How do interims like initial conversations to go?
The process of engaging an interim usually starts with the PE fund providing some background information prior to a first conversation. 78% 46%
The FRP view
The key points that interims want a PE fund to provide – assuming no NDA is in place – are details on the performance of the business (78%), the objective of the turnaround (65%) and information on the company and its market (45%). Funds generally won’t start any conversation unless they have an NDA in place. However, once one is signed, funds told us they are likely to provide what interims are looking for – details about any issues with the business, its financial situation and background on the current management team. Once background information has been shared, interims and a fund will then meet. This is an opportunity to discuss the objectives and circumstances of the project in more detail, but also for the interim to start to ‘sell’ their skills.
In early stages of any interim engagement, there needs to be real openness and honesty from both sides of the table. It’s encouraging to hear that, provided an NDA is in place, PE funds are happy to provide the key information that interims are seeking. And it’s perhaps not surprising that performance is the key issue where interims want detail. When it comes to performance, it’s essential that PE funds are candid, right from the start, about the problems they see. Without this, it will be difficult for either side of the table to understand if they are the right fit. The fact that interims generally choose to emphasise their situational experience over any sector-experience reflects the value that interims most often offer PE partners. While a portfolio business’ management team will, in most cases, have strong sector knowledge, what they might be lacking are the skills to deal with specific circumstances or situations that the business has encountered. It’s these skills that PE fund wants to bring on board, and what an interim needs to show they offer. In the first meeting, they need to listen carefully, and then align their experience closely with the case.
When doing so, interims are most likely to focus on presenting their situational capabilities (46%) over any specific sector experience (38%) to their prospective PE partner. They might also mention PE funds they’ve worked with in the past – something 88% said they felt improved their standing with a potential new fund partner. Most interims tend to work with a close- knit network of one to four PE funds (73%).
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