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Without M&A Activity The Top Six Core Vendors Would Account For Only 13% Of Their Current $14 Billion Annual Revenue

There's a rule for survival in the consulting business - Publish or Perish. Here's my rule for bank tech companies - Acquire or Be Acquired.

It sometimes haunts me to think that I have been in the bank tech business longer (as long in the case of Metavante) than the top six core companies. Other times, it provides me with the hutzpah I need to offer this "what if" blog.You don't have to believe the stats I offer because you probably don't have 22 historical copies of Automation in Banking from which I derived the following numbers. Trust me, I have the 22 historical copies, my spreadsheets work, and vendors have been reporting the truth for 22 years. Now I'm just changing history, at least on paper.

1. If Fiserv had not made 149 acquisitions in 22 years, its annual revenue today would not be $4.54 billion (approaching $6 billion). It would be about $1 billion.

2. If Fidelity National Information Services had not made 12 acquisitions in the past five years, its revenue would not be $4.2 billion (approaching $5 billion). It would be zero.

3. If Metavante had not made 28 acquisitions in the past 15 years, its annual revenue would not be $1.5 billion. It would be about $740 million.

4. If Jack Henry & Associates had not made 29 acquisitions in the past 15 years, its annual revenue would not be $668 million today. More likely it would be about $120 million.

5. If Open Solutions Inc. had not made 16 acquisitions in the past 7 years (and hired Louis Hernandez, Jr. to turn this company around), its revenue would not be $480 million today. It would be defunct. The defunct part is only my opinion, of course.

6. If Harland Financial Solutions had not made seven acquisitions in the past 7 years, its revenue would not be $325 million today. It would be about $100 million representing Marketing Profiles, Inc. and FormAtion Technologies, Inc. which John H. Harland Company, the check printing company, acquired as sort of a stick-your-toe-in test before getting serious about the bank tech business and establishing Harland Financial Solutions.

If you need a reality test to see the impact that acquisitions have had on bank tech vendors, use Computer Services, Inc. as the model of the "unaquirer." This company has been in the space for over 40 years. It has made a handful of small acquisitions. Its annual revenue today is $125 million. It's a good company with very happy stockholders. It's just not in the "ratings game."

There's a rule for survival in the consulting business - Publish or Perish. Here's my rule for bank tech companies - Acquire or Be Acquired.

Disclaimer: The CFOs of the seven companies mentioned in this blog have not seen an advance copy of this blog, nor has anyone else. As a result, it's possible that insiders could dispute my extrapolations, and prove that my figures are wrong.

Art Gillis www.artgillis.comThere's a rule for survival in the consulting business - Publish or Perish. Here's my rule for bank tech companies - Acquire or Be Acquired.

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