October 2, 2025 • 37 mins
Artificial Intelligence (AI) is no longer a futuristic concept—it’s actively reshaping the landscape of Private Equity (PE) right now. In this can’t-miss episode of The Private Equity Experience, hosts Emily Sander, Ed Barton, and Rory Liebhart dive deep into how AI is creating immediate, tangible value in the PE ecosystem.
The discussion kicks off with a rapid-fire round of questions about trusting AI in our personal lives, but quickly moves to how AI is transforming core business functions.
In this episode, you will learn:
Operational Engineering with AI: Ed Barton shares the insight that AI is taking the ability to operationally engineer a business to another level. Learn why PE firms should hunt for "people-heavy" businesses run by "Luddites" where AI can be applied quickly for massive operational leverage and a faster jump in valuation.
Diligence and Cost Savings: Rory Liebhart shares his personal experience saving "tens of thousands of dollars" on professional services and legal fees by utilizing basic AI tools like ChatGPT.
The New PE Investment Thesis: Where are the smartest investments happening? The hosts break down the "picks and shovels" opportunities—investing in the infrastructure that supports AI's growth, such as data centers, power generation, and internet service providers, as a lower-risk investment strategy compared to direct AI companies.
The Future of Human Reliability: Ed offers a fascinating prediction that AI's reliability will soon surpass human instinct, transforming how businesses must adapt in the next decade.
Whether you are a PE investor, a portfolio company executive, or a founder considering a sale, this discussion provides actionable insights on how to leverage the AI revolution for maximum value creation.
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Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).
Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
emily-sander_1_09-17-2 (00:34):
Alright.
Here is our rapid firequestions.
The first five are yes and no,and then the next two are
open-ended, but we'll keep'embrief and then segue into our
topic here.
rory-liebhart_1_09-17-2025_ (00:45):
out and
emily-sander_1_09-17-2 (00:45):
Alright,
rory-liebhart_1_09-17-2025_ (00:45):
uh, simultaneously and I, or,
emily-sander_1_09-17-2025_15 (00:48):
go for it.
Shout away.
Would you let AI choose youroutfit for a big meeting?
rory-liebhart_1_09-17-2025 (00:54):
Yes.
emily-sander_1_09-17-2025 (00:56):
Would you trust AI to plan your
vacation?
Would you let AI pick the nextbook you read?
sweet-eddie-b--yes-no-_1_09 (01:03):
No.
emily-sander_1_09-17-2025 (01:04):
Would you let AI write your best man
speech?
rory-liebhart_1_09-17-2025 (01:07):
Yes.
emily-sander_1_09-17-2025 (01:10):
Would you let AI drive your car while
you nap in the back?
rory-liebhart_1_09-17-2025 (01:13):
yes.
emily-sander_1_09-1 (01:16):
Open-ended?
Question number one.
If AI gave you advice, would youever follow it over a humans?
rory-liebhart_1_09-17-2025_ (01:21):
Oh, yes.
Mm-hmm.
sweet-eddie-b--yes-no-_1_09- (01:23):
It depends on the human that gave
me the
rory-liebhart_1_09-17- (01:26):
Depends.
Yeah.
I
emily-sander_1_09-17-2025_ (01:27):
Good call.
rory-liebhart_1_09-17- (01:27):
depends.
Yeah.
But, but the answer is yes, Iwould.
sweet-eddie-b--yes-no-_1_ (01:31):
Yeah.
emily-sander_1_09-17-2025 (01:32):
Okay, second one.
What's something AI should neverdo?
sweet-eddie-b--yes-n (01:37):
Procreate.
rory-liebhart_1_09-17-2 (01:39):
Agreed.
Yeah.
emily-sander_1_09-17-2025_15 (01:41):
It kind of is, in a way though.
It's like breeding and spreadingitself.
rory-liebhart_1_09-17-2 (01:44):
Become, become
emily-sander_1_09-17-2025_1 (01:45):
Oh.
sweet-eddie-b--yes-no-_1_ (01:46):
yeah, that's, that's the, that's the
Skynet thing that we just can't
emily-sander_1_09-17-2025 (01:50):
Some.
sweet-eddie-b--yes-no-_1_09- (01:50):
so it
emily-sander_1_09-17-2025 (01:51):
Yeah.
sweet-eddie-b--yes-n (01:51):
procreate.
emily-sander_1_09-17-2025_1 (01:53):
Got it.
All right, so AI is like alreadyreshaping our daily lives and
our personal lives.
Now let's talk about how it'sshaping the diligence process,
operations, and even ownershipstructures in private equity.
Maybe to start off, like what isit evolving from?
So like baseline, what?
What does PE structure looklike?
rory-liebhart_1_09-17-202 (02:16):
Well, I, I think I would, I would go
to say pe.
PE in all of the industries, PEsort of represents, surrounded
by professionals, professional,um, bankers, lawyers,
accountants, and the like.
So a lot of professional level.
(02:36):
Uh, talent out there are verycritical up to the baseline for
PE now, things have changed abit.
Uh, I can personally attest tosaving thousands and thousands
of dollars on legal fees byutilizing some very, very basic
tools, in, in JA, GBT and someof the other platforms out
(02:59):
there.
And so from that standpoint, Ithink.
You know, every business, um,can see value in using these
tools.
I mean, after all, you know,we're all about.
Leveraging technology andleveraging innovation.
This, we've never seen anythinglike this before.
And you know, as as Lud I, as Iam, as rudimentary as I am as a
(03:20):
technologist, I have lit quiteliterally spent or saved tens of
thousands of dollars on thingsthat I would've otherwise paid a
professional services firm to dofor me.
So, um, I think in some ways thegame is changing in that
respect.
In some ways you can say it's.
Getting less expensive toconduct business in other, other
areas.
There's some unintendedconsequences you have to be
looking out for, and a wholeother business thesis to
(03:44):
potentially talk about.
sweet-eddie-b--yes-no-_1_ (03:46):
Yeah, I think the, the bigger elements
as it pertains to privateequity.
know, they're, they'retraditionally the private equity
folks are looking for, you know,how do I extract value in a
business?
How do I find businesses thatare undervalued or that I can
add a bit of financialengineering or technol
(04:08):
technology in order to be ableto really leverage this business
into the next, kind of, the nextlevel of its, of its value and
growth I think private equityhas over the last few years been
there's, you know, we've talkedabout it numerous times where
it's been difficult to get dealssold the, the hold periods have
(04:31):
been longer, the interest rateshave been up, the, you know,
there's been some challengesthere.
I think with AI coming on board,what it's really, what it's
really doing is taking thatability to operationally
engineer a business.
To another level.
So I
rory-liebhart_1_09-17-202 (04:48):
Yeah,
sweet-eddie-b--yes-no-_1_09- (04:49):
if I was private
rory-liebhart_1_09-17-20 (04:50):
doubt.
Yeah.
sweet-eddie-b--yes-no-_1_09 (04:51):
I'd be looking at what businesses,
you know, you just were, youwere just kind of calling
yourself a Luddite, Rory.
And I'd be going, where else?
Like when I'm talking to afounder, knowing what AI is
capable of doing.
So if we've got businesses thatare.
People heavy
rory-liebhart_1_09-17-2025 (05:09):
Yep.
sweet-eddie-b--yes-no-_1_09 (05:09):
and those, those resources, you
know, historically privateequities looked at it, what can
I do to, you know, provideunique property as far as
technology that can substitutefor people?
So you're tech enabled services,
rory-liebhart_1_09-17-2 (05:24):
Mm-hmm.
sweet-eddie-b--yes-no-_1_09 (05:24):
and those kind
rory-liebhart_1_09-17-202 (05:25):
Yeah,
sweet-eddie-b--yes-no-_1_09 (05:25):
now I was in private equity, I'd be
looking at what can I use, youknow, what businesses are out
there that are being run byLuddites that I can apply.
rory-liebhart_1_09-17- (05:36):
exactly.
Yeah.
sweet-eddie-b--yes-no-_1_ (05:37):
into, to be able to operationalize AI
into that business, to improveefficiency, to improve accuracy,
and to really operationallyleverage that business to
another valuation level and doit quickly.
'cause again, that that'ssomething, you know, that can be
applied very quickly and it's avery skinny technology
(05:59):
application versus buildingsomething, you know, for, for
ip.
rory-liebhart_1_09-17-202 (06:03):
Yeah, no doubt.
And then also, you know,thinking about from an
investment standpoint, whatkinds of businesses can you
invest in that support theproliferation of ai?
So, I mean, we hear a lot about.
center, uh, and compute powerand other things like that.
I mean, there are so manyancillary ways in which, uh, AI
(06:24):
requires different components ordifferent, uh, resources to, to
basically be effective.
So like figuring out where thoseniches are, and that's what PE.
PE funds are really good at isfiguring out niche, niche
investment strategies, you know,but I think it'd be interesting
to talk about because if you'rethinking about investing in AI
(06:46):
companies themselves, that seemslike a more of a venture game
today, um, than anything.
Now PE I can see being very indirect investments in AI
companies.
know, when there is sort ofmispriced value.
And, you know, so distressedinvestments, so, so many places
(07:08):
to go in this.
But, you know, I feel like it's,it's very much a venture slash
strategic, uh, buyer's game onAI companies themselves.
But, you know, eventually itwill, PE will be involved
directly too, whether it'scircumstantial or, you know, the
sector matures a lot more thanit is at today.
sweet-eddie-b--yes-no-_1_ (07:27):
Yeah, I think the, the AI companies,
you're absolutely on point.
think the picks and shovel sideof it.
Kind of going to the,
rory-liebhart_1_09-17-202 (07:36):
Yeah.
sweet-eddie-b--yes-no-_1_09 (07:37):
you initially said, there's the data
centers, there's the.
generation.
There's, you know, thoseelements.
That's area is where, yep.
rory-liebhart_1_09-17-2025_ (07:46):
reg tech, all that stuff.
sweet-eddie-b--yes-no-_1_09 (07:48):
can be playing today or is playing
today.
So where you've got venture,maybe going, working the, okay,
here's a company that's tryingto come up with the latest, you
know, algorithm to hoover up abunch of data and be able to
build the, the better, thebetter AI infrastructure.
got all the.
Infras, the true bricks andmortar infrastructure play, the
(08:11):
data centers, the powergeneration, the the, um,
internet service providers,those kind of things are all
kind of wired right now for.
For pun intended for privateequity, private equity
investment.
And that's an easy, that's aneasier way to, I shouldn't say
easier.
