Executive Summary
Maintenance is routinely treated as a controllable cost — a line item to be trimmed when margins come under pressure. For private equity investors and operating partners in asset-intensive manufacturing, that framing is a strategic blind spot. Maintenance is, in practice, one of the most powerful levers for EBITDA, cash flow, and enterprise value in the portfolio.
The U.S. Department of Energy (DOE) estimates that unplanned downtime costs manufacturers billions annually in lost productive capacity. A single unplanned stoppage can cost between $40,000 and $2 million per hour depending on sector and production volume.[1] Facilities that transition from reactive maintenance to proactive, data-driven reliability programs routinely reduce maintenance costs by 8%-40%, cut unplanned downtime by 35%-45%, and meaningfully extend asset life.[2]
For investors, this means maintenance performance is not a technical footnote — it is a valuation and underwriting issue.
Why Is Maintenance an Enterprise Value Issue?
Throughput and Revenue
Every hour of lost production directly reduces revenue and margin. Plants operating near capacity cannot simply recover lost hours — they absorb the loss through overtime, expediting, or missed customer commitments, all of which compress EBITDA. Industry benchmarks indicate that progressing from reactive to proactive maintenance can improve Overall Equipment Effectiveness (OEE) by five to 15 percentage points.[3] In high fixed-cost operations, a five-point OEE gain can represent hundreds of basis points of margin improvement.
Short-sighted, band-aid fixes save the delivery for the day but sacrifice performance and reliability over the course of the year. There is a fine line to be walked when it comes to repairing equipment that is capacity constrained. Sound judgement from the leadership team is imperative to service customers and ensure long term internal value of the asset.
Cost Structure and Margin
Maintenance affects profitability across three dimensions:
- Direct Costs: Labor, parts, and contractors.
- Indirect Costs: Scrap, rework, energy waste, safety incidents, and expedited logistics — frequently underestimated and often exceeding direct spend.
- Capital Intensity: Poorly maintained assets fail early, accelerating capex cycles that could have been deferred or avoided entirely.
Per the U.S. DOE Operations & Maintenance Best Practices Guide, predictive maintenance programs save 8%-12% over preventive maintenance and up to 40% over purely reactive operations.[2] Plants in reactive mode typically experience two to five times higher overtime and emergency contractor costs than well-managed peers.
Working Capital and Capex
Maintenance quality has a direct impact on balance sheet efficiency. Frequent breakdowns force higher safety stock of work-in-process and finished goods to buffer production variability. Chronic equipment failures shorten replacement cycles, making run-to-failure effectively a hidden and unbudgeted capex strategy. Avoidable failures tie up capital that could otherwise fund growth initiatives or accelerate debt paydown.
A Maintenance Maturity Framework
Most manufacturing plants fall into one of four maturity levels. Understanding where a target company sits — and the cost to progress — is central to any credible operational diligence.
Moving from Level 1-2 to Level 3-4 is frequently one of the highest-ROI operational improvement initiatives available within a 3-5-year hold. The U.S. DOE documents a 70%-75% reduction in equipment breakdowns and a 35%-45% reduction in downtime for facilities that successfully implement predictive maintenance programs.²
Common Failure Modes in Maintenance Management
Underfunded Maintenance
Short-term EBITDA improvement through maintenance budget cuts is among the most consequential and hardest-to-detect value destruction mechanisms in manufacturing. The effects compound over time: rising unplanned downtime, deteriorating quality, elevated safety and environmental risk, and accelerated capital replacement needs. Deferred maintenance is not savings — it is a liability transferred to the next owner, often invisible in standard diligence.
While running operations for a multi-national manufacturing company where the owners were positioning the company for acquisition, it was witnessed firsthand, the impacts of this. Budgets were cut, and coming in under budget was incentivized to impact EBITDA in the hopes of securing a higher exit multiple. This is short-sighted and hurts the company, and buyer, in the long term and needs to be examined during operational due diligence.
Absent or Underutilized Data Systems
Without a functioning Computerized Maintenance Management System (CMMS) and a complete asset registry, maintenance cannot be managed strategically. World-class facilities track OEE, MTBF, MTTR, planned maintenance percentage, and maintenance cost as a percent of Replacement Asset Value (RAV) — with best-in-class operations targeting below 3% RAV.[4] Facilities with incomplete or untrusted data cannot optimize or accurately benchmark their own performance.
Misaligned Incentives
When production teams are rewarded for output regardless of how often they override maintenance schedules — and when maintenance teams are measured by budget adherence rather than reliability — the result is chronic tension, hidden risk, and systematically suboptimal decisions. Incentive structure is one of the first things an experienced operational diligence team should examine.
While leading teams in the dairy industry for a global, consumer-facing brand that is also known for operational excellence. One of the ways it has been assessed they achieved this was by creating shared incentives across production, maintenance and engineering. It released the tension that comes with conflicting incentives and priorities, created a shared vision, and enhanced cross-functional performance.
Key Metrics Every Investor Should Request
The following metrics provide a reliable diagnostic picture of maintenance health. Patterns across these metrics are often more revealing than any individual data point:
Implications for Valuation and Diligence
Plants with strong maintenance discipline are more likely to sustain high OEE and margin, require less catch-up capital expenditure, and scale more predictably when growth investments are made. They also present lower operational risk throughout the hold.
Conversely, plants with weak maintenance may carry hidden capex cliffs — assets running beyond their effective service life — and may have EBITDA that is structurally overstated due to deferred maintenance. Identifying and quantifying this gap is one of the most consequential elements of manufacturing operational diligence.
For private equity, maintenance is not a line item — it is a core component of the investment thesis. The ability to diagnose current-state maintenance maturity, model the cost and timeline of improvement, and track progress against reliability KPIs is a meaningful differentiator in both underwriting and value creation.
Sources
1. Siemens AG. True Cost of Downtime 2024. Munich: Siemens AG, 2024.
2. U.S. Department of Energy, Federal Energy Management Program. Operations & Maintenance Best Practices: A Guide to Achieving Operational Efficiency, Release 3.0. Washington, DC: DOE, 2010.
3. Vorne Industries. “What Is OEE?” OEE.com. Accessed 2025. https://www.oee.com/what-is-oee/
4. Society for Maintenance & Reliability Professionals (SMRP). Best Practices Metrics and Body of Knowledge, 6th Edition. Atlanta: SMRP, 2019.
© Copyright 2026. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC, its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
