Commercial Factor Q&A: An Inside Look at eCapital’s Acquisition of Flexible Funding
After a tumultuous 2021 that led to a Chapter 11 bankruptcy filing, payroll funding company Flexible Funding got a new lease on life when eCapital acquired the firm and its assets near the end of the year. Marius Silvasan, CEO of eCapital, spoke with Commercial Factor to share the strategy behind the acquisition and what it means for the future of eCapital and Flexible Funding.
In 2021, Flexible Funding, a payroll funding company for the staffing and transportation industries, experienced quite a bit of turbulence. During the summer, the company moved its headquarters from San Francisco to Fort Worth, TX, while hiring a new CFO and CCO. Then, just a few weeks later, rumors swirled that the company and its InstaPay subsidiary were taking steps to enter Chapter 11 bankruptcy protection.
The dust finally started to settle in November when eCapital acquired the assets of Flexible Funding (including InstaPay), providing it with a new direction in 2022 and beyond. Marius Silvasan, CEO of eCapital, spoke with Commercial Factor to share details on the acquisition process and the plans eCapital has for the Flexible Funding team as part of its larger strategy.
How did eCapital go about acquiring Flexible Funding?
Marius Silvasan: They filed bankruptcy protection and the trustee affected what is called a 363 sale in bankruptcy in which it sold the assets of both Flexible Funding and InstaPay. We came in as the stalking horse bidder in that process, so we were the main bid and prevailed in that sale and acquired the assets of both businesses.
When did the process begin for the acquisition from eCapital’s side?
Silvasan: We got involved in the situation in the month of September of last year. This came right after Flexible had filed and we were advised about their filing. Then we were approached to look at the opportunity and that’s when we started considering our options to acquire the portfolios.
Why was eCapital interested in acquiring the business?
Silvasan: Flexible and InstaPay covered two industries that we like and that we have a fairly significant exposure in, which is the transportation and logistics as well as the staffing industry. So, it was really a good fit for us in our current book, which is the reason we decided to move forward.
Flexible Funding moved its headquarters to Fort Worth, TX, last year. Why is eCapital content to maintain its presence there?
Silvasan: We like the Texas market. We are going to maintain the office there. I think from their perspective, the decision was made as a result of a better labor pool in Texas versus California. There were also obviously some cost savings moving from California to Texas. But from our perspective, the Texas location works well and we’re going to maintain the office.
How does the IntsaPay platform factor into the acquisition?
Silvasan: I would say that it does not in a significant way. We have our own fintech platform we have been developing for years, which provides a lot of options, products and services to our clients. Our platform allows our clients to control their funding needs. So, we have transitioned both the InstaPay and Flexible clients to our platform and they now can take advantage of all that eCapital has to offer, including a variety of new products and functionalities.
What else can you tell us about eCapital’s own fintech platform?
Silvasan: The platform is geared towards offering a self-serve solution to our customers, meaning giving our clients the ability to process funding requests in the most convenient way and get funded in the most efficient manner while getting the maximum amount of capital. The platform combines the ability to process transactions on the web with the ability to process transactions from phones through iPhone and Android applications. In addition, the platform allows clients to move money amongst their eCapital lending products or complete external transfers quickly and efficiently 24/7.
How have assets of Flexible Funding been incorporated into the eCapital platform?
Silvasan: They have been transitioned to the eCapital platform fully at this point and have been incorporated in our business lines and are managed in the same fashion as the rest of our accounts.
What staff changes, if any, were made or have been made to accommodate the acquisition?
Silvasan: The staff was realigned by business unit and at this point, they are fully part of the eCapital team.
How does this acquisition compare with other acquisitions eCapital has made in recent years?
Silvasan: This acquisition is in line with previous acquisitions from an asset perspective, but I would say it’s the first acquisition we’ve completed in a bankruptcy scenario.
What is eCapital’s general M&A strategy and goals with any acquisition?
Silvasan: eCapital is looking to be a tech-enabled specialty lender with focus on the SMEs. So, with this in mind, we seek acquisitions that basically help us reach this objective. All of our acquisitions are part of this wider strategy. Once an acquisition is completed, its customers are provided entry to our fintech platform, allowing them access to more lending products and increased funding capacity. Our goal is to be the premier choice for SMEs looking for fast capital and an all-encompassing solution to their capital and banking needs. For the Commercial Factor audience, I’ll say stay tuned because we have a lot of exciting product launches scheduled during the course of this year.