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In a recent review of a private equity portfolio for AI Defensibility, we found that every portfolio company had some opportunity to improve, through internal improvements, M&A, or both.
And the amount of improvement potential was independent of how long the company had been held.
The chart below shows 20 of those companies. The x-axis shows the gains each company could make through internal improvements. The y-axis shows further gains from targeted M&A: one acquisition and one partnership. Both are measured in percentile points versus PE exits. The color shows how long the company has been held, with darker meaning held longer.
There is no correlation. Look at companies T and L: one of the oldest and one of the newest in the portfolio. Both could strengthen their position significantly with internal and inorganic steps.
It’s always the right time to be improving companies.
Method: 29 submetrics, 5 metrics, and one rollup AI Defensibility Index score, benchmarked against 249 PE company exits from the last 18 months.
