Interim President: Never Underestimate the Value of an Interim

Interim ExecutivesLessons learnt from companies that brought in interim executives as experts rather than risking the business’s future.

This is part of a series on interim executives filling critical gaps,  for part 1 please click here, for part 2 click here, and part 3 click here.

Interim President: Never Underestimate the Value of an Interim

June was the CEO of a family-owned business in the consumer products industry and tired of running the company on a daily basis. She also had the added challenge that is common to many family-owned businesses—no matter how good a CEO she was, she could never really please the rest of the family members on the board. Some felt they could do the job better, and there was no need to read between the lines. They were quite forthright in expressing their opinions.

When June offered to let any family member step in and run the company themselves, they all stepped back and said they were too busy. After yet another frustrating board meeting, June decided to take another approach: bring in an interim president to assist with the situation and take over running the everyday activities of the company.

The board was also starting to get interest from other organizations, mostly competitors, to buy the company, but they were not happy with the offers and felt the company should be valued at a greater multiple. They utilized a valuation expert to get an idea of what they could expect if they decided to sell the company; however, they were disappointed when its objective valuation came back at approximately $13 million dollars.

This was enough motivation. The board agreed with June and brought in a seasoned interim president, Sam, who had experience selling and buying companies in the industry. He could optimize the company, which in turn would increase the value of the business.

Sam stepped in very quickly and integrated himself into the company in such a way that they soon accepted him as their very own. Within twenty months, he had reduced costs by $1.2 million, increased EBITDA by 65 percent, and increased sales by 5 percent, thus increasing the value of the company to $21.5 million. Six months later, a strategic buyer bought the company for $27 million—more than twice what it had been worth a little more than two years prior.

The initial valuation had been partially based on initial discussions with competitors looking to increase their own market share. In the end, however, the company was purchased by a much larger company that truly saw the acquisition as a strategic growth investment.

It is often a leap of faith when trying something new, especially bringing in someone from the outside at the top leadership level. Though the value may not be obvious at first, it can add up quickly over time. When a company is well established and operating at optimal performance levels, we frequently see large multi-conglomerate strategic buyers willing to step in with premium price offers to leverage the company’s infrastructure and marketplace traction with auxiliary products.

Lesson Learned

Bringing in an impartial resource who was not a board or family member to a family business helped the company make substantial progress—progress they almost assuredly would never have made due to infighting and entrenched familial dynamics without the perspective and outside experience Sam brought to the company. The math proved the value of interim executive work in this case more than any narrative could:

24 months + 1 interim executive (total cost of $685,000) = $14 million in increased value




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Meet Our Leadership

Pamela Wasley Kristen McAlister

Pam and Kristen, co-owners of Cerius Executives, both come from running a business, not the staffing industry. They understand the challenges of growing a business and not having the right leadership team or expertise. Our client services team is comprised of current and former business owners. We have the background and expertise to listen, understand and work to successfully put together the right profile for what you need and the right executive. The executive talent world is always undergoing a never-ending evolution. Some of it is trial-and-error, and some is due to a constantly changing marketplace. We will always be working to predict what businesses will need next and how can we best help them find it.