.
Apollo Global Management runs a center of excellence staffed by two partners and an external advisory board, which runs workshops, appraises vendors, and maintains a structured playbook for portfolio companies. Cengage, in which Apollo holds a minority stake, is executing eight AI projects with reported cost reductions of 40% in select content production, 15% to 20% through automated lead generation, 15% in customer care, and 10% to 15% in software development. Apollo's Shutterfly launched an AI auto-fill feature in photo book creation that generated $5 million in new revenue in its first year, and AI-enabled code assist delivered 22% productivity gains in a replatforming project.
Hg, a software specialist, relies on the shared characteristics of its midsize business software companies to spread solutions, according to David Toms, Hg's managing director in charge of research, as described on Bain's Dry Powder podcast. Hg uses generative AI to refactor code from outdated languages and to mine a global company database for sales prospects and M&A targets. The firm targets companies in high-cost labor markets, where software spending is highest, and focuses on software clusters such as accounting, payroll, and industry-specific ERP that can improve workflows for highly paid employees.
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