The concept of interim leadership is becoming ever more important in the world of business, particularly for mid-cap organisations on the precipice of a buyout.
In our latest article looking at the role and benefits of interim management, Andrew McIntee outlines the crucial role interim leaders play in helping high potential businesses attract and secure the best possible investment deal.
Mid-cap, founder-led companies occupy a unique position in the investment landscape. They often grapple with the challenge of making themselves as attractive as possible to potential investors while simultaneously needing to maintain the sense of stability that underscores their inherent market value.
For these types of businesses, interim leaders offer a unique solution that can drive rapid transformations and process improvements, while also bringing much needed experience and energy to make a company fully ‘deal ready’.
Getting the dynamics right
Getting leadership dynamics right is one of the most delicate aspects of preparing for an important funding round. While a change in the leadership team just before a sale might hint at instability, the addition of the right kind of leadership skills and experience in the run up to going to market can significantly enhance a business’s appeal.
This is where the strategic incorporation of interim professionals can provide the perfect balance.
These seasoned experts bring a level of flexibility and specialised skill often pivotal in maximising the value of a business and getting the best funding partner onboard. From a stability point of view, they do this without the permanence that could cause friction with existing leadership team members or signal unsteadiness to future investors.
Enhancing value with interim expertise
Indeed, the interim role is much more than simply acting as a stopgap; interims are experienced specialists who know what investors are looking for and can drive substantial, sustainable improvements and efficiencies that make a business more attractive to private equity firms. This includes everything from streamlining operations to ensuring the company is future-proofed and set for continued growth.
In addition, the flexibility of interim professionals allows them to undertake significant transformation projects – be it cost reduction, operational efficiencies, regulatory compliance, or even spearheading ESG initiatives – without burdening any potential new investors with long-term resource commitments.
When investors come on board, interim specialists can seamlessly move on, allowing new funders to work with the businesses’ permanent leadership on establishing longer-term growth plans from a solid foundation.
Making a business ‘easy to buy’
Of course, a key aspect of preparing for investment is making a business ‘easy to buy.’ Often, this involves a range of specialist issues that entrepreneurial leadership teams aren’t always versed in – for example, dealing with regulatory issues, optimising processes, and preparing rigorous deal rooms.
Interim talent is often ideal for helping permanent leadership teams deal with these requirements. While at situation may be completely new to your board, specialist Interims have seen it all before and know exactly what needs to be done and why.
The commonality of Interim CFO
Given the particular value that Interims can bring in getting financial processes and reporting in a strong place for scrutiny by potential investors, it isn’t surprising that the CFO role stands out as the most commonly utilised of all interim leaders.
Specialist interim CFOs – typically highly experienced in helping businesses prep for investment – act as trusted but temporary advisors, guiding the financial strategy to align with the expectations of potential investors. Not only does this help a business be as ‘deal room ready’ as possible, the fact that an experienced interim CFO is on board acts as a positive signal to potential investors in its own right.
That’s because investors will know they’ll be inheriting a well organised financial situation which has been guided by an experienced hand (and, of course, one who will also be perfectly placed to provide a smooth handover to their permanent replacement).
Interim leadership and cultural integration
The smooth assimilation of operations and cultures between investor and investee is essential for the sustained success of the newly funded business. And another area where interim leaders excel is in facilitating post-investment synergies between company and backer.
Interim leaders, with their experience and strategic insight, are experts in helping existing teams identify and smoothly navigate potential culture clashes and operational roadblocks that might otherwise hinder the post-investment integration process.
Interims: a wise investment
For founder-led mid-cap businesses eyeing investment, the deployment of interim talent can be a game-changer. They not only bring the expertise necessary to enhance a company’s value and attractiveness to investors, but also offer a level of flexibility and strategic insight that can be difficult to replicate with permanent staff alone.
As businesses navigate the complexities of pre-buyout preparation, the decision to engage interim expertise could very well be the difference between a good investment and a great one.
As the UK’s number one interim service provider – based on the Institute of Interim Management’s annual survey – no one is better placed to help you find the right interim talent for your strategic objectives.
Discover more about our Interim Management Services, or if you’d like to speak to one of our consultants, please contact us.