March 26, 2024

The Six Times PE Funds Use Interim Executives

The Six Times PE Funds Use Interim Executives

Many private equity funds hear the words “interim executive” and think the only application is an Interim CEO or CFO for turnaround or short-term fill-in of a portfolio company. But PE funds seeking a great return look to interims for their unique abilities to build and transform companies.

An Interim CEO brought on to lead a recently acquired private equity portfolio company, for example, may match the hold period of the fund. That could mean several years of working to build, grow, and ultimately exit the company, hitting big returns for everyone involved.

Here are six major use cases for an Interim CEO, Interim CFO, or other interim executive in PE-backed portfolio companies:

1. Interim Executives in Diligence

Most funds hope to spread their wings and work beyond industries where they’ve already had success. In looking at new industries where acquisitions may cost less and produce higher returns, a little more diligence is often needed. The further afield a fund goes, the more they need expert leadership removed from prior operating teams.

We recently matched a $5B+ fund with an Interim CEO expert in e-commerce and consumer goods to help determine if a potential acquisition made sense. While the fund had deep experience in the manufacturing space, understanding the current challenges and opportunities to expand go-to-market strategy was essential. Once the deal closed, the executive transitioned into an ongoing advisor role to ensure the acquisition would be a success.

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February 28, 2024

Quality of Earnings Report: The Secret Weapon Buyers Won’t Tell Owners About

Quality of Earnings Report: The Secret Weapon Buyers Won’t Tell Owners About

Are you planning to sell your company in the next year or two? 

If so, think about commissioning your own Quality of Earnings report — BEFORE you go to market. Why? Because your buyer will commission one. And it could mean you’ll be leaving money on the table.

A QOE is the business valuation standard prospective buyers use to determine a final purchase price for target companies. If you haven’t commissioned your own, you’ll by necessity be relying on the one your acquirer commissions.

As InterimExecs CEO Robert Jordan said in a recent webinar (scroll down to watch the 8-minute video), consider a middle market business owner who has signed a letter of intent agreeing to sell the company to a private equity fund for 10 times earnings. He believes EBITDA to be $10 million and expects to close for $100 million.

Then the acquirer commissions a QOE to ensure this is a solid investment decision. The report comes back with an adjusted EBITDA of $9.5 million. BAM! The closing price just dropped by $5 million.

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December 8, 2023
Robert Jordan

3 Things Companies Can Learn from How Private Equity Firms Work to Maximize Value

Robert Jordan | CEO, Association of Interim Executives
3 Things Companies Can Learn from How Private Equity Firms Work to Maximize Value

Private equity firms have a simple recipe for making money: They identify companies they believe are undervalued, improve those companies, then sell them for far more than they paid to buy them in the first place.

Knowing how private equity firms work can serve as a roadmap for any company looking to improve operations and maximize value.

Start with these 3 things PE firms do following an acquisition in the lower middle market ($2-$15 million in EBITDA) to improve your own bottom line, whether you plan to continue operating your business or want to ready the company for a future PE investment.

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June 26, 2023

Business Exit Strategy Guide for Owners: Selling Your Business to Private Equity

Business Exit Strategy Guide for Owners: Selling Your Business to Private Equity

Selling your business to private equity is a potentially very lucrative business exit strategy. In fact, the second sale — when the PE firm sells the company outright to recoup its initial investment — can be even more lucrative than the first deal when you sell to a PE firm.

But selling your business to a private equity fund is a complicated sale process and you could end up partners for a number of years before getting a big buyout when the second sale closes. So it’s important to understand all of the ins and outs before embarking on this path.

Here, we share 9 important questions you should ask if you are considering selling your business to private equity.

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May 18, 2023

How To Do a Reverse Merger Into a Public Shell Company in 9 Not So Easy Steps. Or SPAC in 10!

How To Do a Reverse Merger Into a Public Shell Company in 9 Not So Easy Steps. Or SPAC in 10!

When it’s time for a private company to go public, or the board of directors determines that fundraising is needed on a large scale, an IPO is not the only option. There’s also a less well-known and, until recently, less-well-respected option: a reverse merger into a public shell. It is often called an Alternative Public Offering (APO).

This reverse takeover process, which can be faster and cheaper than a traditional Initial Public Offering, is growing in popularity.

