AI's Role in Due Diligence and Investment Evaluation

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode provides a fascinating window into the world of private equity value creation and how AI can help transform both portfolio company and investment firm processes and operations to create value.

We sat down in New York with Hg Partner and Head of Value Creation Chris Kindt to dive into how he spearheaded the growth of the firm’s in-house value creation efforts and has built a high-performing team to meet the evolving needs of portfolio companies.

Chris brings 15 years of experience in architecting and driving value creation to bear, with 11 years of experience at Hg and another 8 years as a consultant at BCG and Parthenon.

Chris and his team are responsible for driving value across a portfolio of 55 companies that represents over $180B in enterprise value and would represent the second largest software company in Europe after SAP if it were a conglomerate.

Chris and I had a thought-provoking discussion about value creation and the impact of AI on investing and operating companies. We discussed:

• How to build a high-performing value creation team.
• Where value creation has the biggest impact.
• How AI is transforming investment processes.
• How Hg has become an “AI-first” investment firm.
• Where AI will have the most impact in a company today and why agentic AI is transforming certain roles and processes within companies.
• How professionals can generate the most leverage from utilizing AI – without having cognitive decline.
• Why prompting and prompt engineering is so critical in the age of AI (and how you can use your weekends to perfect prompt engineering).
• How a management team can buy into AI and why the current time period represents an interesting opportunity for incumbents, particularly for those building mission-critical enterprise software.

Thanks Chris for sharing your expertise and wisdom on company building and AI. We hope you enjoy.

Note: this episode was filmed in August 2025.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.

Show Notes
00:00 Message from our Sponsor, Ultimus

01:18 Welcome to the Alt Goes Mainstream Podcast

02:10 Guest Introduction: Chris Kindt

03:58 Chris Kindt’s Background and Journey

05:43 Value Creation at Hg

06:55 Pre-Investment and Diligence Process

07:44 Management Team Dynamics

08:40 Common Value Creation Interventions

11:14 Building a Cross-Functional Team

12:31 Scaling the Value Creation Team

15:40 Measuring Value Creation Impact

17:49 Investment Philosophy: Inch Wide, Mile Deep

19:28 Partnerships with Management Teams

20:03 Embedding AI in Value Creation

20:24 Internal vs External AI Applications

21:47 AI First Culture

22:18 Effective AI Utilization

24:04 Prompt Engineering and Whispering

26:25 Choosing the Right AI Models

26:50 AI Models: Strengths and Weaknesses

27:42 Transformative Impact of AI

28:21 Skills Needed in the AI Era

28:26 AI's Role in Investment Firms

28:55 Core Insights and Judgements

29:04 The Core Skillset and Efficiency

29:12 Philosophical Questions on AI and Talent Development

30:18 Building Grit in the Age of AI

31:12 Maintaining Discipline with AI

32:08 AI as a Value Creation Lever

32:35 Operational Efficiency and Copilots

33:43 Emergence of Reasoning Models and Agentic Frameworks

34:31 10x Efficiency in Engineering

36:24 Challenges in Implementing AI

37:16 AI Immersion Strategy Days

39:52 Organizational Agility and AI

42:15 AI's Impact on Investment Strategies

43:26 AI in Mergers and Acquisitions

45:29 The Importance of Proprietary Data

47:12 AI Fatigue and Disillusionment

48:07 Building AI Products and Agentic Products

48:58 Hg's Internal AI Incubator

49:59 The Next Wave of AI

51:19 Voice and Multimodality in AI

51:55 Globalization and Internationalization of AI

53:35 Overestimating and Underestimating AI's Impact

54:54 The Competitive Landscape of AI

55:42 The Future of Value Creation with AI

56:23 Conclusion and Final Thoughts

Editing and post-production work for this episode was provided by The Podcast Consultant.