Newsroom

AI Diligence Is Becoming a Deal Condition

A 2026 report found that 68% of private equity leaders now cite AI risk management as their top operational focus.

Newsroom May 2026

Something has shifted in how private equity firms approach AI in their portfolio companies. It is no longer purely an operational question, what tools are being used, what efficiency gains are on the table. It is becoming a valuation and risk question, and increasingly a diligence condition.

A 2026 report found that 68% of private equity leaders now cite AI risk management as their top operational focus. Separately, analysts covering the sector have noted that responsible AI frameworks covering bias, transparency, and governance are moving from good practice to non-negotiable, with firms expected to assess AI risk during diligence and verify compliance post-close. Regulatory exposure sitting inside a portfolio company that was not surfaced at acquisition is a problem that lands on the acquirer.

The practical difficulty is that most portfolio companies cannot answer the questions being asked of them. They can describe what their AI systems do. They cannot demonstrate, with any rigour, how those systems reached specific conclusions, what data was weighted, or whether the decision trail would survive regulatory scrutiny.

This is not a documentation problem. It is an infrastructure problem. You cannot produce a credible audit trail from a system that was never built to generate one.

PE firms that understand this distinction will increasingly treat provable AI infrastructure as a diligence signal, both a risk indicator in acquisition targets and a value driver in assets being prepared for exit. The firms that get there first will have a structural advantage in an environment where AI governance is moving from boardroom concern to deal condition.