We Are Moving sign in vacant store
Thoma Bravo bought Lexmark's enterprise software, but Hyland will get a piece of the pie too PHOTO: Matthew Paul Argall

Thoma Bravo has agreed to acquire Lexmark International's enterprise software business, which includes Kofax, ReadSoft and Perceptive Software. 

CMSWire reported on rumors of this deal last week.

Lexmark Enterprise Software CEO Reynolds Bish had temporarily brought the three businesses together under the brand name Kofax, but once the acquisition finalizes, they will separate.

Thoma Bravo officials stated it will sell the Perceptive portfolio to its subsidiary Hyland Software, and spin off ReadSoft and Kofax into a company that will retain the Kofax name. Chicago-based Thoma Bravo will hold Kofax in its portfolio of companies.

Though in jest, Alan Pelz-Sharpe of Deep Analysis told CMSWire that Thoma Bravo may now be the largest ECM player in the market. More on his analysis later.

Neither Thoma Bravo, Hyland or Lexmark disclosed any financial details of the deals, but last week Reuters reported a potential $1.5 billion price tag for Lexmark Enterprise Software.

Hyland to Lead the Market?

Once the acquisition is complete and Perceptive's assets are integrated into Hyland, some say Hyland could become the leading independent ECM vendor. 

"Especially for mid-sized companies," Terry Frazier, research director for content and digital media technologies at analyst firm IDC, told CMSWire in an earlier interview. The Perceptive acquisition should also, almost instantly, broaden Hyland's portfolio of solutions for vertical industries, shortening time to value for customers.

Forrester analyst Cheryl McKinnon told CMSWire that Hyland and Perceptive have the potential to be a great fit culturally. "They have historically had high levels of customer loyalty and product satisfaction levels," she said, noting, however, that the vendors do have some portfolio overlap.

McKinnon added that the "Perceptive portfolio feels like it has been a bit in the background over last year or so, thus this may be an opportunity for a strong ECM provider — such as Hyland — to give it some fresh life and innovation, not unlike the Documentum portfolio ending up with OpenText.”

Pelz-Sharpe noted that Perceptive could help Hyland, whose customers are largely US-based, find broader international appeal.

Who Will Feel the Impact?

When it comes to the ECM marketplace, Pelz-Sharpe pointed to OpenText as the most obvious firm that will be impacted. But OpenText EVP Engineering and IT Muhi Majzoub wasn't even remotely concerned about this possibility when we spoke with him last week.

Pelz-Sharpe said smaller vendors, like Nuxeo, M-Files and Alfresco (the latter, according to unnamed sources, was recently talking about a sale), could also face heightened competition given that Microsoft and Box are "gobbling up market share,” said Pelz-Sharpe.

"It's going to get very competitive," he added. His advice for the remaining ECM firms? Consider a pivot to focus on sub-markets where they have a substantial existing footprint.