Private equity firms are fundamentally altering their approach to technology services investments due to the disruptive impact of artificial intelligence, according to Lincoln International's Chris Brooks. Brooks argues the traditional model of buying and combining disparate service products – like Microsoft, cloud, and software – for cross-selling is obsolete. Instead, operational excellence and specialization are now paramount for higher valuations and organic growth.

AI integration is a critical factor, as firms lacking integrated systems struggle to leverage AI effectively, leading to declining organic growth. Waterland Private Equity acquiring majority stake in Cooper Turner Beck Group, a safety-critical fastener provider, exemplifies this shift towards specialized, AI-ready tech service firms. The sale of Forged Solutions Group (FSG) to JF Lehman for an estimated $600M-$900M further highlights PE's focus on niche, high-value aerospace parts businesses amid AI disruption.