This piece first appeared in German. The English version is a rewrite rather than a line-by-line translation, and the answers below are translated: the substance is unchanged, the wording is not the speaker's own. The German original stays online in the archive: KI in PE: Interview mit KKR Managing Director Hagen Raab.

All answers are the personal assessments of the interviewee and are not to be read as an official statement by his employer.

Two thirds of value creation in private equity now comes from operational improvement, according to Hagen Raab, a managing director at KKR. Debt financing used to do that work. The shift explains why he sees AI as a central lever rather than an add-on, and the conversation below runs from deal sourcing through to what a first job in the industry now requires.

Where AI lands in a private equity firm

How do you see the role of AI in private equity over the next five to ten years?

AI is already present in many areas and its significance will keep growing, and in private equity I see three central fields.

Deal sourcing: AI can screen markets systematically, search large volumes of data and identify relevant companies. In funnel management especially, where hundreds of potential targets get analyzed, that saves an enormous amount of time.

Analysis and decision processes: in due diligence, AI speeds up the review of documents and key figures. In investment committees it could in future act as an additional voice, for risk assessment or as a complement to human judgment.

Investor relations and fundraising: AI can find new investors, evaluate media and networks, and support personalized communication, from research through to individual letters.

Portfolio management opens up as well. AI can monitor key performance indicators, spot trends early and make risks more visible. Over five to ten years I expect it to be a fixed component of every business area.

Where are the biggest opportunities, and the biggest risks?

The opportunities lie in efficiency. AI makes working processes faster and more precise, which makes teams more productive and projects more profitable. It also opens new perspectives, through deeper market analysis or through business areas nobody had looked at.

There are risks too. Confidentiality: private equity rests on trust, and uncertainty about how AI systems handle sensitive data is a potential problem. Communication and relationships: AI-generated text quickly reads as superficial, which can undermine authenticity and weaken relationships. And loss of competence, which I see particularly among younger staff, where essential capabilities such as research, analytical thinking and precise writing no longer develop to the same degree. Anyone who becomes too dependent risks losing skills over the long run.

What role does bias play in AI-supported processes?

Bias is a central issue. AI is only as good as the data it is trained on, and distorted data produces distorted results automatically. Recruiting shows it best: use historical résumés as the basis and existing patterns get reproduced, which works against diversity.

The technology is improving, and with the right data sources and clear prompts many of those risks can be reduced. What stays decisive is that results get checked critically. AI may support the process, and responsibility for fairness and transparency sits with people.

How does AI change the profile of a professional in private equity?

AI increasingly takes over standard tasks, from screening through to draft presentations, which means younger people have to position themselves differently. My advice is to become an AI champion: somebody who does more than use the tools and actively shapes how they are deployed in the firm.

Classical capabilities gain weight at the same time: critical thinking, understanding of context, the ability to transfer. AI recognizes patterns, and placing them, evaluating them and deriving a strategy remains human work. The people who do well use AI as a sparring partner while continuing to develop their own competence.

The market around the deals

How has the business environment for private equity changed in recent years?

Private equity has gained considerable importance. More companies are turning to private financing while the number of listed firms falls worldwide, and the advantage is obvious: less public exposure, less pressure from quarterly reporting, more room for long-term planning.

The current environment is marked by cautious capital flows. Many investors are waiting for sentiment to improve, and the market for public listings is weak, with numerous companies postponing planned flotations until conditions look more attractive. Private equity matters here because it can restart that cycle, providing capital and accompanying companies through a phase when public markets stay closed.

Geopolitical uncertainty adds to the caution. Conflicts, trade questions and macroeconomic risk make long-term, stable sources of capital more sought after. For institutional investors such as insurers, pension funds and family offices, private equity is attractive on two counts: the prospect of high returns, and comparatively low volatility. In the United States it has established itself as one of the central financing forms, and Europe is catching up.

What role does technology play in deal-making now?

Technology has become the decisive factor. Companies that do not digitize risk being left behind by competitors. Within deal-making itself AI grows more important: it can identify potential targets, work through company data, and support investment committees by making opportunities and risks visible faster.

AI does not replace people, and it can accelerate decision-making considerably. It supplies the base on which experienced professionals then form their judgments.

Where are the biggest challenges for private equity in the coming years?

The goal stays the same: increase company value, through organic or inorganic growth, through operational improvement or efficiency. What differs from the past is that value generation rests less on debt financing and more on genuinely developing the businesses.

Two thirds of value creation in private equity now comes from operational improvement. AI is a central lever there, through process optimization, better data analysis, or new marketing and sales strategies. Whoever uses that potential consistently will be ahead.

What do you expect today from a chief restructuring officer?

Restructurings are exceptional situations, and they need clear communication, steady nerves, and the ability to bring staff with you. Trust is the key, because a workforce supports change only when it understands the strategy and knows the goal.

One effective instrument is employee ownership, meaning participation of all employees in the equity. It strengthens motivation and a sense of responsibility, reduces turnover and encourages entrepreneurship inside the company. In difficult phases that alignment can decide whether change succeeds.

Getting in, and what gets you noticed

What do you advise young people who want to enter private equity?

It is a fascinating industry with a lot of room to shape things. A solid education and good grades count for entry, and relying on those alone is no longer enough.

Firms are looking for variety, and the demand covers scientists, engineers and lateral entrants with particular capabilities as much as classical business profiles. What counts is the combination of technical excellence and personality. Gather practical experience early, through student clubs, consultancies or internships, and develop strengths that distinguish you from everybody else.

What separates the high potentials of tomorrow from those of yesterday?

Grades and the name of the university used to be what mattered. Today variety, commitment and personality weigh as heavily. The high potentials of tomorrow bring academic performance and experience from outside the university: sport, cultural projects, social organizations. That range shapes character and widens perspective.

So it is not only about IQ. Teamwork, communication and creativity matter as much. Firms want talent that brings impulses and does more than fit a pattern.

What helped you most in your own career?

A clear vision, in my case the combination of finance and marketing. Alongside that came many internships, memberships in student organizations and time abroad, and that mixture strengthened my résumé and opened doors.

The exchange with people who inspired me was the most valuable part. Student clubs often gave me practical insight and also contacts who still shape how I think. My advice is to look actively for people who inspire and motivate you, which frequently matters more than any individual course.

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