The case for platform-led value creation in private equity

Private equity is entering a cycle in which technology, rather than financial engineering alone, will determine long‑term winners and losers. Over the past two years, across carve‑outs, integrations and standalone builds, one pattern has become unmistakable: AI is reshaping how value is created, and portfolio companies can no longer rely on inherited systems, parent‑company platforms or deferred modernization to compete.

As AI begins to touch every business function, newly independent entities face a common challenge. They must establish clean data environments, secure digital platforms, modern cloud foundations and real‑time workflows at the very moment a separation begins. This is no longer a downstream IT concern. These foundations now sit at the center of synergy capture, transitional services agreement (TSA) efficiency, integration success and ultimately earnings before interest, taxes, depreciation and amortization (EBITDA) performance.

In 2026, platform execution itself becomes part of the deal thesis — the core strategic hypothesis explaining why an acquisition makes sense and how it will create value.

This shift is increasingly consistent with how the most advanced thinking in the market describes the impact of AI on private equity holding companies. Across recent research, operating experience and deal post‑mortems, a clear message is emerging: AI is not simply a tool for portfolio optimization but also a force that is reshaping how private equity firms operate as owners, value creators and allocators of capital. Advantage is moving away from one‑off functional initiatives toward repeatable, firm‑wide platforms that compound learning and performance across the portfolio.

AI changes everything (including Day‑1 expectations)

What is changing most rapidly for private equity operators is not the existence of AI but the speed at which it demands readiness. Parent firms rarely transfer what a carved‑out business actually needs: scalable cloud platforms, zero trust identity management, unified data, modern networks and platform engineering capability.

As a result, Day‑1 readiness now requires far more than stable infrastructure. It demands intentional design from the outset:

• Zero trust identity management and secure connectivity
• Hybrid cloud landing zones provisioned before close
• Observability and automation embedded from the start
• Data continuity and architectures that support AI‑driven workflows

Without these capabilities, instability appears early — the fastest way to erode deal value.

Increasingly, the most material risks in transactions are operational: separation delays, undocumented dependencies, fragile inherited environments, restricted access to parent systems and rapidly escalating cloud, software-as-a-service (SaaS) and AI costs during transition. Many deals lose momentum here, long before synergies have a chance to materialize.

Cloud modernization as a direct value lever

In practice, the fastest returns often come from platform consolidation, cloud‑native modernization, hybrid landing zones and the early introduction of platform engineering with Day‑2 operations led by site reliability engineering (SRE). These moves reduce fragility, speed up stabilization and unlock cost efficiencies that compound over time.

When cloud transformation begins early (ideally pre‑close), firms consistently see measurable outcomes:

• A 20%–40% reduction in technology run‑rate
• Roughly a 25% reduction in application footprint
• A 25%–50% faster TSA exit
• 3–7 points of EBITDA uplift

These results are not theoretical. They recur when firms commit early to modern cloud and data architectures.

A persistent misconception is that cloud modernization is too expensive to initiate on Day 1. In reality, delays almost always cost more. Parent support unwinds sooner, cloud spending rises without governance and AI readiness pressures intensify. Firms that modernize early also avoid the trap of running newly independent businesses on platforms designed for organizations 10 times their size. Right‑sizing has become a strategic necessity.

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4 cloud imperatives in mergers and acquisitions in 2026

Looking ahead, four imperatives are emerging as consistent drivers of value creation.

1. Accelerate Day‑1 readiness with modern foundations

The most common sources of instability are fragmented identity, legacy networks with undocumented dependencies, limited observability and the absence of platform engineering or SRE capability.

In contrast, high‑performing Day‑1 environments include hybrid cloud landing zones, zero trust identity, unified observability, AI‑ready data platforms, automated Day‑2 operations and predictable opex through disciplined FinOps. These foundations reduce disruption and allow leadership teams to focus on customers, revenue and execution rather than infrastructure recovery.

2. Reduce transition friction and TSA exposure

TSAs fail for predictable reasons: underestimated dependencies, constrained access to parent systems, platforms that cannot scale and interim cloud, and SaaS and AI costs that balloon unexpectedly.

Cloud‑led modernization changes this dynamic. It shrinks TSA scope, accelerates cutover through automation, simplifies separation via application rationalization and reduces risk through modern identity, network and observability architectures. Firms that master this consistently realize synergies faster.

3. Unlock spend efficiency and predictable opex

Value is often lost quietly through duplicate SaaS, uncontrolled cloud consumption, expensive tooling and overprovisioned environments. Regaining control requires strong FinOps, platform and vendor consolidation, adaptive workload placement and standardized identity, integration and data patterns.

Hybrid adaptive cloud-platform-as-a-service models are particularly effective. They balance hyperscaler economics with cost discipline while preserving the elasticity and developer experience that modern teams expect.

4. Modernize inherited estates to protect deal value

Many carve‑outs inherit complex environments never designed to stand alone. These systems slow integration, obscure forecasting and make AI adoption impractical.

The fastest modernization gains come from consolidating revenue systems, building unified data platforms, modernizing integration and application programming interface (API) layers and standardizing hosting and container technologies. This is not incremental uplift; it is central to the investment thesis. Without modernization, value creation stalls. With it, EBITDA expansion becomes repeatable.

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A platform‑led transformation roadmap

Successful transformations follow a clear operating sequence.

• Phase 1: Predeal and TSA planning
  Identify integration and data dependencies early, define the Day‑2 operating model and establish identity and cloud foundations before close. TSA design should reflect the target operating model, not inherited constraints.
• Phase 2: Day‑1 stability and separation execution
  Preparedness is critical: preprovisioned cloud, network and identity; unified observability; tested runbooks; and SRE‑led incident response.
• Phase 3: Value capture through modernization
  Application rationalization, cloud and SaaS optimization, unified data platforms, AI‑assisted automation and modern DevOps workflows deliver the earliest and most durable synergies.
• Phase 4: Portfolio standardization and scalability
  Leading firms standardize landing zones, identity, security and observability; reuse data and integration platforms; and build core capabilities in platform engineering, SRE and FinOps. Reusable TSA templates, shared delivery teams and institutional learning reduce cycle time across the portfolio.

What success looks like in 2026

Across recent programs, clear benchmarks are emerging: 20%–40% run‑rate savings, 25% or greater application reduction, materially faster TSA exits, AI‑ready platforms built on unified data, and stronger operational resilience driven by observability and SRE.

Teams are often surprised by how quickly cloud and AI spending escalates without governance, and by how much complexity can be removed post‑close without disrupting operations. They are equally surprised by the stability gains that follow once platform operations become foundational.

Hybrid adaptive cloud, paired with disciplined FinOps and platform engineering, continues to be one of the most cost‑efficient modernization paths available.

Cloud as the mechanism of deal execution

Cloud is no longer just infrastructure. It is the mechanism through which separations are executed, revenue systems stabilized, AI operationalized and value accelerated. It is inseparable from the modern deal thesis.

The implication for private equity leadership is clear. Platform capability can no longer be treated as a supporting function or delegated entirely to portfolio companies. It must be intentionally designed, funded and governed at the holding‑company level, with the same rigor applied to capital allocation and risk management.

In 2026, the firms that outperform consistently will be those that embed platform thinking into every deal from Day 1, treating cloud, data, security and operations as repeatable systems of advantage. These organizations will move faster, intervene earlier and compound learning across their portfolios.

The industry is already shifting toward platform‑led value creation. The remaining question is not whether this model will prevail, but which firms will operationalize it soon enough to capture its full advantage.

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