That's a far lower risk laterstage investment that doesn't,
(08:35):
that should see significantbenefit from the growth of AI
generally, isn't solely reliantupon that
rory-liebhart_1_09-17-202 (08:44):
Yeah.
sweet-eddie-b--yes-no-_1_0 (08:45):
much lower risk premium than you
would have in a typical AIdirect investment.
rory-liebhart_1_09-17-202 (08:50):
True.
Yeah.
And I guess on similarly in thatvein, I think, you know, every
company you, know, almost everycompany that you hear, uh.
You know, a, a vision roadmapfor on what they're trying to do
involves some level of AIimplementation, whether that's,
you know, for internal processesand, and optimization or, you
know, from a product standpoint.
(09:11):
And so, as we talked about inour book, and I, and we've
certainly talked about it onthis podcast, you know, PE
invests in different stages ofbusinesses, A lot of times
growth equity.
So it's like past your seedround, past your venture round.
But, you know, prior to beingmature.
So it's a growth equityinvestment.
I, I can see a scenario where,you know, companies have a pe
(09:33):
funds have a lot moreopportunity to invest in the
growth stage of any given typeof business that's got an AI
roadmap where they may not havefive years ago.
you know, maybe it, maybe it's ajust a, maybe it's a tech
enabled services business thatserves healthcare.
Well, they, they need, they needcapital for CapEx purpose, they
need for product development,for front end development,
(09:55):
things like that.
And so PE is always gonna bethere as a, as a means to, to
access that kind of capital,whether or not they're trying to
be the next anthropic or, youknow, open AI or something like
that.
They don't have to be an AIcompany to use AI tools.
And just like any other softwaredevelopment or.
You know, hard infrastructuredevelopment, you need capital
and lots of it to implementthese things.
(10:15):
But some of these companies aregonna need it, uh, and maybe
somewhat distressed because ifthey don't do it, they're gonna
be out of business'cause theircompetition is doing it.
So, um.
emily-sander_1_09-17-2025_150 (10:25):
W Well, you had mentioned that PE
companies might be looking atbusinesses that are more
conducive to AI or somethinglike that, that can utilize AI
in a good way.
So what, what, what would besome examples of that?
Or do you see PE firms trendingin that direction where it's
like, yeah, we're gonna leverageit?
By gobbling up companies orgoing after companies where we
(10:47):
can see AI taking them to thenext level, to the next business
valuation very easily.
rory-liebhart_1_09-17-202 (10:52):
Well, I'll let Ed go first.
I know he is.
Got a couple on the tip of histongue.
sweet-eddie-b--yes-no-_1_09- (10:55):
I, I was gonna say, you've got a,
so I'll use a couple of the, thebusinesses that I'm, I'm
involved with as an example,I'll, I'll use, you know,
accounting, accounting services.
rory-liebhart_1_09-17-202 (11:06):
Yeah.
sweet-eddie-b--yes-no-_1_09 (11:07):
The accounting services businesses
has been for the last decade,getting a lot of attention.
Legal services in Europe, etcetera, from private equity
because they're high cash flowbusinesses.
They tend to be people oriented,but they're high cash flow
businesses.
They've got good connections.
You know, it's a, it's a lowcapital intensive business from
the standpoint of bricks andmortar.
(11:27):
And so you've seen privateequity, buying up, accounting
firms, rolling them up, thosekind of things.
had a call earlier this weekwith a company that says,
essentially we've got AI.
That will interface with certaintax software and allow it to,
you know, basically read, readyour PDFs that have been
uploaded by your
rory-liebhart_1_09-17-2 (11:47):
Mm-hmm.
sweet-eddie-b--yes (11:48):
pre-populate 95% of the information for the
return.
So now it becomes a, you know,it takes you 10 minutes to do a
tax return versus two hours todo a tax return.
'cause not only have we lookedat it from the standpoint of,
you know, the pure, the, thepure, like.
OCR type technology and justdump the stuff in.
(12:10):
But we're also looking atapplication of tax law.
You know, what's the mostadvantageous way to take this
rory-liebhart_1_09-17-2025 (12:17):
Yep.
sweet-eddie-b--yes-n (12:17):
deduction, whether it's on this schedule or
this schedule, um, whether itshould be, whether a business
should be structured in acertain way or whether an asset
should be depreciated, um, bonusdepreciation or 1 79.
And so there's, there's thingslike that that AI is worth.
Now, when we looked at it, wesaid the cost of this is.
our type of business, given thenumber of returns we do, we do
(12:38):
less than a thousand returns ayear.
The cost of it was not, youknow, didn't, the juice didn't,
worth a squeeze.
But two years from now, threeyears from now, that's a
different story.
And changing up, if I'm sittinghere as a, let's say a Jackson
Hewitt or an h and r block andI've got, you know, multiple
(12:59):
franchisees.
Who have, you know, arebasically at the, what I would
call the value end of the
rory-liebhart_1_09-17-2 (13:06):
Mm-hmm.
sweet-eddie-b--yes-no-_1_09 (13:07):
and not charging a ton to be able to
process those returns.
And their highest cost is acombination of retail, retail,
storefront, and, and personnelcosts.
If I've got the ability toinvest in AI in a software
package like that with a, youknow, kind of all you can eat.
And I can sell that back to thefranchisees.
It's significant value and, andPE plays in that space right now
(13:31):
all the time.
rory-liebhart_1_09-17-202 (13:31):
Yeah.
sweet-eddie-b--yes-no-_1 (13:32):
that's an area where you could drive
two thirds of the cost out of aaccounting business if you've
got the, if you've got the righttype of AI to be able to handle
the bookkeeping, the payrollprocessing, the, the application
of basic tax law and filling outtax forms.
rory-liebhart_1_09-17-202 (13:48):
Yeah, totally agree.
I would, you know, another one Iwould say is, know, anything
that's customer service related.
You know, I think we've seenthis for a long time, you know,
as far as like companies, bigcompanies you know, a chat bot
and things like that.
But it's becoming sosophisticated and I've, you
know, in the industry I'm in orhave been in, you know, I see it
(14:08):
a lot on the collection side,you know, so people interact.
So it's what, what these toolscan do is increase.
Success when you do connect witha, with an individual, and it
can also through scoring andother.
Analytics based processes, itcan identify which ones to
engage, which, which ones aregonna be worth your time.
(14:29):
So you no longer need a human tolike be thinking about and
running, you know, manual modelsto figure out how to score the
potential of making aconnection.
And once you're in theconnection, you then you're also
a human.
So depending on whether you wokeup on the wrong side of the bed,
you may not be as friendly.
But the AI is never going to be,that.
AI is always going to continueto learn and figure out exactly
(14:52):
how to manipulate the otherperson on the other side to get
the outcome.
It, it's programmed to get.
It's insane, but it's here.
And I think you can see both inthe, in the case of a recovery
agency or you know, collectionsfirm or a debt buying firm or
something like that, you'regonna see.
Increase collections, decreasecost, double whammy, double
(15:13):
positive.
so I, that's just one example.
But think about any other humaninteraction.
Human to human interaction wherethe one, one human in that
interaction can f up the wholeto a bad outcome.
You know, that could verypossibly be reduced or, you
know, mostly eliminated if youhave a AI program for empathy.
(15:34):
But yet persistence.
All, all of these things, but.
It's just, it's just, it's justgetting like a super human you
know, tool in place and youdon't have to pay for it other
than the infrastructure and the,basically the hosting costs for
that.
I mean, it's, it's veryscalable.
emily-sander_1_09-17-2025 (15:51):
Yeah, I had a, I was just talking on a
podcast.
We were talking about chiefs ofstaff and ai and there's this
one tool that basically cancollect and suck up all of the
Slack messages and the emailsand the phone calls.
And one of the things it does,which is good for a chief of
staff is it says, here's yourstated.
Top three priorities and here'swhere people are actually
(16:12):
spending their time.
rory-liebhart_1_09-17-2025 (16:13):
Hmm.
emily-sander_1_09-17-2025_1 (16:13):
And it gives you that delta or that,
um, congruence.
So, um, and that's huge for justlike, it's a little bit
intangible, but if you wantbusiness valuation and people to
be driving toward the samething, knowing where people are
actually spending their time andwhat people are actually worried
about.
It has this, you mentionedempathy, like people seem to be
concerned about this thing,they're uncertain about this
(16:35):
thing, and it can tell you thatby.
The data points it picks up.
Do you guys think that, uh, howdo you think that PE firms are
using AI themselves for maybe adue diligence process or, or
even a search process?
Like, I gotta suck up all ofthese potential.
rory-liebhart_1_09-17-202 (16:50):
Well, I can,
emily-sander_1_09-17-2025 (16:51):
Yeah.
rory-liebhart_1_09-17-2025 (16:51):
I'll state it from one angle.
It's real, real close andpersonal to me these days and,
you know, I'll let Ed jump in,but I, I just, so much of what
goes into a PE group or even anoperating company of a PE.
Group, like an operating companyowned by a pv PE group is, is
basically putting togethermaterials that tell your story
(17:15):
and that those are, those can beartifacts that you store in a
data room that can be, uh, somesort of a, confident
information, memorandum, sim,all this stuff.
you have historically relied onis some, some, you know, really
beaten down mid-level employeeto, to do all this research,
model it out.
(17:36):
And, you know, our populateddata room, we'll, we'll now you
can go get a, a totaladdressable market value for
what, whatever you can conceiveof with citations and statistics
the, within 15 seconds.
Whereas that, that poor son of agun is going to have been
spending night after nighttrying to cobble this all
together just to show the CEOand then have the CEO say, no,
(17:57):
it needs to be bigger.
So my point here is to say.
So much of the groundwork, thefundamental work that you're
paying literally hundreds ofthousands of dollars a year to
an employee to do, can be done,you know, in seconds.
Truly.
I know because I've done thosethings and
emily-sander_1_09-17-2025_15 (18:12):
It feels like this story is semi
autobiographical for you.
rory-liebhart_1_09-17-202 (18:15):
yeah, yeah, I, I, I wish I had these
tools.
15 to 20 years ago is what I'msaying.
sweet-eddie-b--yes-no-_1_0 (18:21):
Rory was
rory-liebhart_1_09-17-2025_15 (18:22):
I was the guy and, and so it,
it's, it's really, it's wild.
I mean, I surprise myselfsometimes that I'm just like,
dude, there's no way I'm gonnaget the information I need.
The way I want it, the way Iwould've like toiled for hours
and hours to get no 15 secondsput in.
comes down to how you prompt it.
