The market isn’t very receptive right now to new firm formation (let alone any form of fundraising), but one executive found a way to hang his shingle amid all the uncertainty.
Omair Sarwar, a long-time dealmaker with SFW Capital Partners, launched his new firm GearBox Capital, with its first investment, a growth recapitalization in Greenshades Software, owned by his former shop.
Sarwar led SFW’s investment in Greenshades in 2019 and understood the business and had relationships with management and the founders, David Rosas and Matt Kane. “I consider the business in the middle innings of the valuation creation plan David [Rosas] and I laid out,” Sarwar told Buyouts.
Greenshades, formed in 2002, provides a payroll and HR platform to mid-market companies.
Operating without a fund, GearBox invested alongside WayPoint Capital and a group of co-investors, carving Greenshades out of the SFW portfolio and housing it in a special purpose vehicle where it will continue to grow. SFW and other existing investors will retain significant ownership in the company, according to a statement about the deal earlier this month.
GearBox will continue to operate under a deal-by-deal model, with the intention of completing several more deals and perhaps moving into a traditional fundraising in a few years.
Getting the deal to completion was made extra challenging by the market as it gradually declined through the year. With the goal in sight, Sarwar said he was beset by doubts as the financing environment degraded and investors became hesitant.
“It was a challenging, stressful environment. To the credit of Greenshades and to the credit of the LPs that stuck with me, we came out the other side,” Sarwar said.
GearBox already has additional targets identified, both as platform investments and add-ons to Greenshades, Sarwar said. The firm will look for mostly tech-enabled businesses in the range of $40 million to $80 million of enterprise value.
The firm’s thesis is to identify well-run companies and help them grow to the next level, by pulling on several “gears” to unlock their value. Things like product expansion, go-to-market strategy, core talent, professional development, installing the right systems and operations and M&A.
“In any given opportunity I can identify these five or six gears,” Sarwar said. Working with the right partners, “I don’t have to get all five or six, if I can tweak or turn one or two, these are a great start.”
Sarwar, a native of Pakistan, joined SFW in 2011 and was chairman of Captify, Greenshades and Devada and a director of Act! He previously was chairman of DaySmart Software and a director at Keypoint Intelligence.
Before, he worked at Sverica International, focusing on investments in software and tech-enabled services companies.