In a world where private equity investments are measured in rapid value creation and clear timeframes, there is no room to wait. Every month, every decision counts. Perhaps the most critical factor for success is leadership, having the right person in the right place at the right time. But what happens when a key person suddenly leaves, or when a new phase in a portfolio company’s development requires a skill that simply doesn’t exist internally? Relying on a traditional recruitment process that can stretch over six months is often an unsustainable luxury.

It is in this high-intensity climate executive interim management has emerged as a powerful strategic tool. To understand how this works in practice, we met with Johan Pernvi, a partner at the private equity firm Polaris. With deep insight from a large number of company acquisitions and transformation journeys, and in a unique position as the majority owner of Valtus, he shares his experiences.

In this interview, Johan elaborates on his reasoning about the real cost of a leadership vacuum, explains why a quick interim solution can often outperform a permanent recruitment, and highlights why cultural change is the most difficult, but perhaps most important, task for external leadership. His message is clear: in an industry built on calculated risks and quick decisions, one should not be afraid to try new, effective models to secure the most important thing of all – leadership that delivers.

PE firms work under time pressure with clear value creation goals. How does that affect the way you think about leadership in the portfolio companies and how quickly a leadership gap must be filled?

“It’s basically about the cost of having the wrong leader – or none at all. To wait and see also has a cost attached. Quickly understanding when new leadership is needed is in itself a value-creating decision. For important positions at the management team level, or in specialist roles, it takes three to six months or more to find the right person permanently. Often, you don’t have that time when the ownership period is three to five years. Every month of incorrect or absent leadership is a month lost from an already limited horizon.

What we often see in companies, and especially when we buy companies from entrepreneurs, is that the CFO role is under-resourced. In companies with a turnover of 300 million to one billion kronor, the entrepreneur has rarely had the same requirements for reporting and financial structure that a PE-owned company demands. They haven’t invested enough in the finance function. This makes CFO changes relatively common early in the ownership period.”

When you look at a potential acquisition, how do you assess the leadership strength in the company and how early do you see if the management team can handle the transformation journey you are planning?

“The organization and leadership are a large and important part of the due diligence process. We often bring in external support for that analysis. But you have to be honest with yourself: in due diligence, you never have full insight, and you never get a 100% accurate picture.

You work from a hypothesis. The first year after the acquisition is largely about testing whether that hypothesis holds – if the team really is what we thought, if the dynamics in the organization are what we expected. Sometimes it’s right, sometimes you have to adjust quickly.”

You have experience working with executive interim management in your portfolio companies. What made you choose that solution over permanent recruitment, and what was the deciding argument?

“In the most recent case, it was about a time-limited, specific effort by a person with specific real estate expertise, a situation where a permanent recruitment would have simply become unnecessarily expensive.

The alternative could have been to hire a real estate consultant with a whole team, but what we wanted was a senior person who was truly part of the organization. That’s an important distinction: an interim executive is not an external advisor who reports from the outside. They are inside the company, they own the issue, and they deliver.

The other common argument for interim management is when you need to replace a management team role that cannot be vacant. Then speed is crucial. A position at that level cannot be left open for months.”

What is your view of a typical situation where interim management is the best option for a PE-backed company – and when is it not the right solution?

“The classic situation is when a leader leaves without warning, and there is no internal solution. That is the core case for interim management. But it’s not the only one.

Sometimes an interim solution is better than a permanent solution – not just an alternative. If a driven, experienced interim manager can be in place in two weeks, compared to a permanent recruitment that takes three to six months, the calculation is often simple.

When is it not right? If you manage to find a permanent candidate who can be in place quickly, and you avoid a long recruitment process, it can be a good alternative. But it’s not by definition better. It depends entirely on what the company actually needs and when.”

Polaris invests in companies with strong transformation potential. What type of change is the most difficult to implement and where do you see the greatest need for external leadership?

“Cultural change. Changing people’s way of thinking, breaking ingrained patterns – that is the most difficult change of all. And that is precisely where external leadership can make a real difference.

New blood brings new energy. It brings new perspectives. A person who comes from the outside does not carry the organization’s history or its built-in limitations, and that can be a huge catalyst. But you shouldn’t fix what works. It’s about seeing what actually needs to be changed and then finding the right person to drive that change.”

If you were to give a single piece of advice to a company considering solving a leadership gap with an interim manager for the first time – what would it be?

“Don’t be afraid to try. Dare to test it.

What I want people to understand is that the selection processes behind interim management are thorough – the same quality as in a permanent recruitment process, but it moves much faster. It’s not a shortcut; it’s a different model. A model where the candidates are vetted and the process is structured.

It provides extra security to collaborate with a large and reputable player. The process and quality are ensured.”

#PE #PrivateEquity #InterimManagement #PolarisEquity