The Lexmark/Brainware Acquisition: Just the beginning of an acquisition-filled year

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Mar 9, 2012

Perceptive has been using Brainware’s IntelliCapture technology with their ImageNow software since 2009, so perhaps Lexmark’s acquisition isn’t too surprising. What is interesting, however, is how an increasing number of OEMs are shifting their focus on ISVs who can provide an added-value to what is currently lacking in their software portfolio. Last year, Lexmark acquired Pallas Athena, enabling them to expand in the EMEA region with a stronger focus on business process management and document management capabilities, while reinforcing the connection between Perceptive Software and Lexmark.

Now, Lexmark makes another acquisition under similar circumstances except with a document capture emphasis. Brainware will act as a division of Perceptive Software but will continue to work with their existing partners, like Oracle and KnowledgeLake. Brainware will maintain control of their data capture market which will help them grow their business much faster and drive product adoption through Lexmark’s and Perceptive’s customer base and channel partners.Acquiring Brainware gives Lexmark a stronger front-end capture and document classification aspect that was lacking within Lexmark’s current offerings. While Lexmark does offer their own OCR software, Brainware provides an additional, more robust value to their solutions portfolio in addition to expanding Lexmark’s market share in Europe and Latin America through Brainware’s direct and indirect channel. Similarly, Brainware is able to capitalize on Perceptive’s deep reach into the education and healthcare market; expanding into verticals outside of their typical AP/invoice automation focus.

The acquisition also aligns very well with Perceptive’s ImageNow software capabilities by securing a much stronger connection between the devices that capture and the software that routes documents and information. Customers now have broader capture and document management platform capabilities to enhance and configure workflows. For Lexmark, Brainware’s Distiller solution can potentially offer some nice synergies with Lexmark’s MPS offering via deployment of Distiller onto scanners/MFDs which can enhance workflows throughout an entire printer fleet. It will be interesting to see how acquisitions of this nature will tie into MPS as our industry continues to shift towards an all-inclusive services model to create more advanced workflows.

Lexmark’s acquisition of Brainware may just spark the beginning of a new year with more acquisitions to come by all vendors, as they seek out various ways to strengthen, differentiate, and provide end-to-end software and services for a variety of organizations, from SMBs to the enterprise. In 2010, IBM acquired Datacap, leaving few pure document and data capture ISVs up for grabs like Kofax, ReadSoft, and AnyDoc. (Not to mention the numerous acquisitions made in 2011 outside of the document capture space, like print and IT services). So, who will be acquired next and which vendors have the cash to spend on such substantial purchases? The percentage of market share is decreasing in terms of acquisitions; and in a relatively flat market, vendors have two choices in order to make themselves more valuable: 1) increase market share or 2) create a new product or offering. And since it’s much easier for vendors to buy a chunk of the market rather than try to push their way into it, 2012 will be a year of acquisitions across the board.

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