The current mid-market UK private equity landscape has been shaped by seemingly relentless economic and geopolitical headwinds, but one thing remains certain, uncertainty!

With PE funds sitting on large reserves of dry powder at one end of the spectrum, and many portfolio companies being held longer than the usual cycle due to market conditions on the other, driving real value in existing portcos has never been more critical.

UK mid-market PE has remained stoic in recent years, demonstrating real resilience and an ability to adapt to the macroeconomic challenges and ever-changing investor diktats. Whilst mid-market deal volumes jumped by 15% in 2024, total deal values declined by just over 9%, to £44bn, mostly down to a rise in smaller transactions and an increase in strategic, bolt-on investments.

So, creating and driving value in portcos remains vitally important to mid-market UK PE, sitting at the heart of the investment thesis, and essential for the delivery of strong returns within the typically shorter investment life cycles.

This is where the board-level interim comes in.

In this article, Stuart Jansze, Partner, specialising in Board level interim placements within Private Equity at Eton Bridge Partners, speaks to Alastair Cotton, Eton Bridge Interim Associate, and expert PE MD/ Commercial Director, to share their insights into how board-level interims are playing a critical role in driving value creation across UK mid-market private equity portfolio companies.

Value creation focused on growth

Mid-market UK private equity typically leans into deep operational improvement, growth acceleration, and strategic repositioning to create and enhance portco value. This approach focuses on market expansion, business maturation and the professionalisation of businesses and their leadership teams, while leveraging digital technology and buy and build strategies.

Gone are the days that PE funds could simply rely on market growth or multiple expansions to guarantee returns. Today, funds must actively drive performance improvement to achieve value creation. Furthermore, unlike large cap funds, mid-market funds cannot rely on complex financial engineering to support value creation.

Additionally, the competitive landscape for quality assets has increased, as have higher acquisition multiples, so value creation has become a clear, strategic imperative for funds.

The impact of board-level interims

Funds are increasingly turning to board-level interims to drive value creation in portfolio companies, but why?

Typically, experienced interim executives – such as CEOs, MDs, CFOs, Commercial Directors, COOs or CPOs – bring demonstrable leadership, operational discipline, and strategic clarity at key inflection points for portcos. Often appointed by the investors, board-level interims are hired to drive restructurings, turnarounds, transformations, stabilisations, pivots into new revenue streams, in addition to supporting exit preparation.

What sets interim executives apart is their unwavering focus on delivering tangible results, neatly aligning with investors’ objectives. By offering an independent perspective and ‘fresh eyes,’ they are able to challenge the status quo and make hard decisions at pace,  enhancing enterprise value within shorter timeframes.

Unlike traditional leadership hires that can take months, executive interims can start near on immediately, offering unparalleled agility to respond to shifting market demands or investor priorities.

Additionally, board-level interims offer a deeply specialised skillset and associated ‘toolkits’ to address situational challenges, optimise strategies and accelerate growth. They have the ability to instantly bridge leadership gaps or drive essential transformation in periods of crisis and change.

Aligning investor expectations and driving results

Having spent 26 years in a variety of commercial and MD roles, experienced interim, Alastair Cotton explains; “PE investors will often give the board-level interim an outline of the problems, while the portfolio company typically offers their own ideas on the solution.” However, he stresses that “it’s crucial for the interim to conduct their own diagnostic first by ‘’getting under the bonnet’ of the business as quickly as possible.

In an earlier portco role Alastair recalls, the lack of sales growth was attributed to a weak sales team, but his own diagnostic revealed that the problem was actually product development. “We were building new products that we thought the customer wanted rather than new products that the customers actually needed. This diagnosis took time, but it allowed us to fix the right problem and led to 20% p.a. EBITDA growth and successful exit. It also prevented us from disrupting a perfectly good sales team!”

Another key challenge faced by an interim is time. By the time the interim arrives in a portco, the value creation plan is usually behind schedule, and investors will be looking for quick wins and instant results. ”While the interim will be able to deliver these,” Alastair points out “it is important to recognise and agree realistic timelines.”

He shares a more recent example where the investors required an improvement in commercial results within a six-month timeframe. “With no time for a diagnostic, conversations with the portco revealed that sales cycles were about nine months’ long.” This insight enabled Alastair and his team to adjust investor expectations accordingly and as a result, successfully bring the business back onto its growth trajectory after just twelve months. “Clearly, it had been crucial to agree those timelines at the start, and manage investors’ expectations accordingly,” he reflects.

What do PE funds look for in critical board-level interims?

“Funds are looking for a board-level interim who understands their world,” Alastair shares. Mid-market PE has its own imperatives and investors need someone who speaks their language and typically, has previously operated successfully in the portco environment.

Interestingly, he notes, “The more enlightened funds will sometimes prioritise functional experience over sector experience. The value of a board level interim often comes from their knowledge of best practice in other sectors which allows cross-sector pollination.”

In another example, Alastair introduced a digital ticketing system into another portco to enhance customer service and operations. “The effect was significantly transformational and contributed to increasing renewal rates which increased enterprise value, but it only happened because I had delivered something similar in another sector,” he explained.

Board-level interims: Critical assets in value creation

With uncertainty continuing to be the ‘new normal’, and mid-market UK funds still not pushing the button on much meaningful M&A, beyond the more strategic and smaller bolt-on acquisitions, it has never been more critical for funds to create true value in their existing portcos. By doing so, they can make sure enterprise value is significantly growing and position these companies for successful exits.

Whilst increasingly, mid-market funds leverage in-house operating partners and value creation teams, the board-level interim has proved to be, and still remains, a compelling contributor to materially shifting the dial in portco value creation. Their ability to provide expert leadership rapidly, without the long-term commitments and risks associated with permanent hires, offers funds invaluable flexibility and risk mitigation – ensuring portfolio companies maintain momentum and resilience even in volatile economic and geopolitical conditions. It is likely that this role will remain pivotal for some time to come as we continue to be buffeted by economic and geopolitical headwinds.

Thank you Alastair for sharing your insights and experience – a valuable reminder of the impact the right board-level interim can have in the PE landscape.

At Eton Bridge Partners, we work closely with private equity firms and their portfolio companies to identify and place the senior leadership talent needed at every stage of the investment lifecycle.

Get in touch to discuss how we can support your leadership needs and help drive value creation across your portfolio. Whether you’re preparing for investment, managing growth, or planning an exit, our expert team is here to help.