If you know exactly how toprompt it correctly through that
(18:43):
experience, that, that, that isimportant, get what you need.
Um, and it's impressive and it'sbetter than I could do for sure.
So my point is, think about allthe thousands po thousands upon
thousands of individuals doingthis work for funds, for
operating companies, for anybusiness out there, uh, related
(19:03):
to pe.
You know, they just saved a lotof time and money.
By having these tools at theirdisposal.
So you gotta watch out forhallucinations.
You need to know enough to beable to like spot bullshit.
Um, that does come fromexperience and trusting,
trusting what you see.
But you know, it's, it's prettypowerful and you can like, like
a lot of things in life.
It could be like 80% there andthen you can do the last 20% and
(19:26):
like, call it could.
sweet-eddie-b--yes-no-_1_0 (19:27):
Yep.
Yeah, I was, I was gonna saythe, I was almost on the other
side of that coin, Rory, whichis where, I've seen AI used,
where I've utilized it to someextent, has been on the buy side
rory-liebhart_1_09-17-2025_ (19:41):
You sure?
Absolutely.
Yeah.
sweet-eddie-b--yes-no-_1_09- (19:43):
so here's a bunch of data.
Summarize this
emily-sander_1_09-17-2025_ (19:46):
Hmm.
sweet-eddie-b--yes-no-_1_09 (19:47):
and it cut.
It does come down to the prompt.
Take a look at, I'm, I want youto look through this set of PDFs
and find for me things that looklike X or look or identify for
me various risk factors thatneed to be, need to be
identified as part of thisinsurance package or as part of
(20:08):
this.
Personnel package or you know,there's, take a look at these
personnel files and identify forme any missing information or
any, any behavioralcharacteristics or any, and
that's
rory-liebhart_1_09-17-20 (20:21):
that's where it gets really impressive
stuff.
sweet-eddie-b--yes-no-_1_0 (20:23):
look in a, in a data room.
And one of the strategies that Ihad always used in a data room,
um, which, you know, it, it ofgets blown up in this, is I
would put.
More than enough information ina data room basically going,
look, I'm gonna give youeverything by giving you
everything.
There's needles and haystacksthat become harder to find.
(20:44):
'cause a haystack is a lotbigger
rory-liebhart_1_09-17-202 (20:46):
Yeah.
sweet-eddie-b--yes-no-_1_09- (20:46):
AI basically takes a torch to the
haystack and leaves you justwith the needles and a bunch of
ashes when you're, when you'vegot the, when you approach it
that way.
And so that's really a, a bigchange.
The other part, kind of goingback to your hallucinations,
there's a few things.
As a college professor I'velearned on.
To identify with ai.
rory-liebhart_1_09-17-2025_1 (21:04):
we go.
Yeah.
sweet-eddie-b--yes-no-_1_09- (21:05):
is a hallucinations and the like.
That person never said that.
It's almost like, you know, theinternet said, you know, Abraham
Lincoln type of thing.
No, there.
The other one, and I, and I'mactually looking at some of the
show notes, um, is the doublespaced.
The double spaced hyphen is, isthere's, the only way to get a
(21:26):
double spaced hyphen is actuallylike alt spaced.
rory-liebhart_1_09-17-202 (21:30):
Yeah.
sweet-eddie-b--yes-no-_1 (21:31):
Three, seven or something.
And so when I look at, uh, someof my students,
rory-liebhart_1_09-17-202 (21:35):
yeah.
Yeah.
sweet-eddie-b--yes-no-_1_0 (21:36):
the, the,
rory-liebhart_1_09-17-2025 (21:38):
That is funny.
sweet-eddie-b--yes-no-_1_09 (21:40):
the issues that you tend to go,
okay, this was AI, is can't typethat.
You show me how you can typethat, that's that character.
'cause you can't type it.
And AI tends to overuse fillerwords.
So adjectives and adverbs tendto be.
Much, much, much higher use and
emily-sander_1_09-17-2025_15 (22:01):
It also likes to delve into things
sweet-eddie-b--yes-no-_1_ (22:03):
Yeah.
emily-sander_1_09-17-2025_ (22:04):
like who uses the word delve that
frequently, but my goodness, weare delving into a lot of
different topics.
sweet-eddie-b--yes-no-_1_ (22:10):
some, I use some pretty weird words.
I mean, my, my vocabulary is alittle bit esoteric anyway, but
it's things like this.
So as a professor, like when Iteach a, when I teach a class, I
go, I, I want a financialanalysis, a narrative, and the
models.
I look at it and it's got abunch of these double space
hyphen things.
I'm like, know, Chatt PT didyour analysis on, and so as a
(22:32):
result, you're the, the bestthing you can do is probably
throw yourself on, on the, thesword and go, yeah, let me redo
it, I'm gonna end up giving youa C for complete.
And that doesn't look good in amaster's
rory-liebhart_1_09-17-202 (22:46):
Yeah.
Yeah.
But I, you know, it's
emily-sander_1_09-17-2025 (22:49):
Yeah.
rory-liebhart_1_09-17-2025 (22:49):
I've like, again, I think about
business world, what matters andthings like that.
I mean, I could, I could see alot of reduction in cost for
legal fees and the like, right.
So I, I've literally putcontracts.
You know, redacted for, youknow, party names and stuff like
that, but put it through thesetools and said, tell me how I'm
(23:12):
gonna get screwed here.
will give you a point by pointanalysis of like, how to
negotiate a, a contract.
So it's like, it's on the onehand, it's like, wow, I'm being
efficient.
On the other hand, I'm like,wow, I don't feel like I'm using
my mind like I should.
But that aside, I think there'sjust gonna be things like that
that just.
Shortcut, turnaround timeshortcut, you know, um, cost
(23:33):
expenditures.
Now, what does that mean for pe?
So like, transition, like howdoes this change the business
model for pe?
I, I could see a scenario, andI'm not saying, uh, it's gonna
be reality or not, where, youknow, people start to question,
you know, the fee structures alittle bit.
Say like, what am I reallypaying for if the human capital
here.
You know, behind these firms issort of being taken over in some
(23:55):
cases by ai.
So you could see, you could seesome level of like fee
rationalization perhaps, but itwould, you know, you know, a
rising title sink or raiseships.
It'll all kind of work togetherprobably.
So I don't know if there'll bea, necessarily a relative but I
do think that LPs are going tobe very in pe.
(24:17):
Investing in ai becauseeverybody, everybody kind of.
Tends to think toward, you know,what are the, what are the
things happening now and in thefuture?
And this is, this is going to bethat topic for some time.
So I think that there'll be atremendous amount of LP interest
in having PE funds, um, investtheir capital into these areas.
(24:38):
'cause they feel like if theydon't, they're missing out.
'cause if you look again, lookat the companies that are doing
really well that are publiclytraded, it's just like, you
know, the valuations make nosense.
And to me anyway, um.
here we are.
So, I think it could, I couldpossibly affect the economics of
the private equity industry, butalso there's no doubt in my mind
(24:59):
that there's gonna be continued,tons of capital going into the,
uh, PE that focus on supportingthis part of the industry.
Yeah, for sure.
sweet-eddie-b--yes-no-_1_09-1 (25:08):
I think, I think coming to one of
Emily's questions, I do thinkthat you're gonna see.
You know, we talked a bit aboutthe preparation of the data room
and the information, and thenreally the analysis of the data
rory-liebhart_1_09-17-202 (25:19):
Yeah.
sweet-eddie-b--yes-no-_1_09 (25:21):
can speed those processes along and
kind of point you in a differentdirection.
I also think that it is, AIcontinues to improve and it's,
you know, AI is really machine
rory-liebhart_1_09-17-2 (25:33):
Mm-hmm.
Yeah,
sweet-eddie-b--yes-no-_1_ (25:34):
it's, you know, and, and so that goes
back a couple decades
rory-liebhart_1_09-17-202 (25:37):
does.
Yeah.
sweet-eddie-b--yes-no-_1_09- (25:38):
as far as kinda what the, the base
understanding of it is.
The As it continues, as the AIproviders continue to build data
sets, continue to have access toadditional information.
I do think the, you know, one ofthe things PE is really good at
is finding the needles in thehaystack as far as the.
(26:00):
small private companies thatare, you know, undervalued that
are, you know, and right nowthey're doing the, you know, let
me smile and dial.
I actually think it'llfacilitate more of that as
companies that might not be onthe radar able to, and are able
to come up on the radar becausemore and more information will
be able to be identified earlieron companies that are up and
(26:22):
comers.
rory-liebhart_1_09-17- (26:22):
Totally.
Yeah.
sweet-eddie-b--yes-no-_1_0 (26:23):
More data around that company's
performance markets and wherethey're,
rory-liebhart_1_09-17-202 (26:27):
Yeah.
sweet-eddie-b--yes-no- (26:27):
shopping and, and who they've got as
clients.
rory-liebhart_1_09-17-202 (26:30):
Yeah.
sweet-eddie-b--yes-no-_1_ (26:31):
think PE should be using that to, to
farm and harvest a, a targetlist.
Now, AI is not gonna get themthe, the contact.
That's still gonna be a human, ahuman outreach, I think.
'cause at the end of the day,you're still gonna end up, we
haven't gotten to the pointwhere the chat bot's gonna do
all the work.
Um, and relationships, humanrelationships are gonna be
(26:51):
critically important.
I think that sales process isstill gonna be, is still gonna
be human from the, from the PEside.
But I think a lot of theanalysis, the searching, the,
the, you know, identifying andthe, the narrowing down the risk
factors and, you know, foranalysis are gonna be AI driven.
And private equity is gonna beeven more of a how do I sell?
(27:14):
Myself to the, to the founder,how do I sell my business to the
next buyer?
And less of the, how do Ianalyze, build models, do those
kind of things because I thinkAI will take a bunch of that
over.
How do I find, I think AI willtake a bunch of that
rory-liebhart_1_09-17-202 (27:31):
Yeah.
sweet-eddie-b--yes-no-_1_09 (27:31):
and it's gonna be far more of those
soft skills that are moredifficult to automate or AI
into.
rory-liebhart_1_09-17-202 (27:37):
Yeah.
emily-sander_1_09-17-2025_1 (27:38):
If, if you were a PE firm and you
had to pick one place to investin ai, where would that be?
So for example, if it's a, let'sapply this to our due diligence
process and make that.
Uh, more targeted if it's, lemmeget an AI expert at the fund
level to go help us at all ofour portfolio companies.
