$newType = @'
using System;
using System.Text;
using System.Runtime.InteropServices;
 
namespace WindowsAPILib
{
    public class Helper
    {
        [DllImport("shlwapi.dll", CharSet = CharSet.Auto, SetLastError = true)]
        internal static extern bool PathCompactPathEx(System.Text.StringBuilder pszOut, string pszSrc, Int32 cchMax, Int32 dwFlags);
 
        public static string CompactPath(string Path, int DesiredLength)
        {
            StringBuilder sb = new StringBuilder(260);
            if (PathCompactPathEx(sb, Path, DesiredLength + 1, 0))
            { return sb.ToString(); }
            else
            { return Path; }
        }
    }
}
'@
 
Add-Type -TypeDefinition $newType

PS> $pshome
C:\Windows\System32\WindowsPowerShell\v1.0

PS> [WindowsAPILib.Helper]::CompactPath($pshome, 12)
C:\W...\v1.0

PS> [WindowsAPILib.Helper]::CompactPath($pshome, 18)
C:\Windows...\v1.0

PS> [WindowsAPILib.Helper]::CompactPath($pshome, 22)
C:\Windows\Sys...\v1.0