Private equity firms do not evaluate technology partners the way most vendors expect.

While diligence conversations focus on tools, platforms, credentials, and prior experience, real evaluation begins after the deal closes, when execution pressure increases and portfolio realities surface.

In practice, private equity firms evaluate technology partners based on whether technology execution accelerates value creation or becomes a source of drag across the portfolio. This evaluation is informal, continuous, and outcome-driven.

This article explains how technology partners are actually evaluated in private equity environments, why many partners struggle after being selected, and what portfolio leaders should look for when choosing and working with technology partners post-close.

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How Private Equity Firms Define Technology Value Creation

In private equity portfolios, technology value creation is not defined by innovation narratives or architectural ambition.

It is defined by outcomes that support the investment thesis.

Specifically, PE firms look at whether technology execution:

• Improves operating cadence rather than slowing it down
• Reduces integration and execution risk
• Enables leadership to make faster and more confident decisions
• Supports scalable growth without increasing fragility

When technology execution fails to deliver these outcomes, it quietly erodes value even if no major system failures occur.

Research from Boston Consulting Group shows that digital initiatives alone deliver 15–20% ROI, while organizations that layer AI on mature digital foundations can reach 30–35% total returns.(Link)

This definition is important because it differs materially from how many technology vendors define success.

Also read: Application Modernization with Kubernetes: Driving Business Impact , how modern architectures improve scalability, resilience, and long-term operating efficiency.

When Technology Partner Evaluation Really Happens

Most technology partners assume evaluation happens during diligence. That is rarely the case.

Diligence establishes baseline comfort. It answers questions such as:

• What systems exist today
• Whether there are obvious red flags
• Whether the technology environment is broadly serviceable

What diligence does not reliably answer is how difficult it will be to execute change.

Actual evaluation begins after close, typically within the first 30 to 90 days, when:

• Integration work starts
• Reporting expectations increase
• Value creation initiatives move from planning to execution

This is when PE firms begin observing how technology partners behave under pressure.

Who Is Actually Evaluating Technology Partners in PE Environments

Technology partner evaluation in private equity is not centralized in one role.

Different stakeholders evaluate partners from different vantage points.

• PE operating partners focus on execution velocity, predictability, and risk reduction.
• Deal teams care about whether execution risk was underestimated and how quickly issues surface.
• Portfolio CEOs care about whether technology enables or constrains operating priorities.
• Portfolio CIOs and CTOs assess whether partners understand post-M&A realities and can operate with limited internal capacity.
  

A partner may appear effective to one group while losing credibility with another. Sustained success requires alignment across all of these perspectives.

Post-merger integration is where value is often won or lost. Studies show 30–50% of deal value can be lost due to slow or ineffective IT integration, highlighting why execution certainty is a board-level concern(Link)

The Portfolio Reality Technology Partners Must Operate Within

Most PE-backed portfolio companies share a common operating reality after acquisition.

• Internal technology teams are usually sized for maintenance, not transformation.
• Acquisitions introduce parallel systems that persist longer than expected.
• Data is fragmented across entities with inconsistent definitions.
• Reporting is designed for compliance rather than decision-making.
• AI initiatives are often discussed before foundational data issues are resolved.
  

Technology partners are evaluated based on how effectively they operate within these constraints rather than in idealized environments.

Also read: AI in Data Cleansing: why reliable, well-governed data foundations are critical for leadership decision-making and analytics confidence.

The Four Criteria PE Firms Use to Evaluate Technology Partners

1. Decision Velocity

The first evaluation criterion is decision velocity.

PE firms watch how quickly technology partners help force clarity on early decisions that are expensive to reverse later.

These decisions commonly include:

• How long multiple ERPs will coexist
• Which systems are considered authoritative for reporting
• Who owns data quality across business units
• Where analytics and AI experimentation are allowed and governed

Partners who defer these decisions in the name of flexibility often create long-term execution friction. Partners who help lock them early tend to reduce downstream risk.

2. Execution Certainty

Execution certainty matters more than methodology in private equity environments.

