Thoma Bravo buys Lexmark Enterprise Software

Steve Pearl
May 11, 2017


“So…what do you think about Hyland’s purchase of Kofax”?  That’s how conversations in the past few days usually start out. Which then lead to explanations of who Thoma Bravo is.  Some background and perspective is clearly in order…

The Facts

Hyland Software’s majority owner, Thoma Bravo, one of the largest private equity firms in the SW industry, announced a definitive agreement on May 3rd to buy Lexmark Enterprise Software (LES), consisting of Kofax, ReadSoft and Perceptive Software, for a reported amount of $1.5 billion.

Once the deal is officially closed, the Perceptive Software business, including Perceptive Intelligent Capture, Acuo VNA, PACSGEAR and Enterprise Medical Image Viewing will be sold to Hyland Software and led by the current President and CEO of Hyland, Bill Priemer.  This is expected to further expand and strengthen Hyland’s offerings to their Healthcare community of customers.  Kofax and ReadSoft will then be combined under the Kofax brand to create a single entity called Kofax, and will be a separate entity within the Thoma Bravo portfolio (like Hyland) and will be led by the current President of Lexmark Enterprise Software, Reynolds C. Bish.

Hyland and Thoma Bravo have a history

In 2007, Hyland Software, already one of the most successful ECM providers, made public their intention to grow via acquisitions, and partnered with a private equity firm, then named Thoma Cressey Bravo, who purchased a majority interest in Hyland.  Now armed with available capital, over the next eight years, Hyland made a total of eight acquisitions of document and content management companies.

Lexmark Acquires Perceptive and Kofax

In 2010, the traditional printing industry was continuing its expansion into content management and workflow.  Lexmark decided to buy Perceptive Software for $280 million.  Then, in March of ’15,  Lexmark bought Kofax for around $1 billion.  Kofax, a leader in image capture and ECM, was bringing in around $300 million a year in revenue. Together with Perceptive, Lexmark hoped to build this acquisition effort into a $700 million per year software operation – well in line with their goals to ward off declines in prints and evolve into a formidable software and services provider.

Lexmark is sold

In early 2016, it was rumored that Lexmark was either looking to sell their Enterprise Software entity (LES) or was going to sell the entire company.  Guess who put in a bid?  Thoma Bravo made a play for LES, but was eventually out bid by an investment consortium who purchased all of Lexmark in an all-cash deal for $3.6 billion. The consortium was led by Apex, a China based, global leader in aftermarket supplies.

This acquisition came with the expectation that Lexmark’s software business was going to be eventually sold off, and now it has. And it was purchased by the very same private equity firm that bid on them last year – Thoma Bravo (Cressey left in ’08 to start his own shop) and sold to them by the three original consortium members who out bid them – Apex Technology Co Ltd, PAG Asia Capital and Legend Capital Management Co, LTD.


For all parties concerned, there’s reason to be optimistic.  Kofax is now owned by a powerful investment firm who has, for many years, managed the growth and expansion of ECM industry leaders.  Hyland will be able to strengthen offerings for their healthcare customers and remains a growing ECM leader in the industry with 17% in total revenue growth for ‘17 over ‘16, with SaaS revenue growing 72% and professional services growth by 33%. Although Thoma Bravo set up Kofax as a separate entity, synergies are expected to be created between Kofax and Hyland that will benefit the customers they serve.  And Lexmark can now do what it does best…and it isn’t required these days to own the components to own the platform (Uber owns no taxis, Facebook creates no content and Alibaba stocks no items), as it’s the interface that is created to enhance the user experience. And that’s what matters most.

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