Akoya Capital

The marketplace demands

Business process outsourcing (BPO) had seen rapid growth in just a few years, and the electronic document management (EDM) market was large and growing, with declining barriers to usage. The EDM market's outsourced segment was expanding at three times the rate of overall EDM spending, and at a faster rate than BPO spending.

Enormous paper flows and the high cost of processing in health care and financial services require efficient and reliable document management, with companies continuing to outsource non-core activities. IDC projected finance, insurance and health care as the best target markets aimed at paper-to-digital conversion.

There was a high marketplace demand for a full-service, full-cycle document management company.

In 2005, Akoya partnered with EDM and BPO industry veterans Dick Aschman and Chuck Bauer to execute an investment strategy to build capabilities within an existing document management platform company in the health care and financial services marketplace.

This strategy directly addressed the fact of increasing regulatory requirements — i.e., HIPAA, Medicare, Sarbanes-Oxley — as well as slow adoption of electronic medical records in the face of demands by organizations and their customers/patients for reduced cycle time and immediate access to information.

Management partners' differentiators

Dick Aschman had 30 years of experience leading global businesses in the document management, business services, entertainment imaging and commercial printing industries. He had directed Kodak's Asia-Pacific operations, developing a service provider strategy throughout the region and doubling revenues in two years through organic growth and acquisition. He also had been president of Kodak's $1 billion motion picture business, in Hollywood, increasing operating earnings by $100 million — a 35 percent increase — in three years. In addition, he led Eastman Kodak's $1 billion commercial business, repositioning it through initiatives in digital imaging and output.

Immediately prior to becoming a management partner with Akoya Capital, Aschman was CEO of VUTEk, the leading supplier of superwide format digital inkjet printers. Under Aschman's leadership, VUTEk increased market share to 40 percent in target segments, produced positive cash flow, paid down $30 million in debt, and generated industry-leading EBITDA in an economic turndown.

Chuck Bauer had 25 years of experience in business process outsourcing and imaging technologies. The companies he founded and led included a private equity-backed investment strategy leading to the identification, purchase and consolidation of four Australian regional service providers that were built into a $150 million business later sold to Kodak; a $10 million micropublishing and imaging regional service provider that was sold to SOURCECORP; and a high-performance (DoD/Intel) image server company.

Strategy targeted for escalating needs

The investment strategy developed by Akoya, Aschman and Bauer leveraged the management partners' operational expertise and long-term experience to build and deliver a differentiated, comprehensive BPO/EDM solution targeted specifically for the escalating needs of health care and financial customers through:

• Document conversion and electronic management expertise.
• A vertical-market focus.
• Existing proprietary software applications and practices addressing intellectual property.
• Multiple, integrated solutions for adding efficiency and accuracy to the flow and coding of documents.

Akoya's research and evaluations found that the market need existed so acutely because current document management companies:

• Took a generalist approach to customers, generally not focused on a specific industry or its required applications.
• Possessed little HQ application expertise supporting sales efforts and account development.
• Did not support customers' current and future internal operations needs. They were under-capitalized with non-current, under-utilized plant equipment, software and systems; had no ability to bid/deliver on large projects; and possessed inadequate financial, project-tracking and cost-accounting systems and productivity tools.

Akoya and the management partners developed a strategy to improve operational performance that included:

• Creating a service offering fully integrated with the customer's operations, addressing the full cycle of EDM needs.
• Providing deep expertise within vertical markets of health care and financial services.
• Upgrading sales and marketing capabilities and building a focused, high-performing team.
• Reducing overhead by consolidating operations and upgrading plants and equipment in alignment with emerging technologies.
• Establishing national accounts with recurring revenue growth.

With Aschman and Bauer, Akoya targeted more than 50 potential companies, narrowing the field through due diligence and ultimately purchasing ImageMax Inc. The acquisition was made entirely through private capital, including Akoya's.

Akoya announces formation of DataBank IMX

In October 2005, document management company DataBank IMX was launched out of the combination of DataBank Inc. and the recently purchased assets of ImageMax Inc. DataBank IMX is privately owned and managed by Dick Aschman as CEO and Chuck Bauer as president and COO. With 11 facilities nationwide and industry partnerships with global document management and technology organizations, DataBank IMX provides digital services, high-quality microfilming and imaging systems for organizations wanting to improve their document imaging and information management processes.

Since its launch, DataBank IMX has streamlined corporate functions, reorganized performance incentives, upgraded physical infrastructure, realigned regional responsibility and divested non-core business, resulting in:

• Upgraded sales and marketing capability.
• Enhanced vertical market vision and focus.
• Generation of recurring revenue growth — 20 percent for 2006/2007.
• 100 percent expansion of hosting revenues.
• Overhead cost structure consistent with industry norms.
• Consistent business processes and methods.
• Upgraded plant and equipment at the Super Centers™.
• Creation of the Center of Excellence concept.
• Implementation of security procedures (secure WAN installed and SAS 70 in process) and financial controls.