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Q&A with Bruce Sim, Head of Acquisitions at eCapital Corp.
By Michele Ocejo
As head of acquisitions, Bruce Sim is responsible for sourcing commercial finance platform companies and portfolios across North America, and the UK.
Sim has more than three decades of experience in commercial finance, banking, and capital markets. Prior to joining eCapital, he served as senior director of business development at ExWorks Capital, and senior managing director for Glass Ratner Advisory & Capital Group. His banking experience includes executive roles as Head of Capital Markets and Wealth Management at RBC (Caribbean) Ltd, a subsidiary of Royal Bank of Canada; Head of Wells Fargo Global Banking in Miami; and Southeast Region Manager for asset-based lending at Wells Fargo. Sim earned his Bachelor of Science (Mathematics) from the University of Toronto and a Master of Business Administration from York University in Canada.
Welcome, Bruce. How about we start with a brief overview of eCapital Corp.?
Sim: eCapital Corp. is a diversified, non-bank, alternative finance company providing working capital to small and medium-sized businesses across North America. We currently offer factoring services with specialties in transportation and staffing, as well as asset-based lending.
Tell us about your role at eCapital.
Sim: I'm part of a dedicated and highly professional team that focuses on executing acquisition opportunities and successfully integrating new businesses and portfolios into our company. My specific role is to create awareness of our firm throughout the industry, build rapport with business owners, and open a dialogue with anyone considering strategic alternatives to their current operating circumstance.
How do acquisitions fit into eCapital's strategy?
Sim: Our goal is to build a broadly diversified commercial finance company with multiple product offerings across the US, Canada, and UK markets, and to realize a liquidity event someday, perhaps in the way of a public offering. Organic growth is a key component, but we've also decided that acquisitions will play a big part, particularly when building new product offerings or expanding into new geographies and jurisdictions. As I mentioned, we have a team dedicated to acquisitions, focusing on all end-to-end aspects of completing "win-win" transactions that work to the benefit of the seller, their customers and employees, and our shareholders.
Tell me about some of the more recent acquisitions. How have you been able to keep active, even during the pandemic?
Sim: Acquisitions are not something to be pursued part-time, "by the by," or now and then. I wouldn't recommend them to anyone unless they have a dedicated acquisition effort in place. Having a set strategy sets you up for success. First of all, you'll know a good fit when you see it because you've already spent the time identifying specialties you want to enter or existing platforms that you want to grow. You won't waste others' time by pursuing a dialogue on opportunities that don't fit your long-term goals. You won't be distracted. You'll automatically maintain a discipline surrounding the execution and post-merger integration. And like anything else, you'll get better at it over time. Completing a successful transaction without a core strategy is like trying to hit a home run without ever having any batting practice. I've talked to executives who've said they'd done a deal in the past, and it went poorly, so they are reluctant to do another one. That's like saying you don't like steak because you tried to cook one once, and it got burned. You have to make it part of your core operating fundamentals.
Our two most recent deals are good illustrations of the value of having a strategy in place. We acquired the North American subsidiary of Bibby on March 2 this year, and then Prosperity Funding, a specialty factor active in the staffing industry, on June 30. We could see immediately that both opportunities fit nicely with our growth objectives. We were able to mobilize quickly and listen to the seller's goals to deliver a solution that worked for them. We brought together dedicated resources to the task of formulating a compelling offer, completing diligence, and integrating new customers and staff post-close. We didn't task our line officers with doing this on top of performing their important day-to-day duties.
What are the most important things to consider when completing an acquisition?
Sim: Listening and delivering a solution that works for the seller are essential keys to any successful transaction. The economics of any deal are undoubtedly important, but it's been my experience that paying close attention to the other "softer" factors are arguably more important. Does the seller want to maintain some kind of active role post-close? Is it important to the seller that key employees be offered a role with our company? Are there key banking or other relationships that need to be honored? How will the customer experience be maintained or improved? You need to be a good listener, which means not just thinking exclusively and solely about how it will fit you as the buyer. In the end, ours is not just a "money" business; it's a "people" business. Building trust and respect throughout the process are just as important as the dollars and cents.
What is the current state of mergers and acquisitions in the industry?
Sim: The pandemic has brought activity almost to a stop. Period. Everyone has waited to see how things would play out and how books of business would hold up. We've been fortunate to be well-capitalized and, as I've said, to have a strategy in place to execute against.
Where do you see M&A activity going in the next year or two?
Sim: Activity will increase, no question. Firstly, and unfortunately, there will be some casualties in our industry. Some companies will suffer performance issues and see their equity and/or their bank lines of credit dry up. So, these companies will be forced to look at strategic alternatives. Secondly, and on a brighter note, some companies will thrive in this new environment, whether it's because they are in a fast-growing specialty area or as a result of decreased competition. And some of these companies will also look at strategic alternatives as a means of realizing new – perhaps unexpected – growth opportunities. Finally, there will be a return to the normal cycle of turnover resulting from retirements and owners looking for an exit in the normal course of their business careers. This activity has been pent up this year, as owners decided to stay with their businesses a little longer. That will likely wash out naturally as we get greater clarity on returning to more "normal" operating circumstances – something we all hope is around the corner.
Any last words of advice for those in the industry?
Sim: Keep up the good effort, and don't get discouraged. Our industry is critical to business. That's never been more the case than in times of economic stress. At eCapital, we say our mission is to "provide the capital businesses need when they need it." Everyone in commercial finance should aspire to something similar these days. And if considering strategic alternatives are part of that process for you, we'd welcome the opportunity to have a conversation.