Exciting Year for BancTec Continues with SourceHOV Merger

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Oct 29, 2014

Portfolio manager HandsOn announced their intention to buy out SourceHOV’s other major shareholder and merge the company with BancTec. The combined company is the product of a years long mission by BancTec and a formidable opponent to large BPOs.

BancTec—a provider with roots in document and check imaging hardware—has been shopping for a buyer for several years. In 2012, it looked as though TransCentra was going to be the acquirer; however, the deal was never completed. In late February of this year, HandsOn3, a portfolio manager based in California, announced an agreement to acquire BancTec. Now HandsOn Global Management, the company also had connections to two similar players: Dataforce Group and SourceHOV.

The inclusion of Dataforce in the press release signaled HandsOn intentions to merge BancTec with Dataforce to drive toward a larger business process outsourcing player. Dataforce is a company with expertise in accounts receivable management, end-to-end auto insurance, and expense and benefits management. The BancTec leadership and management team remained in place and the combined company created a $280 million company. InfoTrends estimated BancTec revenue to be very near that number at the time of the acquisition meaning that Dataforce was a much smaller strategic tuck in. At the time, the absence of SourceHOV was strange, as merging BancTec with SourceHOV would make for a more formidable force in business process outsourcing.

According to a blog post by industry insider Ralph Gammon, the common refrain from BancTec on the subject was that HandsOn3 was only a minor investor in SourceHOV. And the plan all along had been to simply combine BancTec with the smaller Dataforce. We now know that the plan might have initially been to combine BancTec with Dataforce and be done with it, but the prospect of a combined BancTec-SourceHOV BPO was too intriguing to pass up. BancTec and SourceHOV are now one.

The combined venture will have revenue over $900 million and immediately vault into a position of strength among the largest BPO providers. The primary synergy between the two companies is the location of their headquarters’ – both companies are located in the Dallas area. Otherwise, the two companies will bring different assets to the table. BancTec has a large business in remittance processing, an area that hasn’t been a strength historically for SourceHOV. More importantly, BancTec has a presence in Europe, something that has eluded SourceHOV—despite an estimated $600 million in revenue. BancTec expects the deal to close by the end of the month, but the plan at this point is to maintain both the SourceHOV and the BancTec brands. Perhaps “BancTec, a SourceHOV company” could be in the works. The joint company will maintain a presence in 14 countries through 82 delivery centers and 16,000 total employees. InfoTrends will continue to track the impact of these and other developments in the BPO market.

InfoTrends tracks the BPO market with its Document Outsourcing Consulting Service and will soon publish the results of its large, multi-client production scanning study for subscribers, Enterprise Document Capture: Process Gaps and Revenue Opportunities

 

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