(27:59):
I was just talking on thisagain, this podcast this morning
where one of the chiefs of staffgot the job because she
positioned herself as I'm gonnabe the chief of staff and I'm
going to, um.
Spearhead the thought leadershiparound ai, AI for our company in
the industry, and I'm going tomake decisions around where we
should deploy this in ourorganization.
(28:21):
And she was like, I'm gonna dothis.
And they were like, yes, that'sexactly what we need.
Come on board.
But for a PE firm, for, for a PEfund, would you do that?
Like in.
In each portco, would you do itin your due diligence process?
Would it be, I'm gonna gobble upsome AI companies and hopefully
one of them will go.
Like, if you had to pick one,where would you, what would you
do?
rory-liebhart_1_09-17-2025 (28:41):
I'll go first and it's a great
question.
I, I think it's actually ofaround what Ed just mentioned to
me.
I would be using the tools asbest I can to.
Let's say optimize the targetcompany funnel for which I'm pro
prospecting for businesses to gobuy.
And so how, what I mean by thatis so much information on
(29:02):
private companies out there nowand you can benchmark data
attributes against othercompanies that maybe have a
similar, you know, kind ofindustry segment or you know,
whatever kind of commonalitiesyou can watch.
you can do it for companies thathave maybe gone a full life,
you, you basically track smallprospective companies and their
(29:26):
attributes compared to thesuccessful ones that have done
really well and gainedtremendous valuation.
You can say, okay, this has the,basically the, the, the building
blocks of being great.
So I'm gonna focus my effort onthis and build the relationships
there rather than like say,okay, I've got companies here.
Cross different, how do I, howdo I start?
(29:47):
I just throw an army of peopleat'em and you know, whatever.
But I think it would, it's justto me, it to basically
optimizing a sales funnel basedon data.
You know, like take, take thehuman element out of it that
piece of it as much as possibleand say, what attributes can I
compare to other successfuloutcomes?
And if I see the commondenominator attributes, let's
(30:08):
focus on those things.
You know, figure that out.
I mean, that, that's, that'swhere I think the most value
creation can be.
emily-sander_1_09-17-2025_15 (30:16):
It might even be able to back test
like, Hey, feed it this stuff.
What would it like?
Success factors.
rory-liebhart_1_09-17-2025 (30:22):
into that.
I mean, nothing, there's noliterally no boundaries at this
point.
The only boundary is what comes,what, what you can validate is
truth or bullshit when you getthe output.
sweet-eddie-b--yes-no-_1_ (30:34):
Yeah.
I, I would, I would actuallytake a different approach.
I actually think that isprobably the, that's gonna make
the private equity firms.
More effect, more effective.
I think what will actuallyimprove their return is gonna
rory-liebhart_1_09-17-202 (30:50):
Yeah.
sweet-eddie-b--yes-no-_1_0 (30:51):
that level of analysis within their
portfolio companies and reallygoing, okay, where can we
optimize?
'cause again, if you're goingpart of a private equity firm's
strategy, is to go from an eightx to a 15 x multiple on a
business.
And then how can I throwadditional dollars against that
multiple?
And there may be, and again, I,I've, my, my largest client is
(31:15):
essentially an insurance in, inthe insurance industry.
And can they process claimsusing AI and remove two thirds
of their pro, two thirds oftheir claims processing cost?
What would it take to do that?
a lot.
I mean, it's, there's a, it's,and
rory-liebhart_1_09-17- (31:33):
brainer.
sweet-eddie-b--yes-no-_1_09-1 (31:34):
a huge.
It's not a huge investmentrelative to the savings.
And so, you know, it's, it's howdo you prioritize that against
everything else, like any otherbusiness, but there's an
opportunity there.
Same thing with on the, on theother side, if I'm looking at
how do I invest, you know,Emily's like, well, do they
invest in a, in a, you know, oneof the AI companies and hope
that one hits?
(31:56):
I'm one if, you know, I, I walkthe walk, so this is what my
portfolio looks like.
I'm in that specialize in.
centers and power suppliers.
So, so basically the, theutilities
rory-liebhart_1_09-17-2025 (32:11):
Yep.
sweet-eddie-b--yes-no-_1_ (32:11):
areas that are high growth for data
centers.
So
rory-liebhart_1_09-17-2025_ (32:15):
Na.
Natural resources.
Yeah,
sweet-eddie-b--yes-no-_1_0 (32:17):
yep.
So I'm like, where, where arethose kind of, where's the picks
and shovels?
rory-liebhart_1_09-17-202 (32:22):
yeah,
sweet-eddie-b--yes-no-_1_09 (32:22):
if, if the're
rory-liebhart_1_09-17-202 (32:23):
yeah.
Infrastructure.
Yep.
sweet-eddie-b--yes-no-_1_09- (32:25):
if I'm wrong, they're still gonna
do fine.
rory-liebhart_1_09-17-202 (32:27):
Yeah.
sweet-eddie-b--yes-no- (32:28):
they're, and if I'm right, they're gonna
do better than fine.
you know, I'm, I'm more riskaverse
rory-liebhart_1_09-17-2025_15 (32:33):
I am with you on that.
Yep.
sweet-eddie-b--yes-no-_1_0 (32:34):
Than a typical, uh, typical person.
So, but I'm, that's where my,you know, and I get the
dividends, so God bless.
rory-liebhart_1_09-17-2 (32:41):
Mm-hmm.
sweet-eddie-b--yes-no-_1_0 (32:41):
I'm, so that's, that's where I would
be looking from an investmentperspective is kind of not the
cutting edge.
That's, like you said, I thinkRory, that's a venture play.
It's really the, okay, who'slayers behind that
emily-sander_1_09-17-2025 (32:56):
Yeah.
sweet-eddie-b--yes-n (32:56):
providing, you know, going back to the
internet age in, in 20, in 2000.
rory-liebhart_1_09-17-202 (33:01):
Yeah.
sweet-eddie-b--yes-no-_1_0 (33:02):
The, the smart, you could, you could
have hit on Google, but youprobably didn't, and you
probably missed on a, you know,pets.com, even a Yahoo, some of
those kind of things.
But the ones that did well, whowas in Cisco, who was in Oracle,
who was in kind of, who was inthe, the areas behind that, that
were able to, to, you know,really leverage themselves into
(33:26):
the infrastructure those folksdid.
Well, they may not have.
Hit the lottery ticket that somefolks did with some of the
investments, but they didextraordinarily well,
rory-liebhart_1_09-17-2025 (33:35):
Yep.
sweet-eddie-b--yes-no-_1_09-1 (33:35):
a significant period of time.
rory-liebhart_1_09-17-2025 (33:37):
Yep.
And add some leverage.
Do even better.
Yeah.
sweet-eddie-b--yes-no-_1_0 (33:39):
Yep.
emily-sander_1_09-17-2025_ (33:41):
Back to Rory's example.
What was, what was coming up forme when you were saying that is
could you have some AI screeningfor the founder?
The founders fit for the PEcompany.
And the reason I thought aboutthis is because we're in the
throes of football season andthe combine, they like do a
psychological analysis ofquarterback and like are, how
(34:01):
tall are you?
How much do you weigh?
But also like, do you have yourshit together mentally and
emotionally?
Can you lead a multimillion, ifnot billion dollar enterprise on
your shoulders?
That's not just anyone.
And I was like, they do allthese screenings and tests.
And could you not applysomething similar to like a
founder?
Like, are we gonna be able todeal with this guy or gal?
Um, could we put some screeningup there anyway?
rory-liebhart_1_09-17-202 (34:24):
about it.
Yeah.
sweet-eddie-b--yes-no-_1_ (34:24):
Yeah, I wonder if there's enough data.
I wonder if there's enough datato actually get you something
reliable there.
And I think you, you raise abigger concern, Emily.
Not as opposed to a, so I thinkyou, we look at it from a
founder perspective.
That's a significant risk
rory-liebhart_1_09-17-2 (34:41):
Mm-hmm.
sweet-eddie-b--yes-no-_1_09- (34:42):
in a PE investment.
I'm wondering also then, how fardown does that go?
So, you know, how far down doesthat go to the employees?
Does that go to your, your, youknow, life partner?
Does that go to your choice of adoctor?
Does that go?
So I think a again, and there'sa reliance on, on AI that, know,
(35:03):
we've talked about hallucinationa little bit here, but there's a
reliance on imperfect data.
rory-liebhart_1_09-17-202 (35:08):
Yeah.
sweet-eddie-b--yes-no-_1_09-1 (35:08):
I don't think at the end of the
day you can pull out, you know,you asked a lot of the the go no
go questions or Yes, noquestions at the beginning.
I think there's still elementsthere that require human
analysis of AI's output in orderto be able to action it.
I get nervous when we startapplying it to the softer the
(35:31):
skill, the more nervous I getbecause I feel like it's likely
to be.
It's gonna point you in ageneral direction, which is
probably accurate, and, butwithout putting nuance against
it, you're, you may make somevery poor decisions.
rory-liebhart_1_09-17-202 (35:44):
Yeah,
emily-sander_1_09-17-2025_15 (35:44):
I, I agree right now, and if and
when AI gets to the point where.
It does make a better decisionand you can rely on it 99.9% of
the time, then I think that'swhere it's like, okay, now we're
at a tipping point with thisthing where people have to start
making different decisionsaround it.
But yes.
(36:05):
All right.
As we wind down here, anythingelse big that the people should
know about with PE and ai?
rory-liebhart_1_09-17-202 (36:13):
Well, I'd just say the landscape is, I
mean, there's, there's, thehorizon is just like endless.
I mean, I'm, I'm curious, I, I'mcurious to see just how much
gets progress and even the next12 months, I feel like even the
last.
Six to 12 months I've seenthings reach new heights.
It's, it's quite wild, really.
(36:35):
Yeah.
Yeah.
sweet-eddie-b--yes-no-_1_09- (36:37):
is the
emily-sander_1_09-17-2025_150 (36:37):
I feel.
sweet-eddie-b--yes-no-_1_0 (36:37):
I've seen to the 2000 internet, you
know, 1995 to 2001 internet boomlikely similar outcome, by the
way, um, where you're gonna havesome survivors make it through
in a bunch
rory-liebhart_1_09-17-2025_15 (36:51):
I totally agree with that.
emily-sander_1_09-17-2025_ (36:52):
Hmm.
sweet-eddie-b--yes-no-_1_ (36:52):
crash and burn.
Um, but it's also, I think thattransformative, I think you hit
on a m there is gonna be apoint.
