PE companies (Private Equity)
In the business world, private equity companies (PE companies) are powerful players that play a crucial role in shaping and developing companies. A PE company is an investment company that, with capital from its investors, acquires, develops and sells unlisted companies. The aim is to achieve a rapid and focused increase in value over a defined holding period, typically 3-7 years.
This business model, with its intense focus on growth and transformation, creates a unique and recurring need for a certain type of leadership. Here we explain why PE firms have become one of the largest and most demanding users of qualified interim managers.
Why are PE companies so dependent on rapid transformation?
Unlike traditional, long-term owners, PE companies work to a clear deadline. Their business model is based on actively and rapidly increasing the value of their portfolio companies in order to sell them at a good return. This means that portfolio companies are almost constantly under positive transformation pressure. Common initiatives include:
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Rapid growth and expansion: Aggressively scaling up operations, often through internationalization or new product launches.
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Cost optimization and efficiency gains: Implementing comprehensive programs to improve processes and increase profitability.
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Acquisition integrations (Buy and Build): Acquiring and integrating smaller companies to build a larger and stronger group.
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Exit preparations: Professionalizing the organization and its reporting to make the company ready for a sale or IPO.
Why are interim managers the perfect tool for PE firms?
The intense change projects that PE firms undertake require a specific type of leadership that often does not exist, or is fully occupied, in the existing organization. Waiting 6-9 months for a permanent recruitment is rarely an option when a 100-day plan is to be executed. The interim manager is the perfect tool to accelerate value creation.
One interim manager (often a CFO, COO or HR manager) from Interim Search is ideal for a PE-owned portfolio company as they bring:
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Immediate specialist skills and experience: They have often completed similar transformation journeys in other PE-owned companies. They know the methodology and understand the pace and reporting requirements.
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Results focus with no starting distance: An interim manager is used to quickly getting to grips with complex situations and immediately starting to deliver on a clear agenda. They are not there to manage, but to change.
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Objectivity and decisiveness: As an external party, they can make tough but necessary decisions without being bound by internal politics or “this is how we've always done it”.
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Unprecedented speed: For a PE firm where every day counts, our ability to present the right leaders is within 48 hours absolutely crucial. It allows transformation projects to start immediately.
Frequently asked questions about PE companies and Interim Management
What are the most common roles in PE-owned portfolio companies?
By far the most common and critical role is interim CFO. This is due to the high demands of financial reporting, control and strategic governance. Other common roles are interim COO (to drive operational efficiency), HR manager (to manage culture and organizational change) and CEO to lead a full turnaround.
What is an “Operating Partner” in a PE company?
An Operating Partner is a senior industry expert employed by the PE firm to actively work with and support the management teams of the portfolio companies. They often act as a client and strategic partner to the interim managers brought in.
How do the requirements for an interim manager in a PE-owned company differ?
The requirements are generally higher. It involves an extremely fast pace, a strong habit of working against clear and measurable key performance indicators (KPIs), and an excellent ability to communicate and report to a demanding and analytical owner.
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