The mindset in a minority fund is different. We work together but are very much a supportive passenger rather than in the driver’s seat for the journey.
David Whileman, Partner and Head of Partnership Capital, Inflexion.
Inflexion has always been about creating solutions for entrepreneurial businesses. In 2014, Inflexion Partnership Capital was launched as the first dedicated fund in Europe to support businesses that wanted liquidity or capital for growth but didn’t want to sell.
There are plenty of these companies, with the current business climate causing many business owners to rethink plans, whether company growth or personal circumstances. Some want to release some liquidity but retain control of the business they’ve carefully built and therefore seek a long-term partner. They are looking at what’s next, whether for personal reasons or professional, including funding to bolster balance sheets, support M&A or fund their growth, possibly by entering new geographies or markets, or even to change the ownership structure as some longstanding owner-managers look to crystallise value they’ve built up. For these reasons and more, many businesses could benefit from external equity and support for their business, whether as a sounding board or for more specific skills.
While such inflection points typically catalyse talks with private equity backers, not everyone wants to sell their business and Inflexion’s dedicated offering leaves owners in charge.
David Whileman, Partner and Head of Partnership Capital, Inflexion.
And with three distinct funds to cater to different business sizes and management preference, Inflexion can be truly flexible. “Our differentiated mandate means we can tailor each investment, so we can ask owners what they want,” David continues.
While this funding may be minority, businesses partnering with Inflexion’s Partnership Capital Fund have the same access as the rest of its portfolio to Inflexion’s network and proven value acceleration methods, which include overseas offices, digital, commercial and ESG experts, dedicated resource for building talent and experience in supporting over 450 acquisitions. Entrepreneurs can choose to use some, all or none of these as they steer their business through its next stage of development as they aim to maximise valuation – as well as the chance of their legacy remaining intact rather than being absorbed by another business.
M&A: Thoughtful acquisitions can transform a business. We’ve supported over 450 for our partner companies.
International expansion: A local presence is key to successful geographic expansion, and our international experts covering Asia and the Americas provide invaluable experience and connections.
Digital enhancement: Executing a well thought out digital strategy can help businesses across all sectors provide a better customer experience and builds up valuable data.
Talent management: People are at the heart of every business, and their engagement is crucial to success. We have an experienced team to support our portfolio in this critical area.
Commercial strategy: Having the right product-market-pricing fit coupled with strong sales execution is key to accelerating top-line revenue growth and success. Our team supports our portfolio with go-to-market strategies including pricing, proposition and sales.
ESG Framework: ESG isn’t just about risks; it’s about growing your business, with benefits ranging from better employee engagement to improved cashflow and reduced costs. Inflexion has a dedicated in-house team to support this vital area.
It's clear that the right private equity partner brings more than capital; they can bring long-term partnership to accelerate growth. In challenging times, a partner with experience in managing through economic uncertainty with a culture of support is vital.
If you’re looking to grow your business through acquisition, it’s best to seek out a firm which has relevant experience in this complex exercise. We have supported over 450 acquisitions for our portfolio companies, from sourcing and approaching targets, to negotiating with them, introducing banks where funding beyond our equity was required, and to then integrating the businesses post-deal.
Owing to the care needed when integrating businesses, as well as the need to respect delicate cultures and embedded systems, we often support companies to accelerate their M&A plans early on in our partnerships. For example, in 2018 we provided minority funding to Huws Gray, and just six months later supported its purchase of Ridgeons, a transformational acquisition which doubled the size of the business and created the UK’s largest independent builders merchants. Throughout the entire four-year hold period, Huws Gray remained majority owned and led by the existing management team. The firm saw profits increase by 2.5x before Blackstone Group, a $140bn global private equity firm, replaced Inflexion as investors.
Other acquisitions can offer new verticals for the firms we invest in. For example, we are now in our sixth year of partnership with Radius Payment Solutions, during which time the company has doubled and still is growing. The firm’s growth was helped early on by its acquisition of Adam Phones, enabling the fleet payment processing and telematics provider to enter the telecommunications market. Like many of the acquisitions we support, this was done within the first year of our minority investment to ensure ample time to bed the business down. Since then, we’ve supported over two dozen acquisitions to help make Radius a multinational operating in 18 countries across five continents.
Another impressive international buy-and-build to journey was that of testing, inspection, certification, and compliance services business Phenna Group, whose partnership with Inflexion saw 23 acquisitions across six countries made in just 18 months create a global player of scale. The minority partnership saw headcount triple and EBITDA double.
Expanding into new overseas markets can be achieved through M&A (as the examples of Medivet, Radius and Phenna above illustrate), organically, or a combination of both. Our portfolio now reaches 160 countries, with our international experts in Asia and the Americas on-hand, and often instrumental, to the international success of businesses we partner with. We’ve supported over 90 international add-ons in 27 countries to help our partners realise their global ambitions.
Over the years, we have helped with warm introductions and local know-how. Our Partnership Capital fund invested minority capital into K2 Partnering Solutions, with funds earmarked for supporting the specialist IT recruitment business to accelerate its growth globally by utilising our strong track record in the sector and expertise in K2’s key growth markets of the US, where we’ve helped build a team, as well as Brazil and China, where we have a local presence.
2023 started off with the announcement that Inflexion partnered with Proteros to support its growth, with a focus on international expansion both organically and through acquisition, particularly in the US.
The end of 2022 saw Inflexion provide Partnership Capital to YER, a Dutch recruitment specialist. The business started in Germany then Europe and now 60% of its business comes from the US. Extending this further and getting closer to the customers is a big part of the firm’s strategy, and Inflexion is working with management to further develop existing and new customer relationships and through continued international expansion, both organically as well as through select M&A.
