This year, the capital market has taken on an almost dreamlike quality.

AI assets are skyrocketing in value, while traditional 'old guard' assets are experiencing a steady decline.

Yet, amidst the rush to offload these aging assets, one company stands out by doing the exact opposite—it's aggressively acquiring them.

Meet Thrive Holdings.

Specializing in the acquisition of seemingly outdated businesses, such as accounting firms and IT service providers, Thrive Holdings is revolutionizing them with AI. To date, Thrive has reportedly acquired over 70 companies.

Leveraging this unique model, Thrive Holdings secured over $2 billion in funding this August, propelling its valuation to an impressive $12 billion. The remarkable aspect? The company was only established in 2025 and achieved this valuation in just over a year.

Today, Silicon-based Guy will delve into this '$12 billion AI + PE money-making machine.'

/ 01 / Reinventing the 'Old Guard' with AI

When it comes to corporate AI transformation, there's a paradox:

As models become increasingly intelligent, why do many companies still struggle to transform?

According to McKinsey's 2025 global survey, 88% of respondent enterprises already utilize AI in at least one business function. However, only 39% have witnessed profit improvements across the entire enterprise.

AI is purchased, models are integrated—yet profits remain elusive.

McKinsey delved deeper into this issue and, after analyzing 25 factors, identified the variable most strongly linked to profit improvement:

Process reengineering.

Yet, this is precisely what companies are most hesitant to undertake. Among AI-using enterprises, only 21% have genuinely redesigned their workflows.

The reason is straightforward: workflows are intertwined with job roles, departments, and vested interests. Decisions on which tasks to assign to AI, which roles to adjust, and how processes to redistribute ultimately rest with the boss.

This creates a significant gap:

While AI theoretically offers substantial efficiency gains, real-world companies often lack the motivation or capability to undergo a complete overhaul.

Thrive Holdings recognized this opportunity.

Thrive's approach is direct: if external transformation is challenging, acquire the company first. Once in control, redesign its operations from the ground up.

It initially set its sights on the accounting industry.

Accounting firms handle vast amounts of repetitive, standardized, document-heavy work: reading tables, data entry, verification, categorization, and generating drafts.

These tasks are time-consuming yet require minimal professional judgment—making them ideal candidates for AI.

Through its accounting integration platform, Current, Thrive began acquiring local firms one by one.

In March 2025, it acquired Larson Gross, a 75-year-old accounting firm.

Post-acquisition, Thrive didn't merely install AI software; it embedded engineers from OpenAI, Ramp, Clay, Databricks, and others into the firm to collaborate with accountants.

They dissected every aspect of how tax forms arrived, which numbers required manual entry, where errors most frequently occurred, and which steps were purely mechanical.

From these real-world processes, Thrive developed Tax AI.

The results were swift.

During tax season, Tax AI processed 7,000 real tax forms, reducing the average preparation time by 31% and achieving draft accuracy rates of up to 97%.

OpenAI revealed an even more striking case:

An accountant who previously took 180 hours to complete the same workload used Tax AI to finish in just 15 hours.

A direct saving of 165 hours!

But Thrive's goals extended beyond merely reducing workload.

That saved time was redirected towards client maintenance, acquiring new clients, and selling more consulting services. In essence, AI liberated accountants from low-value tasks, enabling them to focus on higher-value work.

After accounting, Thrive replicated this approach in IT services.

In June 2025, it launched the IT platform Shield in partnership with ZBS Partners. By July 2026, Shield had integrated 19 IT service companies, surpassing $100 million in annual revenue.

The strategy remained largely unchanged.

Shield's head, Daniel Gonzalez, explained that during a company's first 90 days, their top priority is understanding how work actually functions.

IronOrbit serves as a prime example.

After Shield's intervention, they redesigned the heavily manual invoicing and payment collection processes. Now, approximately 80% of invoices are processed end-to-end without human intervention, requiring manual review only for exceptions.

Meanwhile, Shield developed two AI systems: Sentinel and Spectre.

Sentinel reads client needs, prioritizes tasks, and auto-assigns them; Spectre directly deploys Agents to resolve some issues.

Currently, these systems handle high-frequency tickets like software and email issues, accounting for over 60% of total tickets. The median resolution time for some tasks has dropped by over 50%.

So, what Thrive truly does is straightforward:

First, use capital to gain control. Then, employ AI to completely reengineer a traditional service company's workflows.

/ 02 / In the AI Era, PE Adapts Its Strategy

If we examine only the underlying strategy, Thrive Holdings is not entirely novel.

It's still employing what PE firms do best:

Identify a sufficiently fragmented industry, acquire small companies, and consolidate them into a large platform.

Ultimately, small companies valued at 6-7 times their profits become a national platform potentially valued at 10 times or more.

