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Within a few years Cutters changed the whole hair salon industry in Norway. With the support of Procuritas, the company is ready to move forward into new markets.
In December 2015, founder Kristian Solheim stood outside of Cutters’ very first hair salon in the Norwegian coastal city of Bergen. Together with his co-founder, he handed out free coffee to draw people in to try the new haircut concept.
“My co-founder got the business idea when he was traveling in Japan. He missed an inexpensive hairdresser that could cut his hair without wasting any time. Shortly after he came back to Bergen, we started to set up the business,” says Solheim.
Cutters’ concept is to offer drop-in haircuts performed by professional hairdressers on a fixed, affordable rate in combination with a slick digital customer experience. The customers pay a price that is lower than that of equally qualified hairdressers and usually spend less than 15 minutes in the salon chair.
“The concept quickly became popular in Norway. We soon realized the opportunity to scale the business and open salons in new markets,” says Solheim.
A partner to help scaling
In less than four years, Cutters expanded from one to 60 salons. And in early 2019, Cutters started to look for a partner that could support the business and enable growth outside of Norway. Approximately six months later Procuritas became the majority shareholder of the company.
“We hired an investment bank to assist us to find a strong partner. Many potential buyers showed their interest, but early on we had a particularly good impression from the Procuritas team,” says Solheim.
Cutters was looking for a partner that could support international expansion, had digital expertise and really wanted to understand how the concept was so appealing in the Norwegian market.
“Procuritas distinguished themselves by being extremely thorough. They put a lot into it. For instance, they took the time to visit us in Bergen long before we were close to any deal and really paid attention to our ideas,” says Solheim.
During the period before the transaction, Procuritas arranged several workshops to better understand the business and what opportunities it provided for further growth. At this point, Solheim remembers he realized how much fun and how productive these people would be to work with.
“In the workshops, Procuritas drilled into our concept by asking questions and analyzing what we had done, what we could do better, what we could/should stop doing, what the challenges might be, what similar companies had done previously and so on. I soon got the feeling that we would be able to work well together,”he says.
After Procuritas invested in Cutters, the company experienced a different level of attraction in the market.
“We get access to Procuritas’ network and we are suddenly considered as more serious players among banks and landlords. Procuritas also put us in touch with people that make us smarter in our operations,” says Solheim.
Recently Bjørn Maarud, the retiring CEO of Bertel O. Steen – one of Norway’s largest service and trading companies – entered the role as chairman of the board. From before, Thomas Evald and Pierre Garami are board members, bringing useful experience gained from scaling the juice bar chain, Joe & The Juice to the global market.
Troika meetings and monthly check-ins
Solheim entered the role of CEO in Cutters in 2018, about a year before Procuritas became the majority shareholder in the company. Before he co-founded Cutters in 2015, he worked as a consultant in the Food and Agriculture Organization of the United Nations.
He has no previous experience working with the Private Equity industry and had thus not heard about Procuritas before the introduction in 2019.
“Now we work closely with a dedicated team having monthly check-ins and so-called Troika meetings whenever needed. In the beginning, it could be a few times a week. It got us off to a good start,” says Solheim.
Cutters is now close to the opening of salon number 100 and well-positioned to continue with its profitable growth journey in Europe. When questioned as to why he wanted to sell a majority stake in a profitable growth company that he founded himself, the answer comes quickly:
“It’s all about scaling the business, especially expanding outside of the markets we are already in. Procuritas significantly increases the likelihood that we will succeed,” says Solheim.
The Cutters investment