FTI Consulting Releases 2025 Private Equity Value Creation Index Highlighting Shift Away from M&A and Rise of AI Strategies

FTI Consulting's 2025 Private Equity Value Creation Index indicates a strategic shift among private equity leaders, with M&A ranking as the least prioritized value creation lever (only 9% identify it as a top concern) due to integration and valuation challenges. While traditional cost optimization remains dominant, Artificial Intelligence has emerged as the top strategic priority for 2025, despite being among the least frequently used and most challenging to implement. The report highlights a significant execution gap between intent and action, particularly in leveraging AI and other growth strategies, underscoring that future value creation will depend on successful integration of these innovations beyond conventional financial engineering.

Analysis

FTI Consulting's (FCN) 2025 Private Equity Value Creation Index reveals a cautious industry landscape, with a significant strategic shift away from M&A, which now ranks as the lowest priority among ten value creation levers for PE leaders. Only 9% of respondents identified M&A as a top priority, citing it as the worst-performing lever. Concurrently, Artificial Intelligence has emerged as the top strategic priority, yet it remains one of the least utilized and most challenging to implement, highlighting a critical execution gap between intent and capability. While this report positions FCN as a thought leader on key industry trends, the underlying market sentiment is negative. This is corroborated by significant bearish signals, including two recent open-market sales by top executives—the CFO and General Counsel—with no corresponding insider purchases. Furthermore, institutional ownership data shows a net outflow, with 250 firms decreasing their positions versus 208 adding. Notably, major asset managers like Neuberger Berman, T. Rowe Price, and Pacer Advisors have almost entirely liquidated their holdings in the most recent quarter, suggesting a lack of confidence from sophisticated market participants.

Key Decisions for Investors

• Given the substantial insider sales by key executives and large-scale divestment by institutional investors like Neuberger Berman and T. Rowe Price, investors should exercise significant caution and consider reducing exposure to FCN.
• The report's emphasis on the AI execution gap presents a 'show-me' story for FCN; investors should monitor the company's ability to translate this industry challenge into tangible revenue growth in its technology and strategic consulting segments.
• With M&A activity identified as the lowest priority for private equity firms, investors should assess potential headwinds for FCN's M&A-related advisory services, which could face diminished demand in the near term.