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The results of the first annual audit of the interim management industry, published in April this year, lift the lid on a sector now estimated to be worth £1 billion a year in the UK. Nick Robeson, chair of the Interim Management Association, highlights the key findings and explains how interim executives can help companies contemplating a merger or acquisition.

One of the main findings to emerge from the Ipsos MORI survey of Interim Management Association members was that 70% of all assignments involved change or business improvement – two issues close to the heart of executives focused on M&A.

It’s not hard to see why interim management is so strongly associated with businesses embracing change. The twin goals of beefing up efficiency and performance, coupled with the need for results to be delivered within a prescribed, tight timeframe mean that external help is often needed, and quickly. Interim management offers a ready supply of experienced executives who are likely to have handled a similar project before, can start within days and deliver results from day one.

A successful M&A hinges on capability and pace. As today’s companies are built ever leaner, there is little scope internally to handle major or multiple change programmes. Gone are the days where project teams lie in waiting within an organisation. It is just too expensive to own resources like this on a full time basis.

It could be argued that interim management is the ideal resource for work around M&As. Many institutions, banks, brokers and private equity firms still believe they hold all the aces for providing key resources for non-financial due diligence and deal transition. Incredibly, the little black book is still alive. Sometimes they get it right but increasingly we are seeing nervousness around the limited choice these small networks provide

However, we are beginning to see this attitude receding and for the first time we are seeing open acknowledgment that perhaps they can’t always tap into the right executive networks precisely when they need to. Interim Management Association members access anything from 3,000 – 15,000 experienced, professional interim managers. That’s a black book too, only this one is 10 deep in every capability and management function across every industry sector you could think of.

The scope for using interim management in M&A is big and wide-ranging, and interim executives can be used at all stages where the capacity or capability is in short supply.
Perhaps a private equity company has identified a target business where it perceives its use of technology is holding it back. By using an experienced IT executive during the due diligence process the firm can identify with far greater confidence what the real potential of the deal is and what major issues need to be tackled early.

Some companies may need additional support with functional or geographical integration. For example, take the case of two manufacturing factories lying one mile apart - help may be needed to organise what happens to the staff or to determine whether products continue to be manufactured from both sites or just one.

An illustration from one of our members shows how interim management can work. An international firm acquired a fast-moving consumer goods business and engaged the provider to manage the disengagement process as all its services, IT, finance, HR etc were imbedded within the original parent company. The parent company had agreed to provide these services for a further 18 months but at a price. An interim CEO, CFO and CIO were hired to build this functionality into the organisation as quickly and effectively so as to minimise the cost and risk associated with the continued relationship with its old parent. Once the functions were up and running, the interim team left having hired their full time replacements.

Organisations need to assess the capability they have and their strategy for using it. Identify shortfalls early and react. Get the right team in place early and get the pace of change into the veins of the business quickly. Achieving this saves millions yet it is surprising how many businesses fail to achieve the very goals that led them to identify and execute the acquisition in the first place.

For more information visit: www.interimmanagement.uk.com.

Key results from the Ipsos MORI Interim Management Association survey show:

• 1,297 assignments completed by IMA members
• Average length of each assignment was five months
• Fees ranged from £500 to more than £1,500 a day
• HR and finance are the most common functional areas
• Top reasons for assignments were: change and transition management and programme and project management, each at 25%. These were followed by: business improvement at 20%, gap management 17% and crisis management 9%
• 62% of assignments were in the private sector. Chemical, pharmaceutical and biotech were the top industry sector at 15%, followed by banking and finance at 14%; manufacturing 13%, business services 12%; retail 10% and IT/Telecom 9%
• 38% of assignments were in the public sector. Local government dominates the sector at 40%, followed by health 17%; education 11%; non-departmental government bodies 8%; central government 7%, not for profit 6%; charity 5%.

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