Hyland Completes Acquisition of Lexmark's Perceptive Business
Early in May, Westlake, Ohio-based Hyland, an information management solutions provider, announced that it has acquired the enterprise content management business unit of Lexmark International which includes Perceptive Software while Thoma Bravo, a US-based private equity firm which already owns Hyland, would keep the rest of Lexmark International's enterprise software business which includes Kofax and ReadSoft. Early this week, Hyland announced the completion of its acquisition of the Perceptive business unit.
Hot on the heels of completion, we reached out to Bill Priemer, president and CEO of Hyland, to inquire about what the recent acquisition means for the Hyland community. “For years, we’ve admired the people and technology of Perceptive, and I’m so excited to welcome them to the Hyland family and for our bright future ahead,” Priemer told CMS-Connected. “Together, we’ll accelerate the advancement of what is already the industry-leading software portfolio, and continue to support our customers by presenting the right information to the right people at the right time.”
Not the First Dance
Thoma Bravo and Hyland had been eyeing Lexmark's software business for a while now. In 2014, for instance, Lexmark and Hyland got into a bit of a bidding war for Readsoft, and as a result, Hyland ended up withdrawing its bid on the company because the bidding rival Lexmark raised its offer. The reason why Hyland chased after Readsoft was to expand its footprint overseas.
Another encounter between the two happened when the rumors started floating around that Lexmark was engaging in sales chats with the potential buyers for its software unit. At that time, its software division was targeted by Thoma Bravo as the private equity firm had wanted to combine the Lexmark software business with Hyland. However, it, once again, lost out to a consortium of companies, led by Chinese firm Apex Technology and private equity firm PAG Asia Capital that acquired the entire company in a $3.6 billion all-cash deal. Furthermore, this acquisition turned Lexmark’s strategy of uniting business information services under a single provider on its ear as the first following move was shedding the Enterprise Software division.
What Will Perceptive Bring to Hyland?
In 2010, Lexmark acquired Perceptive Software in a cash transaction valued at approximately $280 million. The Perceptive unit had 500 employees at its main office in Kansas as of April 2016, whereas it employed 700 people in prior years, says a local news source. According to Hyland, all enterprise software business assets in the Perceptive business unit, including Perceptive Content (formerly ImageNow), Perceptive Intelligent Capture (formerly Brainware), Acuo VNA, PACSGEAR, Claron, Nolij, Saperion, Pallas Athena, ISYS, and Twistage, will now operate under Hyland’s portfolio of products.
The Perceptive acquisition brings Hyland an extra 17 global office locations, including Perceptive's main office in the Kansas City area, alongside a collection of enterprise content management software products. According to Hyland, the acquisition aligns perfectly with Hyland's corporate goals and key strategies by extending their suite of solutions and capabilities, enhancing their vertical expertise and growing their international presence. Seth Boro, a managing partner at Thoma Bravo, said the Lexmark acquisition will be a huge boost for the company because they'll be gaining some of the most advanced digital transformation technologies in the industry. "The Perceptive Software business is highly complementary to Hyland, providing innovative technologies and vertical expertise," Boro said in a written statement.
Speaking of vertical industries, currently, more than 1,800 healthcare providers already utilize Hyland’s OnBase for electronic document management. Additionally, a Perceptive product, called Acuo VNA, is expected to enable Hyland to better serve healthcare customers needing to manage clinical content. Industry insiders have stated that Hyland’s acquisition of Perceptive has the potential to create the market’s single largest enterprise content management business.
Hyland contended that it would use "the powerful recognition engines of Perceptive Intelligent Capture" to improve its data capture product offerings. The vendor also stressed that it may occasionally end up both collaborating and competing with Kofax which combines market leading capture, process management, robotic process automation, mobile, e-signature, customer communications management and analytics capabilities in a unified software platform that enables digital transformation initiatives.
In an open letter to existing and prospective customers, the president and chief executive of Hyland stressed: “There’s one thing I want to make clear to you, our new customers and partners – I am personally committed to your success and I’m not alone in that promise. My commitment to you is backed by more than 2,200 Hylanders around the globe who are ready to get to work collaborating with the outstanding professionals of Perceptive in supporting your solutions.”
What Will Hyland Bring To Perceptive?
Hyland, meanwhile, wrote four online letters addressed to different customer groups to show its strong commitment to serving all Perceptive customers. In a letter to Perceptive Content customers, for instance, Bill Priemer stated: “For those customers planning to maintain and expand their current Perceptive Content solutions, Hyland will support your solutions with new releases and a customer-first approach. For some of you, a migration path may be the best option – especially if your Perceptive Content roadmap includes adding functionality that exists today in OnBase by Hyland, our industry-leading information platform. We’re planning for that. For those Perceptive customers looking to migrate to OnBase, our goal is to provide multiple options to ease the transition.”
By addressing all of the community, Hyland CEO also added: "Going forward, I believe there's no content, process or case management challenge we can't solve together."
As stated above, even though this acquisition represents the opposite of the strategy that Lexmark once wanted to execute under former president and chief executive officer Paul Rooke, I believe that Hyland and Perceptive are a natural fit for each other despite some product overlaps.
Hyland’s core market is midsize to larger enterprises but the vendor has increasingly been selling to larger organizations, as well. To keep that momentum up, it needs to expand its global footprint as currently, its global sales and support options, outside of North America, may be inconsistent, depending on the location. So with the acquisition of Perceptive, the community expects Hyland to better address this issue. In return, given that Hyland has a strong portfolio when it comes to critical ECM capabilities such as integrations with line-of-business (LOB) applications like Epic, Guidewire, and SAP, the vendor has huge potential to leverage the Perceptive portfolio. We will have more insight in the upcoming months as the event unfolds, especially during Hyland’s annual user conference this September but one thing is certain, Hyland’s stronger portfolio will heat up the cut-throat competition in the ECM market where the demand for distributed, more diverse, and more contextualized content and use cases are increasing.