We’ve spent a lot of time helping our portfolio to enhance their digital offering and capability as we see how technology can drive gains in data and efficiency. Whether overhauling a website to better serve clients and generate valuable data or implementing a new software platform to streamline business operations, embracing digital can help businesses across all sectors to provide a better customer experience and open fresh efficiencies and opportunities.
A digital presence is essential to all companies. Mountain Warehouse is the UK’s leading outdoor clothing and equipment retailer and received minority funding from Inflexion in 2018. The firm was operating its multi-channel offering in nine countries and sought a partner to support its roll-out in the UK and abroad, as well as a backer who could strongly support its digital enhancement. Since the minority investment, the team have embarked on an impressive e-commerce strategy which has grown rapidly – with online sales up 100% in its first year with Inflexion.
The team at CMSPI have pivoted to make the business a digital product-centric organisation since partnering with Inflexion. They’ve taken an iterative approach to build on CMSPI’s wealth of data to create products aimed at both internal and external users. The firm’s analysts have become more productive as a result, and are able to focus on client service as opposed to data crunching.
The carve-out of Giacom from its former parent has seen a positive first two years, and Inflexion’s Digital team have been a part of that, initially road-mapping the technical debt removal from the platform. We have also supported the creation of a data team and provided what management call a “very useful lens” onto Giacom’s platform architecture and security.
People are at the heart of every company, and so we have focused on supporting portfolio teams for a number of years. As part of growth or during times of uncertainty – whether a company is undergoing transformational M&A, expanding geographically, developing new operating models – attracting, nurturing and engaging valuable people is crucial.
We have a Talent Director who has spent many years helping growing organisations optimise for growth, through organisational design and thorough scoping and agreement of the skillsets required to succeed. Our network and experience in this area helps teams make the right appointments which can otherwise require a lot of time and often money.
Inflexion’s minority investment in Lane Clark & Peacock, a financial consultancy specialising in pensions, investment and insurance, was successfully exited after strong growth saw revenues increase by over 50% and pension scheme assets under advice more than double to c. £245 billion. An important development was to appoint a new independent Chair, with Inflexion’s Talent team consulting with the partners to understand the attributes they were looking for, and then developing a shortlist from their network. The eventual appointment was deemed crucial to LCP’s focus owing to the strategic lens the Chair provided.
Inflexion appointed an experienced consultancy to get to know the entire exec team at Giacom so we could identify strengths as well as where there were gaps. As a result, a very experienced CFO was brought in shortly after the deal was signed. There was also a Chief Digital Officer appointed to own DWS’s platform strategy and an NED joined from Inflexion’s network.
Our team can also help with international appointments, with the developments at K2 Partnering Solutions a case in point. K2 is acutely aware of the importance of people given it specialises in recruitment, but following our minority investment, our network proved helpful in establishing a local team for the business, whose clients include technology firms in Silicon Valley.
Sales-led profit growth has always been at the heart of Inflexion’s value acceleration strategy – but this has been sorely tested for most firms during the last three years. Focusing on retaining existing customers has been the highest priority for many businesses.
Our portfolio has access to a team dedicated to commercial effectiveness. This includes ensuring businesses develop the right propositions and commercial models, with a strong product-market-pricing fit.
The impact it can have can be seen with our investment in IT, communications and cloud wholesale platform Giacom (previously Digital Wholesale Solutions) to carve it out from Daisy Group. The company’s results since then saw its revenues and adjusted EBITDA grow organically by 14% for two years in a row with all of its key product lines achieving double-digit revenue growth. The creation of a data team following its carve-out has helped Giacom to differentiate pricing and boost bespoke selling.
We are also minority investors in specialist motor insurer Granite Underwriting, which boasts a 25% share of the UK taxi insurance market. Management are drawing on our industry expertise and experience in digital innovation to help grow their market share further and increase efficiency.
At Curinos, the industry-leading financial data, analytics and technology company, we have supported the team to improve pricing and cross-selling approaches. Additionally, with targeted additional investment the team is building a future product roadmap that supports their clients to provide a more personalised, and data-driven approach to interacting with their own customers – in turn driving their revenues goals.
For many businesses, ESG has shifted from a box-ticking exercise to a way of creating sustainable value. Being competitive with ESG helps companies to avoid risk as legislation trickles down, from packaging to decarbonisation. But ESG isn’t just about risks; it’s about growing your business, with benefits ranging from better employee engagement to improved cashflow and reduced costs.
In 2022, Inflexion developed an ESG Framework so that each business we back is clear on its journey ahead. The Framework is designed to be flexible, enabling ambitious portfolio companies to pursue bold ESG strategies, whilst also allowing room for those earlier on in their ESG journeys to focus on driving improvements in the key areas of governance, climate and diversity and inclusion.
This is no longer merely about reporting data but about making real change to the benefit of the business, to the environment, and to society as a whole. We provide the Inflexion portfolio with access to the right skills, knowledge and resources to deliver on their ESG ambition. Done correctly, all stakeholders will benefit from having a sound approach to responsible investing.
Omnichannel retailer Mountain Warehouse has been taking sustainability seriously for years, looking at a broad range of issues from chemicals in materials to carbon reduction. Since its minority investment, Inflexion’s ESG team has supported Mountain Warehouse’s leadership team to expand its strategy beyond environmental and towards a more comprehensive approach to ES&G through training, toolkits and coaching. This has supported the development of an enhanced approach to Diversity, Equity and Inclusion as well as the exploration of how to better integrate ESG considerations into the customer experience.