Recognizing that enterprises struggle to deploy AI effectively, some PE firms are acquiring traditional businesses. Their strategy is to directly own the change management process, forcing AI implementation to unlock latent value that the original management couldn't capture on their own.

The success of an AI roll-up hinges on effective technology implementation. Therefore, the primary filter for acquiring a company is not just its financials but whether its leadership and culture are genuinely eager to adopt AI and transform their operations. This cultural fit is non-negotiable.

Private Equity value creation has evolved. In the 2000s, it was driven by leverage; in the 2010s, by digital transformation. Today, AI serves as the new foundational "operating system" for growth, embedding intelligence into every process, contract, and customer touchpoint to drive returns.

For PE firms buying founder-owned software companies, AI is a game-changer. It dramatically accelerates paying down the technical debt and modernizing the tech stack—often the biggest hurdles to growth post-acquisition. This allows firms to unlock value faster and more efficiently than ever before.

A new startup strategy involves acquiring traditional businesses and dramatically increasing their margins by integrating AI. This approach requires a unique blend of M&A, operational change management, and AI expertise, differing from typical venture-backed company creation.

The acquisition of American Express Global Business Travel by the 2.5-year-old AI firm Long Lake for $6 billion represents a new phase in the AI revolution. Instead of just competing with legacy companies, AI-native firms now have the capital and ambition to acquire and transform them from within.

The rapid evolution of AI means traditional private equity M&A timelines are too slow. PE firms and their portfolio companies must now behave more like venture capitalists, acquiring earlier-stage, riskier AI companies to secure necessary technology before it becomes unaffordable or obsolete.

Long Lake adopts a Berkshire Hathaway-style buy-and-hold strategy. They argue that the benefits of AI transformation—where better tools attract better talent, improving service and driving growth—are compounding effects that take 3-5 years to fully materialize, making the traditional short-term private equity model suboptimal.

Instead of selling software, Long Lake acquires companies to implement its AI platform. This ownership model creates a tight feedback loop between engineers and employees (the end-users), ensuring better change management, faster innovation, and superior business outcomes compared to a traditional vendor relationship.