Not too distant future where thereliability of AI is gonna be
significantly better than thereliability of human instinct.
And it's really gonna be how dowe adapt to that as as
individuals and as businesspeople to be able to of be
(37:17):
successful in an environmentthat I think is gonna be
transformed in the next decade.
rory-liebhart_1_09-17-202 (37:21):
Yeah.
emily-sander_1_09-17-2025_150 (37:22):
I think this will be a recurring
topic for, for, for us certainlyin this podcast.
We might do part two, partthree, even in six months, 12
months time.
But, uh, for right now, we'llcall it a wrap on the Private
Equity Experience Podcast and wewill catch you next time.
Thanks Rory.
Thanks, ed.
sweet-eddie-b--yes-no-_ (37:38):
Thanks.
Alright.
Here is our rapid firequestions.
The first five are yes and no,and then the next two are
open-ended, but we'll keep'embrief and then segue into our
topic here.
rory-liebhart_1_09-17-2025_ (00:45):
out and
emily-sander_1_09-17-2 (00:45):
Alright,
rory-liebhart_1_09-17-2025_ (00:45):
uh, simultaneously and I, or,
emily-sander_1_09-17-2025_15 (00:48):
go for it.
Shout away.
Would you let AI choose youroutfit for a big meeting?
rory-liebhart_1_09-17-2025 (00:54):
Yes.
emily-sander_1_09-17-2025 (00:56):
Would you trust AI to plan your
vacation?
Would you let AI pick the nextbook you read?
sweet-eddie-b--yes-no-_1_09 (01:03):
No.
emily-sander_1_09-17-2025 (01:04):
Would you let AI write your best man
speech?
rory-liebhart_1_09-17-2025 (01:07):
Yes.
emily-sander_1_09-17-2025 (01:10):
Would you let AI drive your car while
you nap in the back?
rory-liebhart_1_09-17-2025 (01:13):
yes.
emily-sander_1_09-1 (01:16):
Open-ended?
Question number one.
If AI gave you advice, would youever follow it over a humans?
rory-liebhart_1_09-17-2025_ (01:21):
Oh, yes.
Mm-hmm.
sweet-eddie-b--yes-no-_1_09- (01:23):
It depends on the human that gave
me the
rory-liebhart_1_09-17- (01:26):
Depends.
Yeah.
I
emily-sander_1_09-17-2025_ (01:27):
Good call.
rory-liebhart_1_09-17- (01:27):
depends.
Yeah.
But, but the answer is yes, Iwould.
sweet-eddie-b--yes-no-_1_ (01:31):
Yeah.
emily-sander_1_09-17-2025 (01:32):
Okay, second one.
What's something AI should neverdo?
sweet-eddie-b--yes-n (01:37):
Procreate.
rory-liebhart_1_09-17-2 (01:39):
Agreed.
Yeah.
emily-sander_1_09-17-2025_15 (01:41):
It kind of is, in a way though.
It's like breeding and spreadingitself.
rory-liebhart_1_09-17-2 (01:44):
Become, become
emily-sander_1_09-17-2025_1 (01:45):
Oh.
sweet-eddie-b--yes-no-_1_ (01:46):
yeah, that's, that's the, that's the
Skynet thing that we just can't
emily-sander_1_09-17-2025 (01:50):
Some.
sweet-eddie-b--yes-no-_1_09- (01:50):
so it
emily-sander_1_09-17-2025 (01:51):
Yeah.
sweet-eddie-b--yes-n (01:51):
procreate.
emily-sander_1_09-17-2025_1 (01:53):
Got it.
All right, so AI is like alreadyreshaping our daily lives and
our personal lives.
Now let's talk about how it'sshaping the diligence process,
operations, and even ownershipstructures in private equity.
Maybe to start off, like what isit evolving from?
So like baseline, what?
What does PE structure looklike?
rory-liebhart_1_09-17-202 (02:16):
Well, I, I think I would, I would go
to say pe.
PE in all of the industries, PEsort of represents, surrounded
by professionals, professional,um, bankers, lawyers,
accountants, and the like.
So a lot of professional level.
(02:36):
Uh, talent out there are verycritical up to the baseline for
PE now, things have changed abit.
Uh, I can personally attest tosaving thousands and thousands
of dollars on legal fees byutilizing some very, very basic
tools, in, in JA, GBT and someof the other platforms out
(02:59):
there.
And so from that standpoint, Ithink.
You know, every business, um,can see value in using these
tools.
I mean, after all, you know,we're all about.
Leveraging technology andleveraging innovation.
This, we've never seen anythinglike this before.
And you know, as as Lud I, as Iam, as rudimentary as I am as a
(03:20):
technologist, I have lit quiteliterally spent or saved tens of
thousands of dollars on thingsthat I would've otherwise paid a
professional services firm to dofor me.
So, um, I think in some ways thegame is changing in that
respect.
In some ways you can say it's.
Getting less expensive toconduct business in other, other
areas.
There's some unintendedconsequences you have to be
looking out for, and a wholeother business thesis to
(03:44):
potentially talk about.
sweet-eddie-b--yes-no-_1_ (03:46):
Yeah, I think the, the bigger elements
as it pertains to privateequity.
know, they're, they'retraditionally the private equity
folks are looking for, you know,how do I extract value in a
business?
How do I find businesses thatare undervalued or that I can
add a bit of financialengineering or technol
(04:08):
technology in order to be ableto really leverage this business
into the next, kind of, the nextlevel of its, of its value and
growth I think private equityhas over the last few years been
there's, you know, we've talkedabout it numerous times where
it's been difficult to get dealssold the, the hold periods have
(04:31):
been longer, the interest rateshave been up, the, you know,
there's been some challengesthere.
I think with AI coming on board,what it's really, what it's
really doing is taking thatability to operationally
engineer a business.
To another level.
So I
rory-liebhart_1_09-17-202 (04:48):
Yeah,
sweet-eddie-b--yes-no-_1_09- (04:49):
if I was private
rory-liebhart_1_09-17-20 (04:50):
doubt.
Yeah.
sweet-eddie-b--yes-no-_1_09 (04:51):
I'd be looking at what businesses,
you know, you just were, youwere just kind of calling
yourself a Luddite, Rory.
And I'd be going, where else?
Like when I'm talking to afounder, knowing what AI is
capable of doing.
So if we've got businesses thatare.
People heavy
rory-liebhart_1_09-17-2025 (05:09):
Yep.
sweet-eddie-b--yes-no-_1_09 (05:09):
and those, those resources, you
know, historically privateequities looked at it, what can
I do to, you know, provideunique property as far as
technology that can substitutefor people?
So you're tech enabled services,
rory-liebhart_1_09-17-2 (05:24):
Mm-hmm.
sweet-eddie-b--yes-no-_1_09 (05:24):
and those kind
rory-liebhart_1_09-17-202 (05:25):
Yeah,
sweet-eddie-b--yes-no-_1_09 (05:25):
now I was in private equity, I'd be
looking at what can I use, youknow, what businesses are out
there that are being run byLuddites that I can apply.
rory-liebhart_1_09-17- (05:36):
exactly.
Yeah.
sweet-eddie-b--yes-no-_1_ (05:37):
into, to be able to operationalize AI
into that business, to improveefficiency, to improve accuracy,
and to really operationallyleverage that business to
another valuation level and doit quickly.
'cause again, that that'ssomething, you know, that can be
applied very quickly and it's avery skinny technology
(05:59):
application versus buildingsomething, you know, for, for
ip.
rory-liebhart_1_09-17-202 (06:03):
Yeah, no doubt.
And then also, you know,thinking about from an
investment standpoint, whatkinds of businesses can you
invest in that support theproliferation of ai?
So, I mean, we hear a lot about.
center, uh, and compute powerand other things like that.
I mean, there are so manyancillary ways in which, uh, AI
(06:24):
requires different components ordifferent, uh, resources to, to
basically be effective.
So like figuring out where thoseniches are, and that's what PE.
PE funds are really good at isfiguring out niche, niche
investment strategies, you know,but I think it'd be interesting
to talk about because if you'rethinking about investing in AI
(06:46):
companies themselves, that seemslike a more of a venture game
today, um, than anything.
Now PE I can see being very indirect investments in AI
companies.
know, when there is sort ofmispriced value.
And, you know, so distressedinvestments, so, so many places
(07:08):
to go in this.
But, you know, I feel like it's,it's very much a venture slash
strategic, uh, buyer's game onAI companies themselves.
But, you know, eventually itwill, PE will be involved
directly too, whether it'scircumstantial or, you know, the
sector matures a lot more thanit is at today.
sweet-eddie-b--yes-no-_1_ (07:27):
Yeah, I think the, the AI companies,
you're absolutely on point.
think the picks and shovel sideof it.
Kind of going to the,
rory-liebhart_1_09-17-202 (07:36):
Yeah.
sweet-eddie-b--yes-no-_1_09 (07:37):
you initially said, there's the data
centers, there's the.
generation.
There's, you know, thoseelements.
That's area is where, yep.
rory-liebhart_1_09-17-2025_ (07:46):
reg tech, all that stuff.
sweet-eddie-b--yes-no-_1_09 (07:48):
can be playing today or is playing
today.
So where you've got venture,maybe going, working the, okay,
here's a company that's tryingto come up with the latest, you
know, algorithm to hoover up abunch of data and be able to
build the, the better, thebetter AI infrastructure.
got all the.
Infras, the true bricks andmortar infrastructure play, the
(08:11):
data centers, the powergeneration, the the, um,
internet service providers,those kind of things are all
kind of wired right now for.
For pun intended for privateequity, private equity
investment.
And that's an easy, that's aneasier way to, I shouldn't say
easier.
That's a far lower risk laterstage investment that doesn't,
(08:35):
that should see significantbenefit from the growth of AI
generally, isn't solely reliantupon that
rory-liebhart_1_09-17-202 (08:44):
Yeah.
sweet-eddie-b--yes-no-_1_0 (08:45):
much lower risk premium than you
would have in a typical AIdirect investment.
rory-liebhart_1_09-17-202 (08:50):
True.
Yeah.
And I guess on similarly in thatvein, I think, you know, every
company you, know, almost everycompany that you hear, uh.
You know, a, a vision roadmapfor on what they're trying to do
involves some level of AIimplementation, whether that's,
you know, for internal processesand, and optimization or, you
know, from a product standpoint.
