July 17, 2026
PE-backed businesses default to permanent hires. The real question is whether that default is always right.
When a role opens in a PE-backed business, the default is permanent. This is rarely examined with much rigour.The question of whether permanent is actually the right structure for this particular need, at this stage of the company's development, tends to get skipped in favour of habit.
The pattern that follows shows up repeatedly across portfolios. Permanent hires made under time pressure, because a vacancy is already damaging the business, that then fail or underperform because the need was transitional rather than structural. Or interim appointments brought in to plug a gap that drag on for two years because the decision to hire permanently keeps getting deferred. Both outcomes are expensive, and both are largely preventable with clearer thinking at the outset.
This is not an argument for one model over the other. It sets out the genuine decision criteria: what actually determines which structure is right, and what PE-backed businesses in particular tend to get wrong when they do not examine that question carefully enough.
The day-rate comparison is the wrong calculation
The surface-level cost comparison between permanent and interim is almost always misleading. A salaried CFO looks cheaper than an interim CFO on a day rate, but that comparison only holds if you exclude employer costs, the recruitment fee, the ramp-up period, the cost of the vacancy itself, and the cost of a wrong permanent hire.
When those factors are included, the picture changes. At senior level in the Netherlands, employer social charges typically add somewhere in the region of a fifth to base salary. Recruitment fees for a CFO-level search generally fall in the 20 to 25% range of base salary. A role sitting empty for several months has a cost. A wrong hire that unravels within the first year has a considerably larger one, both in direct terms and in the disruption it causes to the business during a period when stability matters most.
What the comparison actually looks like at CFO level in the Netherlands:
• Base cost: a permanent salary plus employer charges versus a day rate that scales with the length of the assignment, with no employer charges on the interim side
• Recruitment cost: a placement fee calculated as a percentage of base salary for permanent hires, versus a smaller percentage of total contract value for interim placements
• Speed:permanent searches at this level typically run longer than interim placements, where experienced candidates are often available within weeks rather than months
• Productivity ramp: permanent hires generally take longer to reach full output than experienced interims, who are usually selected specifically for their ability to be effective from the outset
• Downside risk: a permanent hire that does not work out carries severance and reputational cost; an interim assignment that does not work out can simply end
The downside risk is the variable most consistently underweighted in this comparison. Industry estimates for the cost of a senior mis-hire, once direct costs are combined with the indirect impact of disruption, lost institutional knowledge, and team destabilisation, range widely but consistently land well above the base salary itself. In aPE-backed business operating on a fixed timeline with low tolerance for distraction, a permanent hire that fails within the first year is not simply a talent problem. It can affect reporting quality and investor confidence, and in some cases the trajectory of an exit process.
Five questions that determine the right structure
The interim-versus-permanent decision looks binary but it is not. The right answer depends on five questions, and the honest answer to each matters more than any commercial preference for one model over the other.
1. Is this a structural need or a defined capability gap?
A Head of Finance who will build and own the finance function for the next several years is a structural need. An interim Group Controller brought in to stabilise reporting during an ERP migration is a defined gap. Before defaulting to permanent, ask what the role looks like in 18 months if the person completes their mandate well. If the scope narrows significantly, that is a signal toward interim.
2. How much time does the business have?
Permanent searches at senior level in the Netherlands typically take longer than most boards expect, often extending into several months once interviews, references, and notice periods are accounted for. If the business has a reporting deadline in six weeks or a commercial initiative that requires a senior hire to be operational by a fixed date, the permanent timeline may simply not be compatible with the need. An interim covers the gap while the permanent search runs properly, rather than forcing a rushed decision.
3. What is the failure tolerance if the hire is wrong?
A wrong permanent hire at CFO level creates a problem that takes time to unwind: identifying the issue, managing the exit, and running a second search while the function operates under strain.An interim engagement that does not work out can be concluded far more quickly, with considerably less institutional disruption. For businesses in sensitive periods, around a transaction, a CEO transition, or the first year post-acquisition, the risk asymmetry favours interim for roles where the brief is unclear or the candidate pool is limited.