Traditional PE profits from this valuation gap. However, Thrive Holdings adds another dimension: AI.

Now, the business generates returns on two levels.

The first is PE's classic move: transforming 'small companies' into 'big companies.'

As small firms merge, scale increases, operations stabilize, platform value rises, and the asset itself becomes more valuable.

The second level comes from AI.

The same company might have handled 100 tasks with 100 people before; after reengineering, it might handle 130 or 150. In other words, transforming a headcount-dependent service firm into a tech-leveraged one.

The challenge? This sounds straightforward, but replication faces a real-world obstacle: PE's own operating mechanisms are often ill-suited for such long-term transformations.

So, Thrive Holdings overhauled traditional PE tactics. Specifically, it made three key changes:

First, it altered the money's time horizon.

Traditional PE faces an inescapable issue: even great companies must eventually be sold.

Because funds have expiration dates. LPs provide money to funds, which must return the principal and gains after a few years.

Bain Capital statistics show that the average holding period for global buyouts is already approximately seven years when exiting.

Seven years may seem lengthy, but it's insufficient for AI transformations. If a fund starts planning exits in year six, operational decisions can easily become distorted.

Thrive Holdings eliminated this constraint.

It utilizes permanent capital—no fund expiration, no forced exit timeline in a few years.

Thrive Holdings states it clearly on its website:

Without the need to make decisions around fund liquidation cycles, it can pursue heavy upfront investments that pay off years later, then reinvest earnings into the business, employees, and processes.

The second overhaul is counterintuitive. Thrive gains control but doesn't rush to replace management.

Normal M&A integration involves standardizing brands, systems, and management.

Ideally, even office decor looks the same—but Thrive rarely adopts this approach in accounting.

After acquiring local firms, it often retains original brands, keeps founders and operators as partners, maintains management teams, and preserves client relationships.

Often, clients don't even notice the firm has changed hands.

Why? Because accounting has a unique characteristic:

Clients trust people, not systems. Especially for SMEs, accountants have often worked together for years. The boss knows your company's history, how you filed taxes before. This trust cannot be instantly replaced by a national brand.

Current's 2025 independent survey found that 65% of accounting clients believe AI improves their perception of firms. Yet simultaneously, 75% still prefer human interaction.

These numbers speak volumes. Clients don't reject AI—they welcome it—but they don't want to interact solely with robots.

So, Thrive's strategy is clear: AI stays in the background, humans remain front-facing.

Back-office tasks like reading tables, data entry, verification, categorization, and invoicing migrate to AI wherever possible. But front-office tasks—client negotiations, judgments, relationship maintenance—stay with the original accountants.

This captures efficiency gains without destroying the service industry's most valuable asset: trust.

Third, and where this model truly accelerates: Thrive turns acquired companies into acquisition machines themselves.

This didn't commence after Thrive Holdings' founding.

Even before its 2025 official launch, its core accounting platform Current had validated this model by 2023.

RRBB serves as a prime example. When it joined Current in August 2023, its annual revenue was approximately $20 million. Then it kept 'buying,' adding approximately $22 million in revenue.

By July of this year, annual revenue exceeded $44 million. RRBB essentially achieved a full year's performance in just six months.

Reid Advisors is even more remarkable.

After joining Current in February 2024, it acquired six firms in under two years, expanding from New York to the U.S. Southeast, doubling annual revenue to approximately $55 million.

Why do these acquisitions scale so rapidly?

Because new additions don't need to rebuild back-office systems—they just plug into the existing infrastructure.

It's akin to chain restaurants. The first outlet is the hardest, requiring menu R&D, supply chains, training, site selection. Once that model works, the second and third outlets become cheaper.

Thrive does the same.

Except it replicates not a store, but a company's operating system.

/ 03 / Conclusion

By combining these three elements, Thrive Holdings' true replication system becomes evident.

Permanent capital resolves the timing issue.

Retaining original owners and brands addresses the client and industry expertise issue.

Rolling acquisitions solve the scale issue.

And AI handles efficiency upgrades for every newly acquired company.

These four elements form Thrive's true replication engine.

Now, Thrive isn't content with just accounting and IT services.

This August, it officially launched its third platform, targeting infrastructure services. This includes project approvals, construction, certification, and the technical and regulatory services involved in long-term operations.

On the surface, these industries seem entirely different—accounting, IT, infrastructure—but their underlying traits align:

Large markets, fragmented companies, heavy reliance on manual labor, complex and repetitive traditional processes, and clients highly dependent on professionals and local relationships.

So, perhaps the capital market's $12 billion valuation for Thrive isn't betting on its current earnings, but on a bigger question:

How many traditional industries can still be reengineered with this 'capital + AI' approach?

By Yuan Yuan