PE leaders shift focus from financial engineering to operational value creation, with M&A and AI leading the charge
Private equity's playbook has fundamentally changed. Firms can no longer generate returns by buying cheaply and loading up on debt; they now have to build value from within portfolio companies and do it faster than ever.
That's the central finding of FTI Consulting's second annual Private Equity Value Creation Index, a global survey of more than 550 senior PE leaders across 14 countries that for the first time identifies a cohort of consistent outperformers and examines what separates them from the rest.
The most dramatic shift in the data is M&A's resurgence. After ranking dead last among value creation levers in 2025, deal activity has vaulted to the top priority for 2026, a seven-place swing in a single year.
The catalyst isn't a change in philosophy but greater stability in the cost of capital, improved tariff visibility and a more predictable regulatory environment have given dealmakers the confidence to act. Among firms surveyed, 51% say they are exceeding their M&A business case, making it the second-highest performing lever overall.
Execution, however, remains the weak link and only 35% describe M&A implementation as efficient or very efficient, making it the hardest lever to execute across the entire survey.
Across all respondents, 63% report that their value creation levers now deliver measurable results within 12 months, up sharply from 41% the year prior. Cash conversion and cost structure optimization lead the pack, with 82% and 73% respectively delivering near-term results — tools that generate early margin headroom to fund longer-cycle strategies. M&A remains the notable exception, with only 25% seeing results within a year.
AI trajectory
The share of firms seeing tangible AI-driven results within 12 months nearly doubled, rising from 34% to 66% year over year.
The difference between the firms winning with AI and those simply deploying it is substantial. Among top performers, 19% exceeded their AI business case versus just 5% of others, a gap of 3.8 times. The divergence has little to do with adoption rates, which are broadly similar across both groups, and far more to do with governance, talent depth and applying AI to specific high-impact levers such as pricing, cost structure and workforce management.
AI's importance as a standalone factor for buyers collapsed from 59% to just 12% in a year, signaling that acquirers no longer treat AI readiness as an independent value driver. What buyers now prioritize at exit is margin expansion and operational efficiency, cited by 62% of respondents as the most critical exit factor, up from 46% a year earlier.