4. Is the permanent candidate market strong enough?
In the Netherlands, the permanent candidate pool for certain senior finance and technology roles is thin enough that pursuing only the permanent track carries real risk of a long search that yields few viable candidates, none of whom ultimately accept. The interim market provides access to a different pool entirely: experienced practitioners who have chosen a portfolio career and are typically available on shorter notice.
5. What does this stage of PE ownership actually require?
PE-backed businesses in the first year or so post-acquisition often need a different type of leader than the same business will need two or three years later. The early phase rewards someone comfortable with ambiguity and building from scratch. The later phase rewards someone who can scale a function that already has a foundation. These are sometimes the same person and sometimes not. Recognising that leadership needs evolve through the ownership cycle, rather than assuming one hire should carry the whole journey, is one of the more practically useful judgements a fund or operating partner can make. This is also where the impact extends beyond the function itself: a finance or commercial leader who is wrong for the stage tends to create friction not just within their own team but in how the wider leadership group, including the CEO and other senior hires, operates and is perceived by the board.
Running both searches simultaneously
The most consistently effective approach in PE portfolio talent management is not a binary choice. It is running both simultaneously. The interim covers the operational gap from day one, preventing a vacancy from damaging the business during a search that take sthe time it needs to take. The permanent search runs without the pressure of urgency, which tends to produce materially better outcomes.
The obvious objection is cost. In practice, the incremental cost of the interim is almost always lower than the cost of a hiring decision made under pressure. A permanent hire accepted because the business could not sustain the gap any longer is a different, riskier decision than one made from a strong shortlist with adequate time to assess fit properly.
The parallel model also has a less-discussed benefit. The interim sometimes converts. A capable interim who demonstrates real performance over several months is a known quantity, and the risk of converting them to a permanent role is considerably lower than hiring an external candidate who has only been through interviews. The option to convert should be established at the outset of the engagement, not retrofitted later once expectations on both sides are already set.
A note on Wet DBA in theNetherlands
Any PE-backed business in theNetherlands engaging an interim needs to understand Wet DBA, which has been actively enforced by the Belastingdienst since the start of 2025. The core principle is that the working relationship must reflect its actual nature. If an interim is working on-site most of the week, taking instructions from a line manager, and embedded into the organisation in ways that resemble employment, the arrangement carries reclassification risk. Genuine independence matters:the interim should be delivering a defined outcome, not filling a seat. The convert-or-exit decision is not only commercially sensible. In the Dutch context, it is structurally prudent.
What a PE-grade interim looks like
Not every interim is suited to a PE portfolio environment. The PE context, with its investor reporting cadence, compressed timelines, and direct board scrutiny, is not a natural fit for someone who has spent their career in large corporates where decisions take months and budgets are set annually.
The distinguishing characteristics of a PE-grade interim are specific. They can name the funds they have worked with and what those funds expected from portfolio company management. They have presented to a PE board, not only an internal management team. They reach productive output quickly rather than needing an extended orientation period.They build clarity rather than waiting for it. And they typically have a track record of several assignments at comparable scope and seniority, which means they are drawing on real pattern recognition rather than adapting a corporate framework that was never built for this environment.
References for interims at this level should probe three things specifically: how quickly did they reach genuine impact, did they manage upward to the fund effectively, and how did the portfolio company leadership team experience the engagement. The answers to those three questions tell you more about whether someone will work in a PE environment than anything on their CV.
The decision is worth making deliberately
The interim-versus-permanent question does not have a universal answer, but it does have a right way to approach it. Start from the genuine nature of the need rather than from habit.Work through the cost comparison honestly, including the variables that neverappear in a simple day-rate comparison. Recognise that the interim and permanent markets are different talent pools with different profiles, not the same pool at different price points.
At Reign Partners, we work across both models and hold no commercial preference between them. A well-structured interim placement that bridges to the right permanent hire is a better outcome than a permanent appointment made under time pressure that creates a problem nine months in. The question of which model is right belongs at the very start of the engagement, not somewhere in the middle of it once the wrong path has already been chosen.
