As we approach 2025, Manchester Digital is excited to share Picturing 2025 - a series of essays from our members offering insights into the tech trends and challenges ahead. Below, Codurance discuss Private Equity Trends and Opportunities for CTOs.
Private equity (PE) continues to be a cornerstone of the UK economy, supporting millions of jobs and contributing significantly to GDP. As we look ahead to 2025, the role of CTOs in PE-backed businesses is evolving rapidly, shaped by shifting investment priorities, technological advancements, and financial pressures. Navigating this demanding landscape requires CTOs to balance operational excellence with strategic foresight while aligning technology initiatives with financial objectives.
Codurance has considerable experience of working with PE backed businesses and here we share our view on some of the trends and opportunities shaping the future of PE-backed CTOs in 2025.
1. Scalability and Efficiency Take Center Stage
As PE firms aim to maximise returns within tighter investment timelines, the focus on scalable and efficient technology has never been greater.
● Automation and AI: Automating workflows and leveraging AI for decision-making are critical to driving operational efficiency and cost savings.
● Cloud Adoption: Scalable, cloud-based infrastructures are becoming essential to support rapid growth while minimising upfront costs.
● Tech Debt Management: Proactively addressing legacy systems and technical debt enhances both scalability and valuation potential.
2. Elevated Role of Technical Due Diligence
Technical due diligence has become a cornerstone of the PE lifecycle, from acquisition to exit.
● Preemptive Self-Assessments: CTOs are increasingly conducting internal evaluations of their technology systems, addressing weaknesses before formal assessments by PE firms.
● AI and Data Strategies: Investors value robust data infrastructures and AI strategies, seeing them as critical for business intelligence and operational scalability.
3. Financial Metrics Shape Tech Strategy
In PE-backed environments, CTOs must ensure technology investments are directly tied to financial outcomes that drive valuation.
● Key Metrics: Metrics like EBITDA, ARR, and gross profit margin are pivotal in shaping technology priorities.
● Capex vs. Opex: Strategic decision-making around capital and operational expenses is crucial to maintaining profitability and supporting exit readiness.
4. Technology as a Driver of ESG Initiatives
Environmental, Social, and Governance (ESG) considerations are becoming integral to PE strategies, and CTOs are at the forefront of these initiatives.
● Sustainability: PE-backed businesses are adopting greener technologies and energy-efficient infrastructures to meet ESG goals.
● Governance and Transparency: Advanced analytics and automated reporting tools are helping businesses demonstrate ESG progress to stakeholders.
5. Cybersecurity as a Non-Negotiable Priority
In 2025, PE firms are demanding robust cybersecurity frameworks as a fundamental aspect of risk management.
● Building Resilience: CTOs must implement strong security protocols and ensure compliance with evolving data protection regulations.
● Investor Confidence: Demonstrating cybersecurity strength during technical due diligence is essential for attracting buyers and building trust.
6. Talent and Collaboration
The ability to build high-performing teams and foster cross-functional collaboration is increasingly critical for PE-backed CTOs.
● Upskilling and Recruitment: Teams must be equipped with expertise in cloud, AI, and data to align with modern PE objectives.
● Cross-Functional Alignment: CTOs are expected to collaborate closely with CFOs, product leaders, and sales teams to ensure technology supports business goals.
7. Exit Readiness from Day One
With finite timelines to create value, PE-backed businesses must prepare for exit from the moment of acquisition.
● Scalable Infrastructure: CTOs must ensure systems can support growth and transition seamlessly to new ownership.
● Product-Market Fit: Refining the product and technology to align with commercial goals enhances valuation and buyer appeal.
Navigating Challenges and Opportunities
CTOs in PE-backed businesses face unique challenges but also significant opportunities to drive value:
● Boardroom Influence: CTOs must translate technology’s impact into financial terms that resonate with non-technical stakeholders.
● Leveraging Networks: PE firms often provide access to resources and expertise that can accelerate growth and innovation.
● Emphasising Scalability: Ensuring that systems are future-proofed positions the business for both organic growth and acquisition.
Conclusion: Thriving in the PE-Backed Landscape
As the PE sector evolves, CTOs who combine technical expertise with business acumen will be indispensable in driving profitability and valuation growth. By aligning technology strategies with financial metrics, focusing on scalability, and championing ESG initiatives, CTOs can navigate the complexities of 2025 with confidence.
For those who master the balance between innovation and financial alignment, the opportunities in this dynamic space are limitless. Codurance offers tailored solutions for PE-backed businesses to optimise technology and accelerate growth. Explore our success stories and learn more here.
