Deal enables strong exit for PE firm from cutting tool specialist

Regional private equity firm NorthEdge has completed the sale of Cutwel, a UK engineering cutting tool supplier, to Inflexion Private Equity Partners following a period of growth.

Cutwel, which is based in Cleckheaton, serves over 13,000 customers across a range of sectors, supplying them with cutting and machine tool accessories for next day delivery.

The exit was led by Andy Ball, partner, and John Hammond, director, alongside the Cutwel management team.

The deal provides a strong return for NorthEdge Fund II, delivering more than a threefold gross return, and represents the ninth divestment from the fund.

Since the initial investment in May 2018, NorthEdge has supported Cutwel to refine and accelerate its disruptive commercial model, alongside building a scalable platform fit for future growth through investment in people, technology and operational infrastructure.

Alongside appointing a chair and CFO to complete the Board, the business built out the operational leadership team with six critical hires.

This included a head of operations, who has driven a process and technology transformation to improve efficiencies, deliver operational leverage and create a platform for growth, and a head of sales and marketing, who has built out the marketing, sales and account management team from 15 to over 45 people.

Alongside headcount growth, the business has focused on improving digital customer acquisition and embedding a data-driven account management culture.

Cutwel was also able to grow its headcount by 60% and its customer base by 50%, resulting in revenue growth of around 70%.

Adam Gillard, CEO of Cutwel, said: “With NorthEdge’s support we have built a platform that is fit for future growth and we are excited to build on this momentum with our new partners, Inflexion.

“Our growth plan is focused on building deeper relationships with existing customers; utilising our digital and data capabilities to acquire new customers; continuing our focus on operational excellence and expanding our product range.

“Inflexion brings significant experience to Cutwel and we look forward to driving the business forward together with them.

“We believe Inflexion’s experience in developing market leading businesses is particularly well suited to our plans for building our customer offering further.”

Hammond said: “We are proud to have played our part in supporting Cutwel achieve strong top and bottom line growth, despite the challenging market conditions the business has faced since our initial investment.

“By refining and investing in its disruptive sales model and operational platform, the business has continually outperformed competitors whilst retaining its focus on being a great place to work for its people.

“Cutwel is a great example of a regional business creating local and national impact, ready for the next stage of its growth journey.

“We are happy to have delivered another strong exit for Fund II and remain excited to see what Adam and the Cutwel team achieve over the coming years.”

Malcolm Coffin, partner and head of Enterprise Fund at Inflexion, added: “Cutwel is an impressive business with a strong track record of growth. We look forward to supporting the team as they accelerate the growth of the business further.”

NorthEdge and Cutwel were advised by Sentio Partners (corporate finance) and Womble Bond Dickinson (legal).

A team from Addleshaw Goddard advised Inflexion on its investment in Cutwel. The AG team was led by Richard Hunt and included Dave Parker, Caera Loughran, Ed Ainscoe, Jack Irwin and Ozayr Makda.

Debt funding was provided by Virgin Money advised by Tom Telford, Andy Kirkham and David Parry at Squire Patton Boggs.