This latest Lexmark move is harder to assess than previous major acquisitions. Give  the Perceptive acquisition an  A, Brainware  a B -,  and Pallas maybe a  C+. The Kofax merger, on the other hand, has two legitimate views and lets start with the positive. Kofax has indeed assembled a range of complimentary components that fit well with Lexmark's market ambition. The key asset of interest is the TotalAgility (KTA) platform and its related components. These enhance Lexmark's process platform that was based on the Pallas, too low a market share and Perceptive’s document-focused workflow. KTA, by contrast,  has a true case platform and is well integrated with the industry-leading capture platform. Kofax has never had been in the ECM space. They are now with one of the strongest. And the list goes on. Brainware will boost forms processing for Kofax' invoice processing customers. The AltoSoft BI tool adds analytics strength that Lexmark did not have. Data integration is improved with Kapow. A top E-Signature product (Softpro) and a growing CCM platform from AiA are all good pickups. These last two fit well with Lexmark’s transitioning MPS business.

The drawback here is that Kofax’s go to market positioning and execution is nowhere near complete, and needs entrepreneurial energy and execution to get there. Perhaps Lexmark can help – but Kofax will now be part of a larger company that has transition issues of its own. Perhaps more importantly, Lexmark may find itself devoting significant investment dollars to purchase a legacy document capture business that has moderate long term value. We estimate around $200m of Kofax’ current business derives from this market with revenue in this area more likely to decline then accelerate. Lexmark would then find itself devoting a lot of management attention to minimizing the impact of that decline.

This being said, I find myself ending up with a modestly positive take. Kofax has been a strong driver of Smart Process Apps (SPA) for lucrative use cases like mortgage, invoice, other areas. Lexmark can help with deeper vertical market penetration and more developed business development and marketing teams that could accelerate what is a strong SPA strategy. Customers of both should let the dust settle a bit, but in the end will have perhaps the largest arsenal of technologies to help digitize their business. Something all companies need.