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THE BIG IDEA
Private credit markets grew from $2T to $3.5T (2020–2026) but are now under pressure from higher rates and stalled exits. PE firms holding companies longer than planned must shift from financial engineering to operational execution — and interim executives are the fastest lever to pull.
A quiet but significant shift is underway in private capital markets. The private credit boom that fueled rapid dealmaking over the past decade is now colliding with higher interest rates, slower exits, and investor liquidity pressure. For PE firms already holding portfolio companies longer than planned, the implications are real: improving operational performance is no longer optional — it is the primary path to preserving value.
How We Got Here
As banks pulled back from riskier lending and rates began rising, private credit stepped in and grew exponentially. Capital flowed into the sector, growing from $2 trillion in 2020 to an estimated $3.5 trillion in early 2026. For several years, the model worked extremely well. No more.
Persistent inflation, higher borrowing costs, geopolitical instability, and the acceleration of AI have dramatically slowed exits, creating ripple effects throughout the private markets ecosystem.
Holding companies longer isn’t value creation. Operational transformation is.
— Robert Jordan, CEO, InterimExecs
The Liquidity Pressure Building Beneath the Surface
When exits slow, capital becomes trapped. PE firms depend on portfolio company exits — sale or IPO — to return capital to lenders and limited partners. Without exits, funds are becoming more selective, exacerbated by pressure from their own LPs to maintain performance.
Warning Signs
The Market Is Already Paying Attention
- Private credit managers watching shares plunge as markets question valuations and hidden risks
- Default rates could double in coming years, per Partners Group
- Some investors cashing out at a loss to exit aging portfolio positions
- Bank stock volatility reflecting concern about interconnected lender exposure
One Way Out: Operational Excellence That Drives Value
Multiple expansions are fading, leverage is more expensive, and markets are demanding real operational improvement to justify a good exit. PE funds once assumed exits would come eventually — that assumption no longer holds.
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Why Interim Executives Are Today’s Strategic Imperative
In this environment, experienced interim leaders aren’t a luxury — they are mission-critical.
The Interim Advantage
Three Ways Interim Leaders Deliver When Markets Are Tight
- Immediate operational impact
Step in fast and drive performance improvements that are exit-relevant, even when markets aren’t cooperating
- Volatility into execution certainty
Battle-tested across industries; wired for change, not comfort
- Operations aligned
with exits
Smooth earnings and clear growth pathways materially improve buyer confidence — worth multiple valuation points
Interim Executive vs. Permanent Hire
| INTERIM EXECUTIVE | PERMANENT HIRE | |
|---|---|---|
| Time to Deploy | ✓ 48 hours – 2 weeks | 3 – 6 months |
| Ramp-Up Time | ✓ Day one execution | 3 – 6 month learning curve |
| Cost Structure | ✓ No benefits, severance, or equity | Salary + benefits + bonus + equity |
| Commitment Risk | ✓ 30-day cancellation | High — severance, legal exposure |
| Objectivity | ✓ Fresh outside perspective | Subject to internal politics |
| Focus | ✓ Results-driven, defined deliverables | Long-term career considerations |
| Cross-Industry Experience | ✓ Broad — multiple industries & situations | Typically one industry/company |
| Best For | ✓ Crisis, transition, transformation, exit prep | Long-term stable growth |
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The Complete Guide to Interim Management
Everything owners, investors, and boards need to know about deploying interim executives — when to use them, how to vet them, what to pay, and how to get results fast.
The current market is flashing alarms that the time is now.
Case in point: we were called into a PE fund’s poorly performing portfolio company with instructions to our RED Team CEO to “break no glass.” The end result was disastrous. The fund knew things were bad but feared the unknown. The reality turned out far worse. Don’t wait.
Bottom Line: Speed + Leadership Distinguishes Winners
Firms that rely on strategy alone will lag. Firms that pair strategy with proven execution leadership will outperform. Reach out for a confidential conversation about how our vetted RED Team executives can drive the change your portfolio companies need — with CEOs, CFOs, and COOs available in as little as 48 hours.
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Frequently Asked Questions
The private credit market isn’t in a formal crisis, but significant stress is building. Higher borrowing costs, slower exits, and rising default concerns are creating a tightening loop that’s forcing PE sponsors to focus on operational performance rather than financial engineering to protect and grow value.
The most effective lever is operational improvement — driving EBITDA, cleaning up financials, and building the management bench. Interim executives are uniquely suited to this because they deliver immediate impact without the ramp-up time of a permanent hire, and they’re measured on results, not tenure.
We deploy CEO, CFO, COO, CIO, CTO, CMO, and CSO-level executives with direct PE portfolio experience. We also place Executive Chairmen when the fund needs board-level oversight and accountability without replacing the existing management team.
Typically within 48 hours for initial conversations, with executives onsite within days. In urgent situations — fraud discovery, sudden leadership departure, deal closing — we’ve placed executives in as little as 24 hours from first call.
Most PE-related assignments run 6–18 months. Value creation engagements ahead of exit tend to run longer (12–24 months). Crisis stabilization is typically shorter — 3–6 months — before transitioning to a permanent hire or fractional arrangement. All contracts are subject to 30-day cancellation with no severance or benefits costs.
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