The Growing Leadership Crisis in Manufacturing and Private Equity
From the pandemic to the Great Resignation, remote work challenges, and economic uncertainty, businesses have faced relentless disruptions in recent years. Yet, as we move further into 2023, none of these issues should be the top priority for manufacturers and private equity (PE) firms. Instead, the most pressing challenge is a talent shortage unlike anything seen before.
The statistics are alarming:
- Over 10,000 workers reach retirement age daily (AARP).
- 63% of frontline workers are excited about tech-driven job opportunities, while 53% prioritize health and wellbeing overwork (Microsoft Work Trend Index).
- 69% of employers struggle to find workers with the right mix of soft and hard skills (ManpowerGroup).
- The manufacturing skills gap could leave 2.1 million jobs unfilled by 2030, costing the industry $1 trillion (The Manufacturing Institute).
Supply chains, already stretched to their limits, must now adapt to new disruption geopolitical conflicts, extreme weather, and potential recessions.
Why Private Equity Firms Are Turning to Interim Executives
Many private equity funds associate interim executives solely with turnaround situations or temporary fill-ins. However, forward-thinking PE firms leverage interim leaders for their ability to build, transform, and scale portfolio companies efficiently.
Here are six critical cases for interim executives in private equity-owned businesses:
- Interim Executives in Diligence
When PE funds expand into new industries, they need expert leadership untainted by prior operating teams. While diligence isn’t a traditional interim role, many interim executives assist in pre-deal assessments, often for nominal fees, to ensure smooth transitions. Their primary goal? Assuming leadership post-closing.
- Interim Executives in Process Improvement & Upgrades
Many acquired companies lack the structured processes required by PE firms, especially if they were family-owned or privately held. Interim CFOs and operations experts help implement:
- Stronger financial controls
- ERP systems
- Supply chain optimizations
- Outsourcing strategies
- Interim Executives in Closing Mode
Permanent hires can take six months or longer. Instead of delaying deals, PE firms deploy interim leaders to:
- Close transactions efficiently
- Establish robust systems
- Recruit permanent executives
- Interim Executives in Growth Mode
While most interim engagements last 18–24 months, some interim CEOs align their tenure with a fund’s exit timeline (e.g., three years). These leaders specialize in:
- Corporate spinoffs
- Successful exits
- Scaling businesses for maximum valuation
- Interim Executives Preparing for Sale
Most PE firms must eventually exit their investments. But what if the management team has never navigated a sale? Interim executives with exit expertise assure:
- Optimal financial reporting
- Stronger branding and IP positioning
- Higher valuation of sales
- Interim Executives in Distress or Turnaround Mode
When portfolio companies underperform, PE firms bring in turnaround specialists to:
- Stabilize operations
- Replace legacy leadership if necessary
- Restructure for profitability
Contact VDS today to discuss how an interim executive can drive value in your portfolio.
The leadership gap in manufacturing and private equity is widening, but interim executives provide a proven solution. Whether your portfolio company needs a turnaround specialist, growth-focused leader, or exit-ready management, interim experts deliver immediate impact.
If your firm is facing talent shortages, operational inefficiencies, or an upcoming exit, now is the time to leverage interim leadership.