(09:11):
And so, as we talked about inour book, and I, and we've
certainly talked about it onthis podcast, you know, PE
invests in different stages ofbusinesses, A lot of times
growth equity.
So it's like past your seedround, past your venture round.
But, you know, prior to beingmature.
So it's a growth equityinvestment.
I, I can see a scenario where,you know, companies have a pe
(09:33):
funds have a lot moreopportunity to invest in the
growth stage of any given typeof business that's got an AI
roadmap where they may not havefive years ago.
you know, maybe it, maybe it's ajust a, maybe it's a tech
enabled services business thatserves healthcare.
Well, they, they need, they needcapital for CapEx purpose, they
need for product development,for front end development,
(09:55):
things like that.
And so PE is always gonna bethere as a, as a means to, to
access that kind of capital,whether or not they're trying to
be the next anthropic or, youknow, open AI or something like
that.
They don't have to be an AIcompany to use AI tools.
And just like any other softwaredevelopment or.
You know, hard infrastructuredevelopment, you need capital
and lots of it to implementthese things.
(10:15):
But some of these companies aregonna need it, uh, and maybe
somewhat distressed because ifthey don't do it, they're gonna
be out of business'cause theircompetition is doing it.
So, um.
emily-sander_1_09-17-2025_150 (10:25):
W Well, you had mentioned that PE
companies might be looking atbusinesses that are more
conducive to AI or somethinglike that, that can utilize AI
in a good way.
So what, what, what would besome examples of that?
Or do you see PE firms trendingin that direction where it's
like, yeah, we're gonna leverageit?
By gobbling up companies orgoing after companies where we
(10:47):
can see AI taking them to thenext level, to the next business
valuation very easily.
rory-liebhart_1_09-17-202 (10:52):
Well, I'll let Ed go first.
I know he is.
Got a couple on the tip of histongue.
sweet-eddie-b--yes-no-_1_09- (10:55):
I, I was gonna say, you've got a,
so I'll use a couple of the, thebusinesses that I'm, I'm
involved with as an example,I'll, I'll use, you know,
accounting, accounting services.
rory-liebhart_1_09-17-202 (11:06):
Yeah.
sweet-eddie-b--yes-no-_1_09 (11:07):
The accounting services businesses
has been for the last decade,getting a lot of attention.
Legal services in Europe, etcetera, from private equity
because they're high cash flowbusinesses.
They tend to be people oriented,but they're high cash flow
businesses.
They've got good connections.
You know, it's a, it's a lowcapital intensive business from
the standpoint of bricks andmortar.
(11:27):
And so you've seen privateequity, buying up, accounting
firms, rolling them up, thosekind of things.
had a call earlier this weekwith a company that says,
essentially we've got AI.
That will interface with certaintax software and allow it to,
you know, basically read, readyour PDFs that have been
uploaded by your
rory-liebhart_1_09-17-2 (11:47):
Mm-hmm.
sweet-eddie-b--yes (11:48):
pre-populate 95% of the information for the
return.
So now it becomes a, you know,it takes you 10 minutes to do a
tax return versus two hours todo a tax return.
'cause not only have we lookedat it from the standpoint of,
you know, the pure, the, thepure, like.
OCR type technology and justdump the stuff in.
(12:10):
But we're also looking atapplication of tax law.
You know, what's the mostadvantageous way to take this
rory-liebhart_1_09-17-2025 (12:17):
Yep.
sweet-eddie-b--yes-n (12:17):
deduction, whether it's on this schedule or
this schedule, um, whether itshould be, whether a business
should be structured in acertain way or whether an asset
should be depreciated, um, bonusdepreciation or 1 79.
And so there's, there's thingslike that that AI is worth.
Now, when we looked at it, wesaid the cost of this is.
our type of business, given thenumber of returns we do, we do
(12:38):
less than a thousand returns ayear.
The cost of it was not, youknow, didn't, the juice didn't,
worth a squeeze.
But two years from now, threeyears from now, that's a
different story.
And changing up, if I'm sittinghere as a, let's say a Jackson
Hewitt or an h and r block andI've got, you know, multiple
(12:59):
franchisees.
Who have, you know, arebasically at the, what I would
call the value end of the
rory-liebhart_1_09-17-2 (13:06):
Mm-hmm.
sweet-eddie-b--yes-no-_1_09 (13:07):
and not charging a ton to be able to
process those returns.
And their highest cost is acombination of retail, retail,
storefront, and, and personnelcosts.
If I've got the ability toinvest in AI in a software
package like that with a, youknow, kind of all you can eat.
And I can sell that back to thefranchisees.
It's significant value and, andPE plays in that space right now
(13:31):
all the time.
rory-liebhart_1_09-17-202 (13:31):
Yeah.
sweet-eddie-b--yes-no-_1 (13:32):
that's an area where you could drive
two thirds of the cost out of aaccounting business if you've
got the, if you've got the righttype of AI to be able to handle
the bookkeeping, the payrollprocessing, the, the application
of basic tax law and filling outtax forms.
rory-liebhart_1_09-17-202 (13:48):
Yeah, totally agree.
I would, you know, another one Iwould say is, know, anything
that's customer service related.
You know, I think we've seenthis for a long time, you know,
as far as like companies, bigcompanies you know, a chat bot
and things like that.
But it's becoming sosophisticated and I've, you
know, in the industry I'm in orhave been in, you know, I see it
(14:08):
a lot on the collection side,you know, so people interact.
So it's what, what these toolscan do is increase.
Success when you do connect witha, with an individual, and it
can also through scoring andother.
Analytics based processes, itcan identify which ones to
engage, which, which ones aregonna be worth your time.
(14:29):
So you no longer need a human tolike be thinking about and
running, you know, manual modelsto figure out how to score the
potential of making aconnection.
And once you're in theconnection, you then you're also
a human.
So depending on whether you wokeup on the wrong side of the bed,
you may not be as friendly.
But the AI is never going to be,that.
AI is always going to continueto learn and figure out exactly
(14:52):
how to manipulate the otherperson on the other side to get
the outcome.
It, it's programmed to get.
It's insane, but it's here.
And I think you can see both inthe, in the case of a recovery
agency or you know, collectionsfirm or a debt buying firm or
something like that, you'regonna see.
Increase collections, decreasecost, double whammy, double
(15:13):
positive.
so I, that's just one example.
But think about any other humaninteraction.
Human to human interaction wherethe one, one human in that
interaction can f up the wholeto a bad outcome.
You know, that could verypossibly be reduced or, you
know, mostly eliminated if youhave a AI program for empathy.
(15:34):
But yet persistence.
All, all of these things, but.
It's just, it's just, it's justgetting like a super human you
know, tool in place and youdon't have to pay for it other
than the infrastructure and the,basically the hosting costs for
that.
I mean, it's, it's veryscalable.
emily-sander_1_09-17-2025 (15:51):
Yeah, I had a, I was just talking on a
podcast.
We were talking about chiefs ofstaff and ai and there's this
one tool that basically cancollect and suck up all of the
Slack messages and the emailsand the phone calls.
And one of the things it does,which is good for a chief of
staff is it says, here's yourstated.
Top three priorities and here'swhere people are actually
(16:12):
spending their time.
rory-liebhart_1_09-17-2025 (16:13):
Hmm.
emily-sander_1_09-17-2025_1 (16:13):
And it gives you that delta or that,
um, congruence.
So, um, and that's huge for justlike, it's a little bit
intangible, but if you wantbusiness valuation and people to
be driving toward the samething, knowing where people are
actually spending their time andwhat people are actually worried
about.
It has this, you mentionedempathy, like people seem to be
concerned about this thing,they're uncertain about this
(16:35):
thing, and it can tell you thatby.
The data points it picks up.
Do you guys think that, uh, howdo you think that PE firms are
using AI themselves for maybe adue diligence process or, or
even a search process?
Like, I gotta suck up all ofthese potential.
rory-liebhart_1_09-17-202 (16:50):
Well, I can,
emily-sander_1_09-17-2025 (16:51):
Yeah.
rory-liebhart_1_09-17-2025 (16:51):
I'll state it from one angle.
It's real, real close andpersonal to me these days and,
you know, I'll let Ed jump in,but I, I just, so much of what
goes into a PE group or even anoperating company of a PE.
Group, like an operating companyowned by a pv PE group is, is
basically putting togethermaterials that tell your story
(17:15):
and that those are, those can beartifacts that you store in a
data room that can be, uh, somesort of a, confident
information, memorandum, sim,all this stuff.
you have historically relied onis some, some, you know, really
beaten down mid-level employeeto, to do all this research,
model it out.
(17:36):
And, you know, our populateddata room, we'll, we'll now you
can go get a, a totaladdressable market value for
what, whatever you can conceiveof with citations and statistics
the, within 15 seconds.
Whereas that, that poor son of agun is going to have been
spending night after nighttrying to cobble this all
together just to show the CEOand then have the CEO say, no,
(17:57):
it needs to be bigger.
So my point here is to say.
So much of the groundwork, thefundamental work that you're
paying literally hundreds ofthousands of dollars a year to
an employee to do, can be done,you know, in seconds.
Truly.
I know because I've done thosethings and
emily-sander_1_09-17-2025_15 (18:12):
It feels like this story is semi
autobiographical for you.
rory-liebhart_1_09-17-202 (18:15):
yeah, yeah, I, I, I wish I had these
tools.
15 to 20 years ago is what I'msaying.
sweet-eddie-b--yes-no-_1_0 (18:21):
Rory was
rory-liebhart_1_09-17-2025_15 (18:22):
I was the guy and, and so it,
it's, it's really, it's wild.
I mean, I surprise myselfsometimes that I'm just like,
dude, there's no way I'm gonnaget the information I need.
The way I want it, the way Iwould've like toiled for hours
and hours to get no 15 secondsput in.
comes down to how you prompt it.
If you know exactly how toprompt it correctly through that
(18:43):
experience, that, that, that isimportant, get what you need.
Um, and it's impressive and it'sbetter than I could do for sure.
So my point is, think about allthe thousands po thousands upon
thousands of individuals doingthis work for funds, for
operating companies, for anybusiness out there, uh, related
(19:03):
to pe.
You know, they just saved a lotof time and money.
By having these tools at theirdisposal.
So you gotta watch out forhallucinations.
You need to know enough to beable to like spot bullshit.
Um, that does come fromexperience and trusting,
trusting what you see.
But you know, it's, it's prettypowerful and you can like, like
a lot of things in life.
It could be like 80% there andthen you can do the last 20% and
(19:26):
like, call it could.
sweet-eddie-b--yes-no-_1_0 (19:27):
Yep.