Scott Jordan (no relation to InterimExecs’ CEO Robert Jordan), an investment banker and CFO who spent 30+ years working in biotech, engineered a reverse merger of a biopharma company in 2019. He says that while the coronavirus caused capital flow interruptions, investors in the private markets are still providing capital to companies with novel or scientifically validated biotechnology companies.

That means reverse mergers and PIPEs (Private Investment in a Public Entity) can still raise the money needed to complete their deals. He estimates that about 20 biotech firms debuted in the public markets last year as a result of reverse mergers and the number is on track to repeat in 2020, despite the virus.

But let’s back up and begin at the beginning.

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May 4, 2023

Search Fund Primer: Your Guide to Launching a Successful Search Fund

Search Fund Primer: Your Guide to Launching a Successful Search Fund

As the incredible success of private equity over the past couple of decades has made clear to many aspiring company owners and investors, if you can find and acquire a decent company, it’s possible to earn great returns. This has fueled a new class of individuals seeking to launch their own search funds. But how to start a search fund that wins at the acquisition game? 

This guide to starting a successful search fund answers the questions: What is a search fund? And, How can I start a successful search fund?

Let’s explore.

The Stanford Graduate School of Business Center for Entrepreneurial Studies explains search funds this way: “The model offers relatively inexperienced professionals with limited capital resources a quick path to managing a company in which they have a meaningful ownership position.”

Inexperienced professionals? Limited capital resources? It doesn’t exactly sound like a recipe for success.

But it can be.

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April 5, 2022

Crypto 101: Cryptocurrency Basics for Business Executives

Crypto 101: Cryptocurrency Basics for Business Executives

Crypotcurrency. NFTs. Bitcoin. Blockchain. They’re the hip new financial products and all the cool kids are talking about them. As many as 40 million have invested in them.

But what are cryptocurrencies and how will they affect the way you run your business in the future?

We talked to Stephen Meade, founder of TheBullsEyeGuy.com, who shared his expertise in a cryptocurrency 101 tutorial. In this beginner’s guide, he explains what cryptocurrencies are, explodes some myths about what they’re good for and helps you understand how you may use them to manage your business in the future.
Let’s dive in.

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March 21, 2022

Business Exit Strategy: Owners Neglect at Their Peril

Business Exit Strategy: Owners Neglect at Their Peril

InterimExecs founder Robert Jordan learned early the tremendous weight an entrepreneur must bear: “When you own the company, it’s nothing like being an employee,” he writes in exploring the sacred trust of ownership. “You might as well compare lifting up a hundred pound weight versus a feather.”

Jordan, who founded his first small business at age 26 and “hit every speed bump you could possibly think of, and then a couple more just for creativity points,” has learned a lot along the way. Among the most important lessons: while business exit planning is critical, it is usually neglected – at the owner’s and board’s peril.

Alejandro Cremades, author of Selling Your Startup: Crafting the Perfect Exit, Selling Your Business, and Everything Else Entrepreneurs Need to Know, agrees. He says that a company’s management team must add “crafting an exit strategy” to their business goals.

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October 1, 2021

Lessons from Intel Capital’s Co-Founder Avram Miller

Lessons from Intel Capital’s Co-Founder Avram Miller

Avram Miller, a well regarded Silicon Valley luminary, has recently published a memoir that chronicles his journey in the world of technology.

It is called The Flight of a Wild Duck, which is how Intel’s CEO, Andy Grove, referred to him because Miller would always chart his own course. This included founding Intel Capital, which became the most successful corporate venture group, and playing a leading role in the creation of residential broadband.

The book is full of interesting stories of key figures in the tech world and well as important lessons.

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March 31, 2021

4 Winning Strategies to Add Value to Portfolio Companies

4 Winning Strategies to Add Value to Portfolio Companies

“For private equity funds, the clock starts ticking the second you sign, the second you own your new portfolio company. So the Holy Grail is: how do you add superior value?” That’s how InterimExecs CEO Robert Jordan helped kick off a recent panel about adding value to portfolio companies. Sponsored by InterimExecs and hosted by Private Equity Career News publisher David Toll and John McNulty’s Private Equity Professional, panel experts shared best practices for value creation.

On the panel were Jordan, Micah Dawson, vice president of Portfolio Support at Trivest Partners; Pericles Mazarakis, managing partner of TriSpan; and Mike Zawalski, an InterimExecs RED Team member who serves in executive chairman roles with PE-backed portfolio companies.

Here, we round up the top insights from the panelists, everything from the importance of monthly operation reports to establishing trust with the business owner and investing in human capital.

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