Private equity (PE) firms are taking a deliberate approach and looking for clear signs that a company is operationally strong with growth potential before moving forward. For manufacturing companies, whether privately held or PE-backed, these shifts have direct implications for strategy, operations, and financial performance. This article shares key manufacturing private equity insights from the US Private Equity Report (drawn from more than 150 respondents in late 2025) and explores what they mean for manufacturers navigating today’s investment environment.
Deal Selectivity & Implications for Manufacturing Sellers
Even as price multiples rose, U.S. middle-market deal volume declined 27% through Q3 2025 compared to the same period in 2024, according to the US Private Equity Report. Capital tends to flow toward businesses that demonstrate defensible positions, clean financial reporting, and operational resilience.
For manufacturers, understanding why manufacturing deals are becoming more selective starts with one finding. Within the survey responses, operational complexity was cited by 50% of PE respondents from the report as a top factor negatively impacting portfolio performance, second only to market and geopolitical trends.
How Are Tariffs & Input Costs Narrowing Manufacturing Margins?
Manufacturers face a particularly pronounced set of challenges. As one PE leader observed in the report in late 2025:
“The biggest headwind is weak consumer and business sentiment, driven by policy uncertainty, tariffs that pressure input costs, affordability issues, and an interest-rate environment that remains elevated compared with the prior decade.”
Tariffs and higher borrowing costs are tightening margins at the same time. Manufacturers that actively model tariff exposure and manage working capital are better positioned to protect profitability and sustain growth.
What Manufacturing Companies Need to Attract PE Investment
An insight gleaned from the report highlights a stark divide in how PE investors evaluate manufacturing assets:
“Some exits, where there is a clean story, easily understandable business, and a specific buyer set with owning the business, are happening on schedule as expected. For stories with more complexity, we're seeing a lot of buyer fatigue and discernment.”
Manufacturers with fragmented systems, unclear cost structures, or operations spread across multiple locations face slower deal timelines and reduced valuations. Simplifying operations, strengthening reporting, and building real-time performance visibility aren’t just efficiency improvements. They’re valuation strategies that define what manufacturing companies need to attract investors.
How Is Manufacturing Value Creation Strategy Evolving in 2026?
Exit timelines are lengthening across the PE landscape. According to the US Private Equity Report, 74% of respondents are extending the life cycle of current funds when facing fundraising challenges.
“Exit timelines are running behind plan due to a challenging M&A market and continued economic uncertainty, with processes delayed when near-term projections or recent performance showed dislocation.”
A strong manufacturing value creation strategy at this moment in time calls for longer-range financial planning, disciplined key performance indicator (KPI) reporting, and continual improvement programs that can deliver results over multiyear horizons.
How Can AI Power Manufacturing Private Equity Strategies?
PE firms increasingly view technology investment, particularly in artificial intelligence (AI), as a core component of operational improvement and an emerging pillar of effective manufacturing PE strategies. Support for growth strategy execution (47%) and performance improvement transformation (45%) were cited as the top tools PE firms use to manage portfolio challenges.
AI is being used in manufacturing for forecasting, scheduling, quality monitoring, and supply chain improvements. However, it often depends on having reliable, well-organized data (something many traditional manufacturers are still building). When the right data is in place, AI can help simplify processes, deliver quicker insights, and improve efficiency without replacing human judgment and experience.
Why Differentiation Is Critical to Attracting Capital
PE firms are concentrating on sectors that can demonstrate deep, repeatable value creation. A PE leader shared:
“We are sector focused in industrials and healthcare because our team has deep, differentiated expertise, and long-term, innovation-driven tailwinds create opportunities to build strategically important companies.”
Manufacturers seeking capital or advisory support should look for in-depth industrial knowledge. Deep sector focus is pivotal to how PE is creating value in manufacturing.
How Manufacturing Leaders Should Respond
The manufacturing PE insights across the US Private Equity Report point to one consistent theme. Value creation depends on operational discipline, technology adoption, cost management, and the ability to perform over longer timelines. Leaders who invest in these capabilities will likely be better positioned to attract capital, protect margins, and build lasting enterprise value.
How Forvis Mazars Can Help
Forvis Mazars supports privately held and PE-backed manufacturers in addressing operational challenges. Our cross-functional teams can help strengthen performance, improve financial visibility and KPI reporting, implement technology and AI strategies, and navigate transactions and post-acquisition integration to support long-term growth. Whether you’re preparing for a transaction, managing an extended hold period, or building a stronger operational foundation, we can help you prepare for what’s next. If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.
Download the full US Private Equity Report for more data-driven insights.