BACKGROUND: PE Fund with $5 Billion in Capital Can’t Exit a SaaS Portfolio Company

A private equity fund with a strong track record and more than $5 billion raised in capital had taken one of its portfolio companies,a SaaS technology product, through a formal sales process. However, bids came in significantly lower than expected, leading the firm to pause the sale. Revenue had remained flat, and the fund recognized that new leadership and fresh thinking were needed to increase value before attempting another exit.

The software company was founded by three individuals who later handed off operations to a CEO who was strong in sales but lacked the financial and leadership capabilities necessary to fully scale the business. After the unsuccessful sale process, the private equity owners decided to strengthen the leadership team and focus on growing the company for another year before bringing it back to market.

THE CHALLENGE: What challenges signaled the need for new leadership?

Six years after acquiring the company, the private equity firm found the business was generating approximately $40M in revenue and $7M in EBITDA, yet growth had stalled. Despite operating in a market growing at double-digit rates and holding a strong competitive position, the company was not benefiting from industry growth.

When the fund ran a sale process, the resulting valuation fell well below expectations. Leadership had good ideas but lacked the execution needed to translate them into measurable results. The organization needed stronger accountability, improved execution, and experienced leadership to help unlock value.

SOLUTION: InterimExecs RED Team Deployed a Fractional Executive Chairman to Ready the Company for Sale

The private equity fund engaged InterimExecs to bring in an Executive Chairman with deep software and technology experience. The goal was to work closely with the CEO and management team to improve profitability, set clear KPIs, and prepare the business for a successful exit.

The Executive Chairman worked approximately three days per week, coaching leadership and advising fund partners to ensure consistent progress toward growth and operational improvements.

Key initiatives included:

• Defining the company’s value proposition
• Improving communication and accountability across the leadership team
• Implementing better reporting and clear KPIs
• Increasing revenue through cross-selling initiatives
• Expanding into new markets to acquire new customers

Results

• Improved enterprise value and overall business performance
• Increased cash flow and EBITDA performance
• Stronger lead flow and market expansion
• Company prepared and packaged for sale
• Successful completion of the M&A process and sale of the company led by the Executive Chairman

FAQs

Q: How do private equity firms use interim executives to grow portfolio companies before a sale?

A. Private equity firms turn to InterimExecs RED Team interim and fractional executives to accelerate operational improvements before taking a portfolio company to market. These vetted leaders have experience across industries growing and selling companies. They arrive on the job ready to focus on increasing revenue, improving EBITDA, implementing clear KPIs, strengthening management teams, and ensuring the company is positioned to achieve a higher valuation during an exit process.

Q: When should a private equity fund hire an interim or fractional executive?

A. Private equity funds typically engage interim or fractional executives when a portfolio company needs experienced leadership quickly. Common situations include preparing for an exit, replacing underperforming leadership, integrating acquisitions, driving operational improvements, or executing a growth strategy within a defined timeframe. InterimExecs RED Team executives can be on-site in as little as 48 hours.

Q: What roles do interim executives usually fill in private equity portfolio companies?

A. The most common interim and fractional roles in private equity-backed companies include Interim CEO, Executive Chairman, Interim CFO, Interim COO, and commercial leadership roles. These executives work alongside the existing management team to improve performance, implement strategy, and prepare the business for sale or recapitalization.

Q. How can an interim Executive Chairman increase enterprise value before an exit?

A. An interim Executive Chairman helps increase enterprise value by improving leadership alignment, defining the company’s strategic positioning, strengthening reporting and accountability, and driving initiatives that improve growth and profitability. This can include expanding into new markets, improving sales execution, and preparing the company for investor scrutiny during the sale process.

Q. Why do private equity firms use fractional executives instead of hiring full-time leaders?

Fractional executives provide private equity firms with senior-level expertise without the time and cost required for a full-time hire. This allows funds to quickly address specific operational or strategic challenges, implement improvements, and scale leadership support across multiple portfolio companies when preparing them for growth or exit.

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