Mandate anatomy
PE portfolio turnaround. Anatomy of a 12-month mandate.
Brief
Anonymised. Real shape of the work: how a private-equity fund brings in an interim CEO when a portfolio company is missing plan and burning cash.
Direct answer
A mid-market PE fund holds a 60 million euro revenue Italian industrial company that has missed plan two quarters in a row, breached a covenant, and lost the sitting CEO. An interim CEO is engaged within two weeks. Twelve-month mandate. Outcome: covenants reset, margin recovered by six points, permanent CEO in seat month eleven.
Situation at engagement
- Revenue 60 million euros, EBITDA 4.2 million versus 8 million in plan.
- Cash covenant breached, waiver requested from senior lender.
- CEO exited two weeks before the mandate started. No internal successor.
- Top team demoralised, three key customers at risk, two plants under-utilised.
First 30 days
- Cash forecast rebuilt at 13-week granularity, weekly review with the fund.
- One-to-one with every direct report. Two confirmed, one moved, one exited.
- Personal visits to the three at-risk customers. Two retained with revised terms.
- Lender meeting with a credible waiver ask and an operating plan draft.
First 90 days
- Operating plan approved by the board and the lender.
- Waiver granted with a covenant reset tied to Q3 EBITDA milestones.
- Plant consolidation announced, one of two sites in transition to closure over 18 months.
- New sales lead onboarded, pipeline coverage moved from 1.4x to 2.1x.
Outcome at month twelve
- EBITDA recovered by six margin points versus the entry run-rate.
- Covenants inside headroom, no further waivers requested.
- Permanent CEO in seat from month eleven, four-week handover.
- Total fee to the fund below the cost of the equivalent executive search plus opportunity cost.
Continue reading
Hub
Interim CEO in ItalyOne senior operator with a C-level track record, the alternative to head hunter fees.
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Interim CEO for PEThe full playbook for portfolio work.
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Turnaround CEOWhen cash and covenants are the mandate.
FAQ
FAQ on PE portfolio turnaround mandates
How does a PE fund typically engage an interim CEO for a portfolio turnaround?
The lead partner scopes the situation on a call, a written mandate and pricing are issued within 48 hours, the interim CEO is on the ground within two weeks with full board authority. Monthly retainer, no success fee, reversible mandate.
Who owns the operating plan during a turnaround mandate?
The interim CEO owns and signs the operating plan, presents it to the investment committee, and executes it. The fund reviews cash and covenants weekly for the first quarter.
How is the mandate closed?
Handover to a permanent CEO recruited during the mandate, or to an internal successor coached inside the mandate. The interim CEO stays for a defined transition period, typically four to eight weeks.
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