In a significant turn of events in the fintech sector, TabaPay, a prominent money-moving fintech company, has decided to abandon its plans to acquire assets from the bankrupt Banking-as-a-Service (BaaS) provider, Synapse. This decision was announced after TabaPay sent a termination notice for the purchase agreement, citing unmet closing conditions.
The initial agreement, set in April, followed a tumultuous period for Synapse, which included a substantial reduction of its workforce by 40% after losing a key client. This layoff was part of a broader strategy to cope with adverse macro-economic conditions, a strategy that had already led to an earlier reduction of 18% of its staff.
According to a statement from a TabaPay spokesperson to TechCrunch, the termination of the agreement was due to the failure to satisfy the stipulated conditions necessary for closing the deal. This development was first brought to light by Jason Mikula of Fintech Business Weekly.
Despite the setback, Sankaet Pathak, CEO of Synapse, remains optimistic about TabaPay’s intentions. Pathak expressed to TechCrunch that he believes TabaPay still holds an interest in completing the acquisition. However, he attributes the failure to finalize the deal to issues with their banking partner, Evolve Bank & Trust. According to Pathak, the deal stumbled because Evolve did not fulfill a specific condition related to the full funding of its For Benefit Of (FBO) accounts.
Contrary to Pathak’s claims, a representative from Evolve Bank & Trust clarified their position, stating that the bank was not involved in the TabaPay acquisition and had no closing conditions to meet concerning that deal. However, the representative did acknowledge a separate settlement agreement with Synapse that included a funding condition, which, according to them, was satisfactorily met.
This cancellation marks a significant hiccup in the consolidation efforts within the fintech sector, particularly in the BaaS space, which has been experiencing financial instability and heightened competition. The fall through of this deal could potentially reshape future negotiations and strategies for both TabaPay and Synapse as they navigate the challenges of a rapidly evolving financial services landscape.