When timelines shift repeatedly or ownership remains unclear:

• Integration milestones slip
• Hiring decisions are delayed
• Analytics and AI initiatives remain in pilot stages

PE firms favor technology partners who provide realistic timelines, surface risks early, and maintain predictability even when information is incomplete.

Execution certainty stabilizes operating cadence across the portfolio.

3. Operating Model Fit

Most portfolio companies do not have excess execution capacity.

It is common to see companies with revenues between $50 million and $500 million operating with two or three internal engineers while being expected to integrate acquisitions, modernize platforms, and improve reporting.

Technology partners who assume strong internal ownership often struggle in this environment.

Partners who can add execution capacity without increasing permanent overhead align better with private equity constraints and are evaluated more favorably.

4. Referenceability in Post-M&A Conditions

In private equity contexts, references are evaluated based on relevance rather than brand recognition.

PE firms listen for experience with:

• Post-acquisition data fragmentation
• Parallel ERPs and overlapping systems
• Undersized teams operating under execution pressure
• Technology initiatives that stalled and the reasons they stalled

Partners who can speak clearly about what broke, what took longer than expected, and how tradeoffs were managed tend to earn trust faster.

Why Many Technology Partners Struggle After Being Selected

Many technology partners are selected based on diligence performance but struggle post-close.

Common reasons include:

• Underestimating the impact of limited internal capacity
• Treating early decisions as reversible when they are not
• Focusing on tools and architecture rather than execution sequencing
• Lacking experience operating across multiple portfolio companies

These issues do not usually result in immediate failure. Instead, they slow execution incrementally until value creation timelines slip.

How Strong PE Firms Reduce Technology Execution Risk Early

Private equity firms that consistently realize technology-driven value creation take a more deliberate approach post-close.

They:

• Treat technology as a primary value creation workstream
• Force early decisions on systems, data, and governance
• Align execution plans with actual team capacity
• Add execution capacity in flexible ways rather than permanent hiring

This approach reduces execution uncertainty during the period when decisions have the greatest impact.

How Technology Decisions Affect Portfolio Performance Over Time

Technology execution rarely destroys value through a single event.

More often, value erosion occurs through:

• Delayed integration and synergy realization
• Slowed analytics and AI adoption
• Reduced confidence in reporting and forecasts
• Compressed execution timelines later in the hold period

Technology partners are evaluated based on whether they prevent these outcomes.

Also read: Metrics to Measure Application Modernization ROI , the KPIs leadership teams use to validate technology investments and protect value creation timelines.

Where Ideas2IT Fits in PE Environments

Ideas2IT works with private equity firms and PE-backed portfolio companies using operating models designed specifically for post-acquisition and value creation environments.

Our work typically includes:

• Post-close technology and data assessments focused on execution risk
• Integration and modernization roadmaps aligned with team capacity
• Data foundation and analytics programs that support decision-making
• Scalable execution models that add delivery capacity without permanent overhead

The objective is not activity. The objective is predictable execution that supports value creation timelines.

What Portfolio Leaders Should Evaluate When Working With Technology Partners

CEOs, CIOs, and PE operating partners should evaluate technology partners using the following questions:

• Are early technology decisions being explicitly locked or quietly deferred
• Are execution timelines stable and realistic
• Does the operating model align with limited internal capacity
• Is data reliable enough to support leadership decisions
• Are technology initiatives reducing or increasing execution uncertainty

Clear answers to these questions correlate strongly with value creation outcomes.

What to Do If You Are Evaluating a Technology Partner Right Now

If you are within the first 90 days post-close or planning a major initiative, the most effective step is to assess execution feasibility before plans harden.

This typically involves:

• Pressure-testing decision points
• Evaluating change capacity
• Sequencing initiatives based on operating reality

Early clarity reduces downstream rework and prevents execution drag.

Next Steps

Ideas2IT supports private equity firms and PE-backed portfolio companies through:

• Post-close technology execution risk assessments
• Integration and modernization programs
• Data, analytics, and AI foundation initiatives
• Scalable execution capacity models

If you are evaluating technology partners or concerned about post-close execution risk, an early assessment can surface issues while decisions are still affordable to change.

Request a Post-Close Technology Execution Assessment and discuss technology support for your portfolio.