The influence of artificial intelligence on decision-making in deal selection in private equity

Abstract

This study examines the integration and influence of artificial intelligence (AI) in deal selection processes within South African private equity (PE) and venture capital (VC) firms. Using theoretical frameworks including Information Processing Theory and Principal-Agent Theory, the research explores how AI enhances decision quality, speed, and uniformity while balancing human intuition and contextual judgment. Findings reveal that AI is primarily used as a supportive analytical tool, aiding in data synthesis, regulatory scanning, and due diligence rather than replacing human decision-making. Although AI has improved efficiency and transparency, challenges such as data scarcity, confidentiality concerns, regulatory limitations, and lack of local contextualization persist. Human discretion remains central, especially in evaluating qualitative factors such as founder integrity and cultural fit. The research emphasizes that AI’s current value lies in process improvement rather than financial outcomes. Responsible and context-aware adoption is essential, requiring robust governance frameworks, localized models, and ethical deployment. The study concludes that collaboration among regulators, firms, and industry bodies is vital to build a sustainable AI ecosystem in South Africa’s investment landscape.