New analysis reveals defense, data centers driving private equity’s move into manufacturing

A new report from the Private Equity Stakeholder Project examines the private equity industry’s incursion into the U.S. manufacturing sector and its wider impacts on workers and communities. 

As the Trump Administration espouses a commitment to bringing manufacturing jobs back to the United States after decades of offshoring, the financial sector has been exploring potential opportunities for domestic growth. That interest has been reflected in private equity firms’ acquisition trends. In the first half of 2026, private equity firms acquired more than 170 US-based companies with at least 500 employees. According to acquisitions data from Pitchbook, manufacturing companies made up 26 percent of acquisitions in the second quarter of this year, an increase from 16 percent in the first quarter.

According to the report, the private equity industry has shown particular interest in two specific manufacturing sectors: defense and data centers. Twenty-nine percent of the companies acquired by PE in the first half of 2026 provide goods and services to the defense sector, while another 29 percent supply parts for data centers or integrate artificial intelligence into their products. Notably, the Deputy Secretary of War is former Cerberus executive and co-founder Steven Feinberg, whose duties include overseeing Pentagon contracting alongside two other former Cerberus executives. Several Cerberus-owned companies have received federal contracts in recent years.

The report also includes several case studies analyzing notable bankruptcies of private equity-backed manufacturing companies; layoffs following PE acquisition of manufacturers; and union-busting at private equity-owned manufacturers. 

Other key findings of the report include: 

• In the first half of 2026, manufacturing accounted for more than 20 percent of private equity acquisitions of companies with more than 500 employees. 
• The growth of defense industries, data centers, and artificial intelligence is driving private equity investment in manufacturing, with more than half of Q1 and Q2 2026 manufacturing acquisitions serving these sectors.
• In 2025, private equity-owned companies represented two-thirds of manufacturing bankruptcies with liabilities over $500 million.
• Private equity ownership in manufacturing has led to increased market consolidation, layoffs, bankruptcies, union-busting, health and safety risks to workers and communities, and more.

“Private equity’s intense focus on short-term profits simply does not square with the long-term sustainability necessary for rebuilding American manufacturing,” said Azani Creeks, senior campaign and research coordinator at PESP and lead author of the report. “As private equity continues to move into the manufacturing sector, policymakers should take a proactive approach to ensure that workers and communities are not left high and dry by the financial engineering favored by private equity.”

The report also examines the trend of consolidation favored by private equity firms investing in the manufacturing sector. By buying up multiple small companies in the same industry segment and merging them under one corporate umbrella, roll-ups enable private equity firms to skirt regulatory approval. Ultimately, private equity firms can gain a substantial share of the market and dampen competition through such methods, as seen in the case of fire truck manufacturing. fire truck manufacturing. 

According to a bipartisan congressional analysis, American Industrial Partners (AIP) portfolio company REV Group controls one third of the fire truck manufacturer market, the largest of any company, while independent companies represent just 20 percent. In February 2026, Los Angeles County sued AIP and REV Group alleging damage to the local Fire Department and taxpayers through “highly concentrated and oligopolistic markets.” The lawsuit claims that REV Group intentionally reduced supply by closing plants in 2022, and later raised prices by 50 to 100 percent. The closures in Pennsylvania and Virginia lead to at least 380 job losses.

To read the full report, visit:https://pestakeholder.org/reports/private-equity-in-us-manufacturing