Private equity firms are spending more time focused on the companies they already own. With deal activity slower and hold periods extending, the focus naturally shifts toward what sponsors can control: strengthening portfolio company performance and creating more value from existing investments.
That raises an important technology question: Is the technology keeping pace with the business and the investment thesis?
A longer hold period shouldn’t simply mean more time owning the same business. It creates more time to strengthen operations, pursue growth opportunities, and address areas that can either accelerate or constrain value creation.
Technology is increasingly one of those areas.
Is Technology Keeping Pace With the Business?
A lot can change over the course of an investment. A portfolio company may grow significantly, complete add-on acquisitions, enter new markets, add customers and employees, and become much more complex than the business originally acquired. At the same time, expectations around data, cybersecurity, automation, and AI continue to move quickly.
Technology that was adequate at acquisition may not be adequate for the business several years later.
We see this play out in different ways. Reporting becomes harder. Integrations take longer. Manual processes begin affecting efficiency. Technical debt accumulates. Key-person dependencies become more significant. Data remains fragmented across systems. The business wants to pursue AI, but the underlying technology and data foundation may not be ready for it.
These aren’t simply IT issues. Over time, they can become business issues that affect the execution of the value creation plan.
That’s why the technology conversation during the hold period needs to move beyond “Is IT working?”
The more important question is: “Can our technology support where we need to take this business?”
Bring a Quality of Tech Perspective to the Hold Period
IT Ally’s proprietary Quality of Tech (QoT™) methodology provides a business-focused approach to evaluating technology through the lens of risk, opportunity, scalability, and enterprise value.
During the hold period, that perspective becomes particularly valuable because the technology priorities of the business may have changed significantly since the original investment.
The focus isn’t on creating a long list of IT projects or modernizing technology for technology’s sake. It’s about understanding where technology is supporting the investment thesis, where it may be creating constraints, and where targeted improvements can have the greatest impact on the business.
For one portfolio company, that may mean addressing technical debt that is beginning to limit scalability. For another, it may mean improving data and reporting, strengthening cybersecurity and governance, preparing for future add-on integrations, or reducing manual processes through automation.
The specific priorities will be different for every business. What matters is connecting those priorities back to the value creation plan.
“Whether your exit is months away or years down the road, the hold period is where technology should be actively engineered for value. Use that time to strengthen the business, accelerate the investment thesis, and build enterprise value for exit.”
Michael C. Fillios, Founder & CEO, IT Ally
AI Is Raising the Stakes
AI adds another dimension to this conversation.
Portfolio companies are looking for ways to use AI to improve productivity, automate processes, strengthen decision-making, and create new opportunities for growth. But meaningful AI adoption requires more than choosing a tool or launching a pilot.
The underlying data, systems, processes, and governance matter.
Fragmented data, disconnected systems, technical debt, and unclear governance can make it much harder to move from AI experimentation to measurable business value.
That is why AI opportunities should be considered in the context of the company’s broader technology environment. Where are the highest-value use cases? Is the underlying foundation ready? What needs to change first? And where can AI realistically support the investment thesis?
An extended hold creates more time to answer those questions and act on them.
Don’t Wait for the Next Transaction
Technology tends to receive significant attention during diligence. Once the transaction closes, however, the focus naturally shifts toward operating the business and executing the value creation plan.
The risk is allowing technology to remain in the background until the next transaction puts it back under scrutiny.
By then, the questions become more urgent. Can the technology scale? How much technical debt has accumulated? Is the cybersecurity environment mature? Can the systems support future growth or acquisitions? Is the data reliable? What investments will be required by the next owner?
Those are much better questions to address during the hold period, while there is still time to do something about the answers.
This is also why QoT™ extends beyond a point-in-time diligence assessment. IT Ally uses the QoT™ methodology across the investment lifecycle to evaluate how technology risk, capability, and opportunity align with the business and the investment thesis.
The questions may change from acquisition to hold period to exit, but technology’s influence on value does not. This is consistent with your strategy to position QoT™ across the full investment lifecycle rather than only diligence.
Put the Hold Period to Work
A longer hold creates an opportunity to take a more deliberate look at the technology behind the business. Where is it supporting growth? Where is it creating friction? What risks are becoming more significant? And which opportunities could create meaningful value over the remainder of the investment?
The answer isn’t necessarily to spend more on technology.
It’s to make better technology decisions based on the investment thesis and the outcomes that matter most to the business.
A longer hold period isn’t extra time to wait. It’s extra time to create value.
Through our proprietary Quality of Tech (QoT™) methodology, IT Ally helps sponsors and portfolio company leaders identify and prioritize the technology risks and opportunities that matter to growth, scalability, and enterprise value.
Ready to make technology a more active part of your value creation plan?
Use the hold period to turn technology into a value creation lever, strengthening scalability, enabling growth, and building greater enterprise value throughout the investment lifecycle.
