It’s the second most polarising issue in strata today - AI. Of course, number one is insurance commission, but enough of that for this week.
AI mania is sweeping the world. The US equities market has struck record highs. The FT Weekend (20 September 2025) reports that, despite alarming fundamental economic and geopolitical risks, bets on the rise of AI have taken over trading floors and powered the stock markets.
The same might be happening in the strata market in Australia. Private equity is on the move. Australia’s largest PE firm has taken out Johns Lyng Group, which owns Bright and Duggan and SSKB. Even before that transaction settled, B and D snapped up the New Zealand outfit, Active Building Management.
At the smaller end of the PE spectrum, some young guns out of the big consulting firms are having a crack, with high-net-worth money behind them.
Is it AI for strata that’s attracting this attention? Probably. The holy grail for PE in strata has always been scale. Scaling is not just about getting bigger –it’s about growing revenue at a rate that outpaces cost increases. In recent years, that hasn’t happened in Australia, as I discussed recently in a webinar for LookUpStrata. So, yes, it’s AI in the mix that’s attracting the big money.
Two questions arise. Will it work? What does that mean for those in the game now?
Regarding the first question, across many sectors, a view is emerging that AI may not be as easy to implement or as cost-saving as first thought. But who would know in this fast-moving race? What seems to be agreed by AI entrepreneurs, is that precise operational procedures are essential before building robots that can perform tasks with little or no human intervention. It is also common ground that you need deep pockets. Money is relatively plentiful, but the same can’t be said for precise operational procedures in strata.
If the answer to the first question is yes, then those in strata now are in for some disruptive times. The PE firms will be looking to partner with well-run firms with solid operating procedures and strong leadership. For this, they will be prepared to pay good money, very good money – more than has ever been paid before. If the target doesn’t come up to scratch, it will be quickly discarded, and obliterated by the competition.
And this is what is different about this cycle of mergers and acquisitions. In the past, when growth meant more revenue (or so it was thought), the aggregators would buy just about anything. Even if the target firm was rubbish, it could be knocked into shape and have some costs ripped out, so it made sense. But the driver is no longer growth; it’s scale, and that’s a whole different game.
So, a lot depends on the answer to the first question – will AI in strata work?
Let me know what you think.
Michael Teys advises strata management businesses on improving profitability through professionalisation and streamlined operating systems.
He has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