Yeah, I was, I was gonna saythe, I was almost on the other
side of that coin, Rory, whichis where, I've seen AI used,
where I've utilized it to someextent, has been on the buy side
rory-liebhart_1_09-17-2025_ (19:41):
You sure?
Absolutely.
Yeah.
sweet-eddie-b--yes-no-_1_09- (19:43):
so here's a bunch of data.
Summarize this
emily-sander_1_09-17-2025_ (19:46):
Hmm.
sweet-eddie-b--yes-no-_1_09 (19:47):
and it cut.
It does come down to the prompt.
Take a look at, I'm, I want youto look through this set of PDFs
and find for me things that looklike X or look or identify for
me various risk factors thatneed to be, need to be
identified as part of thisinsurance package or as part of
(20:08):
this.
Personnel package or you know,there's, take a look at these
personnel files and identify forme any missing information or
any, any behavioralcharacteristics or any, and
that's
rory-liebhart_1_09-17-20 (20:21):
that's where it gets really impressive
stuff.
sweet-eddie-b--yes-no-_1_0 (20:23):
look in a, in a data room.
And one of the strategies that Ihad always used in a data room,
um, which, you know, it, it ofgets blown up in this, is I
would put.
More than enough information ina data room basically going,
look, I'm gonna give youeverything by giving you
everything.
There's needles and haystacksthat become harder to find.
(20:44):
'cause a haystack is a lotbigger
rory-liebhart_1_09-17-202 (20:46):
Yeah.
sweet-eddie-b--yes-no-_1_09- (20:46):
AI basically takes a torch to the
haystack and leaves you justwith the needles and a bunch of
ashes when you're, when you'vegot the, when you approach it
that way.
And so that's really a, a bigchange.
The other part, kind of goingback to your hallucinations,
there's a few things.
As a college professor I'velearned on.
To identify with ai.
rory-liebhart_1_09-17-2025_1 (21:04):
we go.
Yeah.
sweet-eddie-b--yes-no-_1_09- (21:05):
is a hallucinations and the like.
That person never said that.
It's almost like, you know, theinternet said, you know, Abraham
Lincoln type of thing.
No, there.
The other one, and I, and I'mactually looking at some of the
show notes, um, is the doublespaced.
The double spaced hyphen is, isthere's, the only way to get a
(21:26):
double spaced hyphen is actuallylike alt spaced.
rory-liebhart_1_09-17-202 (21:30):
Yeah.
sweet-eddie-b--yes-no-_1 (21:31):
Three, seven or something.
And so when I look at, uh, someof my students,
rory-liebhart_1_09-17-202 (21:35):
yeah.
Yeah.
sweet-eddie-b--yes-no-_1_0 (21:36):
the, the,
rory-liebhart_1_09-17-2025 (21:38):
That is funny.
sweet-eddie-b--yes-no-_1_09 (21:40):
the issues that you tend to go,
okay, this was AI, is can't typethat.
You show me how you can typethat, that's that character.
'cause you can't type it.
And AI tends to overuse fillerwords.
So adjectives and adverbs tendto be.
Much, much, much higher use and
emily-sander_1_09-17-2025_15 (22:01):
It also likes to delve into things
sweet-eddie-b--yes-no-_1_ (22:03):
Yeah.
emily-sander_1_09-17-2025_ (22:04):
like who uses the word delve that
frequently, but my goodness, weare delving into a lot of
different topics.
sweet-eddie-b--yes-no-_1_ (22:10):
some, I use some pretty weird words.
I mean, my, my vocabulary is alittle bit esoteric anyway, but
it's things like this.
So as a professor, like when Iteach a, when I teach a class, I
go, I, I want a financialanalysis, a narrative, and the
models.
I look at it and it's got abunch of these double space
hyphen things.
I'm like, know, Chatt PT didyour analysis on, and so as a
(22:32):
result, you're the, the bestthing you can do is probably
throw yourself on, on the, thesword and go, yeah, let me redo
it, I'm gonna end up giving youa C for complete.
And that doesn't look good in amaster's
rory-liebhart_1_09-17-202 (22:46):
Yeah.
Yeah.
But I, you know, it's
emily-sander_1_09-17-2025 (22:49):
Yeah.
rory-liebhart_1_09-17-2025 (22:49):
I've like, again, I think about
business world, what matters andthings like that.
I mean, I could, I could see alot of reduction in cost for
legal fees and the like, right.
So I, I've literally putcontracts.
You know, redacted for, youknow, party names and stuff like
that, but put it through thesetools and said, tell me how I'm
(23:12):
gonna get screwed here.
will give you a point by pointanalysis of like, how to
negotiate a, a contract.
So it's like, it's on the onehand, it's like, wow, I'm being
efficient.
On the other hand, I'm like,wow, I don't feel like I'm using
my mind like I should.
But that aside, I think there'sjust gonna be things like that
that just.
Shortcut, turnaround timeshortcut, you know, um, cost
(23:33):
expenditures.
Now, what does that mean for pe?
So like, transition, like howdoes this change the business
model for pe?
I, I could see a scenario, andI'm not saying, uh, it's gonna
be reality or not, where, youknow, people start to question,
you know, the fee structures alittle bit.
Say like, what am I reallypaying for if the human capital
here.
You know, behind these firms issort of being taken over in some
(23:55):
cases by ai.
So you could see, you could seesome level of like fee
rationalization perhaps, but itwould, you know, you know, a
rising title sink or raiseships.
It'll all kind of work togetherprobably.
So I don't know if there'll bea, necessarily a relative but I
do think that LPs are going tobe very in pe.
(24:17):
Investing in ai becauseeverybody, everybody kind of.
Tends to think toward, you know,what are the, what are the
things happening now and in thefuture?
And this is, this is going to bethat topic for some time.
So I think that there'll be atremendous amount of LP interest
in having PE funds, um, investtheir capital into these areas.
(24:38):
'cause they feel like if theydon't, they're missing out.
'cause if you look again, lookat the companies that are doing
really well that are publiclytraded, it's just like, you
know, the valuations make nosense.
And to me anyway, um.
here we are.
So, I think it could, I couldpossibly affect the economics of
the private equity industry, butalso there's no doubt in my mind
(24:59):
that there's gonna be continued,tons of capital going into the,
uh, PE that focus on supportingthis part of the industry.
Yeah, for sure.
sweet-eddie-b--yes-no-_1_09-1 (25:08):
I think, I think coming to one of
Emily's questions, I do thinkthat you're gonna see.
You know, we talked a bit aboutthe preparation of the data room
and the information, and thenreally the analysis of the data
rory-liebhart_1_09-17-202 (25:19):
Yeah.
sweet-eddie-b--yes-no-_1_09 (25:21):
can speed those processes along and
kind of point you in a differentdirection.
I also think that it is, AIcontinues to improve and it's,
you know, AI is really machine
rory-liebhart_1_09-17-2 (25:33):
Mm-hmm.
Yeah,
sweet-eddie-b--yes-no-_1_ (25:34):
it's, you know, and, and so that goes
back a couple decades
rory-liebhart_1_09-17-202 (25:37):
does.
Yeah.
sweet-eddie-b--yes-no-_1_09- (25:38):
as far as kinda what the, the base
understanding of it is.
The As it continues, as the AIproviders continue to build data
sets, continue to have access toadditional information.
I do think the, you know, one ofthe things PE is really good at
is finding the needles in thehaystack as far as the.
(26:00):
small private companies thatare, you know, undervalued that
are, you know, and right nowthey're doing the, you know, let
me smile and dial.
I actually think it'llfacilitate more of that as
companies that might not be onthe radar able to, and are able
to come up on the radar becausemore and more information will
be able to be identified earlieron companies that are up and
(26:22):
comers.
rory-liebhart_1_09-17- (26:22):
Totally.
Yeah.
sweet-eddie-b--yes-no-_1_0 (26:23):
More data around that company's
performance markets and wherethey're,
rory-liebhart_1_09-17-202 (26:27):
Yeah.
sweet-eddie-b--yes-no- (26:27):
shopping and, and who they've got as
clients.
rory-liebhart_1_09-17-202 (26:30):
Yeah.
sweet-eddie-b--yes-no-_1_ (26:31):
think PE should be using that to, to
farm and harvest a, a targetlist.
Now, AI is not gonna get themthe, the contact.
That's still gonna be a human, ahuman outreach, I think.
'cause at the end of the day,you're still gonna end up, we
haven't gotten to the pointwhere the chat bot's gonna do
all the work.
Um, and relationships, humanrelationships are gonna be
(26:51):
critically important.
I think that sales process isstill gonna be, is still gonna
be human from the, from the PEside.
But I think a lot of theanalysis, the searching, the,
the, you know, identifying andthe, the narrowing down the risk
factors and, you know, foranalysis are gonna be AI driven.
And private equity is gonna beeven more of a how do I sell?
(27:14):
Myself to the, to the founder,how do I sell my business to the
next buyer?
And less of the, how do Ianalyze, build models, do those
kind of things because I thinkAI will take a bunch of that
over.
How do I find, I think AI willtake a bunch of that
rory-liebhart_1_09-17-202 (27:31):
Yeah.
sweet-eddie-b--yes-no-_1_09 (27:31):
and it's gonna be far more of those
soft skills that are moredifficult to automate or AI
into.
rory-liebhart_1_09-17-202 (27:37):
Yeah.
emily-sander_1_09-17-2025_1 (27:38):
If, if you were a PE firm and you
had to pick one place to investin ai, where would that be?
So for example, if it's a, let'sapply this to our due diligence
process and make that.
Uh, more targeted if it's, lemmeget an AI expert at the fund
level to go help us at all ofour portfolio companies.
(27:59):
I was just talking on thisagain, this podcast this morning
where one of the chiefs of staffgot the job because she
positioned herself as I'm gonnabe the chief of staff and I'm
going to, um.
Spearhead the thought leadershiparound ai, AI for our company in
the industry, and I'm going tomake decisions around where we
should deploy this in ourorganization.
(28:21):
And she was like, I'm gonna dothis.
And they were like, yes, that'sexactly what we need.
Come on board.
But for a PE firm, for, for a PEfund, would you do that?
Like in.
In each portco, would you do itin your due diligence process?
Would it be, I'm gonna gobble upsome AI companies and hopefully
one of them will go.
Like, if you had to pick one,where would you, what would you
do?
rory-liebhart_1_09-17-2025 (28:41):
I'll go first and it's a great
question.
