Why Private Equity Should Stop Ignoring OT and Smart Manufacturing (Before It Costs Them Millions)

Private equity diligence is thorough—except where it isn’t.

Financials? Nailed.

Legal? Lawyered up.

IT? Account for an ERP and CRM.

Commercial? Decked out with market insights.

But what about the factory floor? You know, the place where all that EBITDA is supposed to happen? For too long, OT and smart manufacturing have been afterthoughts. Here’s why that’s a dangerous oversight—with the numbers to prove it.

1. Your “Stable” Operations May Be Running on Windows XP

Too many critical machines are running on unsupported Windows. And the only person who knows how to reboot them is Carl—who’s been promising to retire since 2016.

54% of industrial firms still run outdated Windows OS on OT assets (Dragos, 2023).Example: WannaCry ransomware shut down Nissan and Renault due to these vulnerabilities (The Guardian).

2. You Can’t Scale Chaos

Without connected operations, scaling a manufacturing platform is like franchising a lemonade stand where every kid buys lemons from a different vendor.

Smart manufacturing boosts productivity by up to 40% (McKinsey).Example: A PE-backed Tier 2 supplier cut lead times 30% through machine connectivity (CESMII).

3. The Next Cyberattack Could Shut Down Your New Investment

Manufacturing is now the #1 target for cyberattacks. OT networks are the blind spot.

Manufacturing topped IBM’s 2024 X-Force threat report, with OT vulnerabilities growing 30%.Example: JBS paid an $11 million ransom after an attack froze plant operations (Reuters).

4. Hidden Value Creation Lives in the Factory

Margin expansion isn’t just commercial levers. It’s predictive maintenance and automated quality control.

Smart factories improve OEE by 15–25% and cut maintenance costs by 30–50% (BCG).Example: A plastics company saved $2.5M/year with Rockwell and PTC smart manufacturing solutions (PTC).

5. Your Competitors Are Already Doing It

While you’re printing work orders, they’re deploying digital twins.

72% of manufacturers are investing in Industry 4.0, up from 54% three years ago (LNS).Example: TPG Capital modernized C.H.I. Overhead Doors, driving a $3B exit to Nucor (Bloomberg).

Bottom Line

If you ignore OT and smart manufacturing, you’re leaving value—and risk—on the table.

Bring someone who speaks both PLC and P&L to your next diligence process.

Your future self (and your exit multiple) will thank you.