How strategic PE partnerships can drive manufacturing transformation

Manufacturing thrives on momentum. It’s a sector wired for change – adapting operating models, constantly improving efficiency, and seizing opportunities head-on. But with AI, automation and geopolitical shake-ups reshaping the global landscape, manufacturers are now facing a different kind of challenge – how to deliver transformational change at a pace fast enough to stay ahead.

To understand that challenge, we spoke to CEOs, MDs, and business owners at 100 manufacturing companies with annual turnovers ranging between £55 million and £350 million and which were undergoing transformation, to ask what transformation means right now. What’s holding them back? What support do they need most? And what role could a private equity partner play in helping them evolve? Their answers were revealing. The mood is ambitious but cautious. The appetite for change is strong. But there are real capability gaps. While Private Equity (PE) is firmly on manufacturers’ radar, many are still searching for the ideal partnership fit. Here’s what we found.

Transformation is essential – but many lack the skills

Nearly half (49%) of the leaders we spoke to admitted to lacking the skills and experience needed to execute transformation successfully. This lack of internal capability is becoming a clear blocker to meaningful change.

Even more telling? The biggest skills gap isn’t technical. It’s about leading transformation. Change management topped the list of missing expertise (61%), followed closely by product development (51%) and IT/technology (49%).

And while capital investment still plays a crucial role, 44% said they can only partially achieve their goals without it, our conversations revealed something more – manufacturers need more than just money to unlock growth. They need confidence, capability and partnership.

The case for private equity: more than money

Private equity is no stranger to the manufacturing boardroom and many businesses now recognise the unique blend of financial firepower and hands-on experience that PE brings to the table. In fact, the top reasons manufacturers turn to PE over other sources of capital are:

• The opportunity for management to share in business growth (46%)
• The firm’s proven expertise and hands-on involvement (44%)
• Access to larger investment sums (39%)

But above all, manufacturers are actively looking for collaborative PE relationships, where strategic advice and commercial insight sit alongside capital. More than half (55%) of manufacturing leaders highlighted this as their number one priority. What’s clear is that PE houses that can position themselves not just as investors, but as true partners in transformation, will stand out.

It’s this dual offering, financial backing and strategic leadership, that defines the sweet spot for manufacturers.

Choosing the right partner is personal

When selecting a PE firm, experience counts:

• 49% of respondents said they’d seek out a firm with a track record of supporting businesses with similar challenges.
• 42% specifically look for firms with sector experience in manufacturing.
• 41% see value in the broader portfolio of a PE group – the ecosystem of connections, knowledge and opportunities that can unlock real advantage.

But softer factors matter too. 37% told us that personal chemistry and strong individual relationships with key figures in a PE firm were a critical part of their decision-making process. With deals becoming increasingly competitive, particularly in the North and Midlands, where Government-backed interest in UK manufacturing is rising, PE houses who can demonstrate cultural fit, clarity of purpose and shared ambition have the edge.

Barriers still need breaking

Of course, the PE world still has work to do in overcoming outdated perceptions. Some manufacturers remain wary:

• 64% believe PE is only focused on financial returns.
• 55% assume cost-cutting is a priority.
• 48% feel PE takes a short-term view.
• 44% are concerned about losing control.

That might seem like a case of mixed messages, but it’s an opportunity. For forward-thinking PE houses, there’s a clear path to differentiate, by telling real, grounded success stories of long-term growth, leadership collaboration and sustainable business health.

The more transparent and human PE firms become in telling those stories, the faster these barriers will break down.

What’s next?

Transformation in this sector is no longer optional. Manufacturers are chasing three top-tier objectives: revenue growth (41%), increased efficiency and cost reduction (39%) and a sharper focus on sustainability (34%). Automation (41%), sustainability initiatives (37%) and digital transformation (35%) are now at the top of the strategic agenda.

These aren’t small-scale upgrades; they’re big structural shifts. And with so many businesses lacking the time, internal capability or financial headroom to act alone, it’s clear that PE has a pivotal role to play.

But it’s not about PE dictating any change. It’s about working together, matching capital with capability, strategy with support. For manufacturers and PE firms that find the right fit, this isn’t just a chance to grow. It’s a chance to redefine what transformation means.

As volatility continues in global markets – from tariffs and supply shocks to shifting trade landscapes – the manufacturers who survive will be those who can lead through uncertainty. The investors who thrive will be those who offer more than money.

The opportunity for transformation is real and it’s mutual. For PE firms willing to collaborate, challenge, and partner with purpose, there are ambitious UK manufacturers ready to make bold moves.

Want to discuss in more detail? If you’re interested in discussing your strategic private equity partnerships or talking through our research, contact Debbie Jackson, our Partner and Head of Private Equity, to discuss further.