I, I think it's actually ofaround what Ed just mentioned to
me.
I would be using the tools asbest I can to.
Let's say optimize the targetcompany funnel for which I'm pro
prospecting for businesses to gobuy.
And so how, what I mean by thatis so much information on
(29:02):
private companies out there nowand you can benchmark data
attributes against othercompanies that maybe have a
similar, you know, kind ofindustry segment or you know,
whatever kind of commonalitiesyou can watch.
you can do it for companies thathave maybe gone a full life,
you, you basically track smallprospective companies and their
(29:26):
attributes compared to thesuccessful ones that have done
really well and gainedtremendous valuation.
You can say, okay, this has the,basically the, the, the building
blocks of being great.
So I'm gonna focus my effort onthis and build the relationships
there rather than like say,okay, I've got companies here.
Cross different, how do I, howdo I start?
(29:47):
I just throw an army of peopleat'em and you know, whatever.
But I think it would, it's justto me, it to basically
optimizing a sales funnel basedon data.
You know, like take, take thehuman element out of it that
piece of it as much as possibleand say, what attributes can I
compare to other successfuloutcomes?
And if I see the commondenominator attributes, let's
(30:08):
focus on those things.
You know, figure that out.
I mean, that, that's, that'swhere I think the most value
creation can be.
emily-sander_1_09-17-2025_15 (30:16):
It might even be able to back test
like, Hey, feed it this stuff.
What would it like?
Success factors.
rory-liebhart_1_09-17-2025 (30:22):
into that.
I mean, nothing, there's noliterally no boundaries at this
point.
The only boundary is what comes,what, what you can validate is
truth or bullshit when you getthe output.
sweet-eddie-b--yes-no-_1_ (30:34):
Yeah.
I, I would, I would actuallytake a different approach.
I actually think that isprobably the, that's gonna make
the private equity firms.
More effect, more effective.
I think what will actuallyimprove their return is gonna
rory-liebhart_1_09-17-202 (30:50):
Yeah.
sweet-eddie-b--yes-no-_1_0 (30:51):
that level of analysis within their
portfolio companies and reallygoing, okay, where can we
optimize?
'cause again, if you're goingpart of a private equity firm's
strategy, is to go from an eightx to a 15 x multiple on a
business.
And then how can I throwadditional dollars against that
multiple?
And there may be, and again, I,I've, my, my largest client is
(31:15):
essentially an insurance in, inthe insurance industry.
And can they process claimsusing AI and remove two thirds
of their pro, two thirds oftheir claims processing cost?
What would it take to do that?
a lot.
I mean, it's, there's a, it's,and
rory-liebhart_1_09-17- (31:33):
brainer.
sweet-eddie-b--yes-no-_1_09-1 (31:34):
a huge.
It's not a huge investmentrelative to the savings.
And so, you know, it's, it's howdo you prioritize that against
everything else, like any otherbusiness, but there's an
opportunity there.
Same thing with on the, on theother side, if I'm looking at
how do I invest, you know,Emily's like, well, do they
invest in a, in a, you know, oneof the AI companies and hope
that one hits?
(31:56):
I'm one if, you know, I, I walkthe walk, so this is what my
portfolio looks like.
I'm in that specialize in.
centers and power suppliers.
So, so basically the, theutilities
rory-liebhart_1_09-17-2025 (32:11):
Yep.
sweet-eddie-b--yes-no-_1_ (32:11):
areas that are high growth for data
centers.
So
rory-liebhart_1_09-17-2025_ (32:15):
Na.
Natural resources.
Yeah,
sweet-eddie-b--yes-no-_1_0 (32:17):
yep.
So I'm like, where, where arethose kind of, where's the picks
and shovels?
rory-liebhart_1_09-17-202 (32:22):
yeah,
sweet-eddie-b--yes-no-_1_09 (32:22):
if, if the're
rory-liebhart_1_09-17-202 (32:23):
yeah.
Infrastructure.
Yep.
sweet-eddie-b--yes-no-_1_09- (32:25):
if I'm wrong, they're still gonna
do fine.
rory-liebhart_1_09-17-202 (32:27):
Yeah.
sweet-eddie-b--yes-no- (32:28):
they're, and if I'm right, they're gonna
do better than fine.
you know, I'm, I'm more riskaverse
rory-liebhart_1_09-17-2025_15 (32:33):
I am with you on that.
Yep.
sweet-eddie-b--yes-no-_1_0 (32:34):
Than a typical, uh, typical person.
So, but I'm, that's where my,you know, and I get the
dividends, so God bless.
rory-liebhart_1_09-17-2 (32:41):
Mm-hmm.
sweet-eddie-b--yes-no-_1_0 (32:41):
I'm, so that's, that's where I would
be looking from an investmentperspective is kind of not the
cutting edge.
That's, like you said, I thinkRory, that's a venture play.
It's really the, okay, who'slayers behind that
emily-sander_1_09-17-2025 (32:56):
Yeah.
sweet-eddie-b--yes-n (32:56):
providing, you know, going back to the
internet age in, in 20, in 2000.
rory-liebhart_1_09-17-202 (33:01):
Yeah.
sweet-eddie-b--yes-no-_1_0 (33:02):
The, the smart, you could, you could
have hit on Google, but youprobably didn't, and you
probably missed on a, you know,pets.com, even a Yahoo, some of
those kind of things.
But the ones that did well, whowas in Cisco, who was in Oracle,
who was in kind of, who was inthe, the areas behind that, that
were able to, to, you know,really leverage themselves into
(33:26):
the infrastructure those folksdid.
Well, they may not have.
Hit the lottery ticket that somefolks did with some of the
investments, but they didextraordinarily well,
rory-liebhart_1_09-17-2025 (33:35):
Yep.
sweet-eddie-b--yes-no-_1_09-1 (33:35):
a significant period of time.
rory-liebhart_1_09-17-2025 (33:37):
Yep.
And add some leverage.
Do even better.
Yeah.
sweet-eddie-b--yes-no-_1_0 (33:39):
Yep.
emily-sander_1_09-17-2025_ (33:41):
Back to Rory's example.
What was, what was coming up forme when you were saying that is
could you have some AI screeningfor the founder?
The founders fit for the PEcompany.
And the reason I thought aboutthis is because we're in the
throes of football season andthe combine, they like do a
psychological analysis ofquarterback and like are, how
(34:01):
tall are you?
How much do you weigh?
But also like, do you have yourshit together mentally and
emotionally?
Can you lead a multimillion, ifnot billion dollar enterprise on
your shoulders?
That's not just anyone.
And I was like, they do allthese screenings and tests.
And could you not applysomething similar to like a
founder?
Like, are we gonna be able todeal with this guy or gal?
Um, could we put some screeningup there anyway?
rory-liebhart_1_09-17-202 (34:24):
about it.
Yeah.
sweet-eddie-b--yes-no-_1_ (34:24):
Yeah, I wonder if there's enough data.
I wonder if there's enough datato actually get you something
reliable there.
And I think you, you raise abigger concern, Emily.
Not as opposed to a, so I thinkyou, we look at it from a
founder perspective.
That's a significant risk
rory-liebhart_1_09-17-2 (34:41):
Mm-hmm.
sweet-eddie-b--yes-no-_1_09- (34:42):
in a PE investment.
I'm wondering also then, how fardown does that go?
So, you know, how far down doesthat go to the employees?
Does that go to your, your, youknow, life partner?
Does that go to your choice of adoctor?
Does that go?
So I think a again, and there'sa reliance on, on AI that, know,
(35:03):
we've talked about hallucinationa little bit here, but there's a
reliance on imperfect data.
rory-liebhart_1_09-17-202 (35:08):
Yeah.
sweet-eddie-b--yes-no-_1_09-1 (35:08):
I don't think at the end of the
day you can pull out, you know,you asked a lot of the the go no
go questions or Yes, noquestions at the beginning.
I think there's still elementsthere that require human
analysis of AI's output in orderto be able to action it.
I get nervous when we startapplying it to the softer the
(35:31):
skill, the more nervous I getbecause I feel like it's likely
to be.
It's gonna point you in ageneral direction, which is
probably accurate, and, butwithout putting nuance against
it, you're, you may make somevery poor decisions.
rory-liebhart_1_09-17-202 (35:44):
Yeah,
emily-sander_1_09-17-2025_15 (35:44):
I, I agree right now, and if and
when AI gets to the point where.
It does make a better decisionand you can rely on it 99.9% of
the time, then I think that'swhere it's like, okay, now we're
at a tipping point with thisthing where people have to start
making different decisionsaround it.
But yes.
(36:05):
All right.
As we wind down here, anythingelse big that the people should
know about with PE and ai?
rory-liebhart_1_09-17-202 (36:13):
Well, I'd just say the landscape is, I
mean, there's, there's, thehorizon is just like endless.
I mean, I'm, I'm curious, I, I'mcurious to see just how much
gets progress and even the next12 months, I feel like even the
last.
Six to 12 months I've seenthings reach new heights.
It's, it's quite wild, really.
(36:35):
Yeah.
Yeah.
sweet-eddie-b--yes-no-_1_09- (36:37):
is the
emily-sander_1_09-17-2025_150 (36:37):
I feel.
sweet-eddie-b--yes-no-_1_0 (36:37):
I've seen to the 2000 internet, you
know, 1995 to 2001 internet boomlikely similar outcome, by the
way, um, where you're gonna havesome survivors make it through
in a bunch
rory-liebhart_1_09-17-2025_15 (36:51):
I totally agree with that.
emily-sander_1_09-17-2025_ (36:52):
Hmm.
sweet-eddie-b--yes-no-_1_ (36:52):
crash and burn.
Um, but it's also, I think thattransformative, I think you hit
on a m there is gonna be apoint.
Not too distant future where thereliability of AI is gonna be
significantly better than thereliability of human instinct.
And it's really gonna be how dowe adapt to that as as
individuals and as businesspeople to be able to of be
(37:17):
successful in an environmentthat I think is gonna be
transformed in the next decade.
rory-liebhart_1_09-17-202 (37:21):
Yeah.
emily-sander_1_09-17-2025_150 (37:22):
I think this will be a recurring
topic for, for, for us certainlyin this podcast.
We might do part two, partthree, even in six months, 12
months time.
But, uh, for right now, we'llcall it a wrap on the Private
Equity Experience Podcast and wewill catch you next time.
Thanks Rory.
Thanks, ed.
sweet-eddie-b--yes-no-_ (37:38):
Thanks.
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