Unlocking M&A Value: Is Unplanned Downtime Hiding Your Company’s True Worth?

Sean Hart, Chief Executive Officer And Managing Partner, POWERS

Valuation drives every M&A and private equity deal, but the numbers don’t always tell the full story and that shows in value.

At POWERS, we’re zeroing in on a factor often overlooked in deal rooms: unplanned downtime. As we’ve explored all April, downtime—when production stalls due to missing parts, ingredients, or system failures—bleeds profits and signals risk. Could it also be dragging down company valuations, leaving some manufacturers undervalued? And if so, how can PE firms and M&A players unlock that hidden value?

Downtime’s Valuation Drag

Unplanned downtime is a profit-killer. When a beverage plant waits on a delayed ingredient or an automotive production line halts for a missing part, the costs stack up—lost output, overtime labor, rushed repairs, and more. Industry estimates peg downtime at 5-20% of productivity losses, with some manufacturers facing $100,000-plus per hour in damage. That’s not just a hit to the bottom line; it’s a red flag in due diligence.

For PE-held manufacturers, high downtime can depress EBITDA multiples, signaling operational risk.

In M&A, buyers might discount a target’s valuation, wary of inefficiencies or supply chain fragility. A client we advised saw their valuation take a hit when downtime spiked during a sale process—buyers saw a problem, not potential. But here’s the flip side: companies struggling with downtime aren’t always lemons. Often, they’re diamonds in the rough, undervalued because their operational fixes are within reach.

The Undervaluation Opportunity

Poorly managed downtime can mask a company’s true worth. Imagine a PE portfolio company in automotive, churning out solid products but losing 10 hours a week to part shortages. Its financials look soft—lower margins, weaker cash flow—but the core business is sound. A savvy buyer or PE firm sees the gap: fix the downtime, boost efficiency, and unlock millions in value. We’ve seen it happen. One manufacturer we worked with cut downtime by double digits using our DPS platform, lifting their valuation significantly before an exit.

In M&A, sellers who tackle downtime pre-sale can command premiums.

A food and beverage firm we advised tightened their supply chain and slashed downtime before hitting the market—buyers paid up for the proven resilience.

For buyers, downtime-heavy targets are a chance to buy low, optimize operations, and sell high. It’s classic value creation, but only if you spot the opportunity.

Turning Downtime into a Deal-Winner

So, how do you turn downtime from a valuation drag into a value driver? It starts with visibility. Our DPS platform equips frontline leaders with real-time data and analysis to spot and stop disruptions—think missing parts or maintenance delays—before they snowball. That’s not just operational; it’s strategic. PE firms can use our DPS platform to transform portfolio companies, boosting OEE and margins for a stronger exit. In M&A, sellers who show downtime mastery signal efficiency, while buyers can factor in post-deal gains.

The key is action before the deal. For sellers, audit your downtime now—where are the leaks, and how can you plug them? For buyers and PE firms, look past the surface. A downtime-heavy target might be a bargain if the fix is straightforward.

At POWERS, we’re helping clients do both, cutting downtime risks and proving their worth in a competitive market.

The Bigger Picture

Downtime isn’t just an operational headache; it’s a valuation lever. Companies that let it fester risk being undervalued, while those that master it stand out in M&A and PE deals. As dealmaking heats up in 2025, the winners will be those who see downtime not as a flaw but as a chance to unlock value.

About POWERS

At POWERS, we help acquirers and manufacturers unlock value fast. Our team digs into operations—processes, workforce, supply chains, maintenance—to drive efficiency and accountability. We deliver results: higher output, lower costs, and teams aligned to your vision. Our DPS platform takes it further, giving you real-time visibility into KPIs and execution, so gains stick. Want to maximize your next deal? Let’s talk.