Private Equity is money from a group of investors, pooled together in a fund or private equity firm to finance takeovers and growth. The investors are often insurance companies, pension funds, wealthy individuals and the managers of the fund. The aim is to obtain a substantial return on the investment; a target return of 20-30 percent is not unusual.
Private Equity is once again in the spotlight. The growth of investments in recent decades has been twice as large as the sale of shares on the stock exchange. Due to the low interest rates, Private Equity investments are expected to grow further. This also implies a growth in the demand for experienced Interim Managers. Why?
Firstly, Private Equity funds like to use Interim Managers during due diligence to assess the health of an organization and to draw up a plan. See also our Private Equity case study. However, due diligence does not always reveal everything. Only when a fund enters a company can it really see what it is dealing with.
For example, operational improvements need to be implemented and the interests of the management need to be aligned with those of the shareholder(s). The old management often does not have the right skills to bring about a transition. It needs guidance from an experienced manager to adapt to the fund’s vision. Not only about where the company can go, but also about how to execute it afterwards. Because in addition to providing financial resources, fund managers nowadays also actively think along with the company’s strategy. Here, good Interim Management plays a decisive role.
Interim Managers identify in detail on-the-job shortcomings and opportunities. A good Interim Manager makes improvements in financial systems, marketing, operations and, for example, the technology of a company. All in all, this means change and transformation of the organization, which often facilitates access to new markets.
The Private Equity sector is becoming an increasingly powerful force in today’s entrepreneurial landscape. Whereas previously it was mainly seen as a financially driven sector, it has now been transformed into a more strategic investment specialism. With extra knowledge, new networks or activities and good interim management, Private Equity parties are better able to take a decisive look at the market in which the company operates and to create extra value.
Often the stake of a Private Equity fund is sold after 5 to 7 years. The proceeds are paid out to the investors. Professional Interim Management should therefore not be seen as a cost, but as an investment, both during the preliminary study and during the implementation.
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