Selling a Unicorn: Inside FSW Funding’s Acquisition by Oxford Commercial Finance

After more than two decades building FSW Funding, Robyn Barrett sold the prominent factoring firm to Oxford Commercial Finance this past spring. Even with the sale, Barrett is still committed to growing the company and maintaining her people, all while taking on new opportunities.

BY MARKIESHA THOMPSON, ASSOCIATE EDITOR

Timing is important with mergers and acquisitions, but so is preparation. Both factors played a major role in consummating the acquisition of factoring firm FSW Funding by Oxford Commercial Finance this past spring.

Robyn Barrett, founder and managing member of FSW Funding, says she began preparing FSW for acquisition three or four years ago by building out its management team, creating policies and procedures and having its financial information audited so that it would be as appealing as possible to potential buyers.

As a certified public accountant, Barrett was uniquely qualified to ensure her company had all its ducks in a row for the acquisition. According to Barrett, although she didn’t advertise her intentions publicly, the firm attracted interest prior to the COVID-19 pandemic and once the M&A market kicked back into gear in the last year, that interest returned in full force.  

On the other side of the equation, Oxford Commercial Finance, a subsidiary of Oxford Bank, contacted FSW about a potential acquisition as part of its commitment to build a commercial finance business. David Lamb, president and CEO of Oxford Bank, explains that instead of building infrastructure and systems organically, its strategy has been to hire experienced people and acquire established platforms. FSW fit that mold perfectly, with conversations beginning in mid-February and the deal closing in early April.

Cultural Fit

As Lamb explains, the quick process was made all the easier because of Barrett’s highly organized records and documentation. In addition, Barrett’s reputation both within and outside the commercial finance space made her company an even more attractive acquisition target.

“It is really more about the leader than anything when you do an acquisition, at least to me and the team,” Lamb says. “We were actively looking, and Robyn and her team turned out to be a great fit for us.”

Lamb says once Oxford’s risk management team and other internal teams were on board, policies were finished and all other necessary steps were in order, Oxford was ready to move forward, particularly since the factoring and asset-based lending space aren’t exactly foreign to the company.

“Oxford Commercial Finance actually does understand asset-based lending and they understand factoring,” Barret says. “And they've got Steve Tomasello [senior vice president at Oxford Commercial Finance], who was at Crestmark, there and Mark Matheson [executive vice president at Oxford Commercial Finance], who was at Crestmark. So, I felt that they were truly investing in starting a commercial finance group and that I wouldn't be the only one carrying the torch.”

As part of the acquisition, Oxford is keeping the entirety of FSW’s team intact, something that was important to both Barrett and Lamb. From Oxford’s perspective, maintaining the team provides it with a cohesive and knowledgeable unit to attack the opportunities the bank is eager to pursue — many of which catalyzed the acquisition itself — as well as deals already in its pipeline. Lamb also says in speaking with Barrett during the M&A process, he could see FSW and Oxford had similar cultures, calling FSW “the biggest small non-bank financial company.”

“It’s rare to find somebody with that level of risk management, frankly, and performance,” Lamb says. “[FSW] did both. It's kind of a unicorn.”

Barrett says discussing Oxford’s internal culture was a major part of the acquisition negotiations, noting that without that fit, the deal wouldn’t have gone through.

“Culture is really important to me. If we can still maintain that culture, which is a lot like Oxford's, then my employees are happy,” Barrett says. “I put my employees first because if my employees are happy, they're going to do their job; they're going to make the clients happy. And Oxford is the same way. And they really do invest in people. There's no ivory tower.”

Doing More

Applauding Oxford’s vision, Barret is excited about the future for FSW, which will initially maintain its brand identity before transitioning to fully embrace the Oxford Commercial Finance brand once the acquisition is more established in the marketplace. In addition to that transition, FSW will now have access to capital at a cheaper cost of funds that will allow the company to expand, get larger deals approved, remain independent and be more aggressive in the market.

“It allows us to be more competitive in the market. It also allows us to go up market and do true ABL transactions and then, hopefully, down the road, we can do equipment financing,” Barrett says. “We can do all the things we did before, plus we can do more.”

Despite selling the company, Barret will continue to help build FSW. In fact, the acquisition will free her up to focus on new deals and marketing rather than having to handle human resources, accounting and everything else that comes with a running a business.

Even with all the benefits of being acquired, Barrett acknowledges that some things will change, especially as the formerly independent FSW takes on the yoke of regulation as part of a bank. However, Barrett sees this as a potential benefit, explaining that as regulations inevitably increase in the commercial finance space, merging with a company that already manages the red tape will make it easier for FSW to focus on its core competencies rather than trying to traverse the regulatory world alone. 

Aside from helping with regulatory procedures, Oxford Bank will obviously play a large role in building the business along with Barrett. Lamb says the company plans to grow its capital base and utilize its contacts in southeastern Michigan to refer business to FSW, especially with bank clients and prospects who may not fit the conventional credit mold, as well as provide new solutions for FSW customers.

Entrepreneurial Spirit

From both Lamb and Barrett’s perspective, the initial weeks since the acquisition announcement has proved fruitful, with Lamb saying that everything has proceeded better than expected.

Barrett says that FSW’s goals as a part of Oxford Commercial Finance, both in the short and long term, will be predicated on growth, especially as the company continues to bring deals in like it always has, only now with a larger appetite.

“We're going to measure success by how much can we grow,” Barrett says. “I think that's how the bank's going to look at it too. They have goals for us to meet and if we can meet those and maintain culture, I think that's true success.”

Barrett also hopes that the growth of FSW since its founding in 2001 and this acquisition will serve as an example for younger women in the commercial finance industry who are committed to building their own businesses.

“I'm hoping that there's other women, younger women, that look at FSW Funding and say, "Hey, you know what? She did it. I can do it too,” Barret says. “I think it's really important because we're right now seeing a lot of acquisition of factoring and ABL shops that have been around for a long time. Let's make sure that we're bringing people up below us that might have that entrepreneurial spirit.”

Markiesha Thompson is an associate editor of Commercial Factor.