How private equity firms are scaling investment research with AI

Private equity firms are under growing pressure to make fast, high-stakes decisions in increasingly complex markets. The firms poised to lead are doing technology‑enabled due diligence at speed and scale. Speed lets firms reinvest time saved into sourcing, research, and closing more opportunities. Scale helps them operate efficiently, make smarter investment choices, and build a more cohesive portfolio. This guide explores where AI delivers the biggest workflow gains, what measurable benefits firms can expect to see, and how to begin integrating AI today.

Pressure to move and act quickly

Global market complexity and rising deal volumes make it hard for private equity firms to sift through the flood of corporate and personal data. Firms face intense pressure to make fast, accurate investment decisions while managing the risks attached to it. Traditional manual due diligence and deal sourcing slows them down, leading to missed opportunities and delayed market responses. This has given AI a transformative role to play as a catalyst for sharper, faster decision-making.

Three investment research use cases

AI addresses the inefficiencies and blind spots in traditional private equity due diligence processes by enabling scalable, data-driven decision-making from day one. It allows firms to automate the initial triaging and investment research processes that are often the most time-consuming. Key use cases for AI in private equity include:

• Deal origination. Firms often run an initial report on a company and its people, either before or right after a first meeting. This early background check allows firms to confirm any initial claims, and get a first impression. With AI, the due diligence process can be done in 15 minutes as opposed to 15 days. This speed allows firms to quickly decide whether to move forward or not, without investing a lot of time or resources on that particular deal. 
  

• Investor relations. Private equity firms often work with investors who are high-net-worth individuals. For those with a strong public presence, they need to run deep background checks. While they might find what they need with a Google search eventually, AI gives faster, more focused results in minutes. It also finds contextual information about a person’s interests or past investments, which is a useful conversation starter.
  
  
• Vetting non-executive directors. LinkedIn profiles and CVs only show what that individual wants you to see. With an AI-powered tool built for open source research, firms get the full picture of someone beyond their resume or references. It helps firms understand their connections and wider network. For example, if a firm is considering hiring someone who is linked to someone else they know, they can ask for independent references. It also helps spot specific expertise that aligns with the companies in a firm’s portfolio. 

Importance of integration and transparency

We spoke with Zach Francis, Investment Director at YFM Equity Partners, to pinpoint where private equity firms should begin with AI. He set two key criteria for any new tool: it must scale alongside the firm and integrate seamlessly with existing systems to deliver a holistic view of investment deals. It also needed deep coverage across diverse data sources to ensure no information stays hidden. Finally, Zach insisted on transparency. Any vendor must clearly explain how the tool works so the team can validate every output.

Integrating AI into private equity due diligence 

For firms starting with a new AI tool, Zach advises first identifying where manual research drains your diligence team’s time. Most often, it’s during the initial data‑gathering stage of potential deals. Once you’ve identified that bottleneck, explore relevant AI solutions.

He suggests starting small with AI. Choose one use case, assess its performance, monitor key metrics, and then expand. A test‑and‑learn approach lets you fine-tune how your team uses AI and, once proven, scale it across additional workflows.

It’s particularly important to focus on return on investment (ROI) to ensure that benefits are measurable and clear from the outset. For instance, firms can clearly quantify the number of hours that would have been spent conducting manual research. 

How leading private equity firms use Xapien

Xapien is purpose-built for professional due diligence. It integrates seamlessly into existing processes, scales with your firm, and uses a wide range of data sources. Xapien uses both structured (compliance data sets) and unstructured data (real-time internet data) to give a fast, holistic view of a person or company and flags whether there may be criminal proceedings, ESG concerns, or signs of financial crime or sanctions violations. 

YFM’s team recently evaluated an investment with a complex cap table and discovered an unfamiliar potential co‑investor based outside the UK market. They ran a quick Google search alongside Xapien. Google surfaced basic facts, but Xapien uncovered deeper details in minutes. These were insights the team would have missed or taken hours to find through manual research. These faster, richer insights enabled them to make an informed investment decision much earlier in the process.

Another leading private equity firm uses Xapien to screen portfolio companies they plan to buy. The Xapien reports take 10 minutes to run and provide early insights on risks and red flags, as well as highlighting complex corporate structures. This allows the compliance team to quickly confirm if a portfolio company is suitable for a deal, and get back to the first line far quicker. These rapid insights early on in the cycle allow the deal team to make more efficient investment decisions.  

When the firm raised more funds, it needed to deploy those funds into more investments quickly. As a result, the deal team has grown substantially, with more AML searches being run than ever. Xapien plays a vital role in enabling the compliance team to manage their workload at scale, ensuring that they can efficiently handle this growing demand.

Learn more from an expert about how Xapien can support your own firm here.