Fintech acquisition targets bank accounting software market
AvidXchange, a fintech that specializes in automating invoices and accounts payable, expanded its reach within the banking industry this week by acquiring accounting software company BankTEL.
The Charlotte, N.C.-based fintech already works with a number of U.S. banks, but also provides services to companies in the real estate, homeowner association management and construction industries. BankTEL currently does business with 20% of U.S. banks.
“This acquisition is very aligned to that overall strategy of how we build our business,” said Michael Praeger, co-founder and CEO of AvidXchange.
Terms of the deal were not disclosed. The BankTEL acquisition marks AvidXchange’s fifth and largest purchase in the last nine years.
Praeger said AvidXchange traditionally services “middle market” companies that have revenues between $5 million and $1 billion. Boyce Adams Jr., the president and CEO of BankTEL, said that middle market translates to banks with under $30 billion in assets, which include mid-tier regional community banks, the largest credit unions, and even de novo institutions.
BankTEL added over 200 new bank partnerships last year alone, according to Adams.
But Adams added that Columbus, Miss.-based BankTEL had reached a scalability ceiling in the market, and was seeking different ways to expand its business.
“At least 20% of middle market banks in the U.S. leverage or product in one way or the other,” Adams said. “We needed to double down in our market and become a more dominant player. That’s where we began the conversations with AvidXchange.”
The companies already were aligned with automating invoices and digitizing accounts payable.
“We digest invoices that the bank puts into our system, then process, approve and pay them,” Adams said. “AvidXchange essentially is one bookends of that process, on the front end processing invoices for us, and then on the back end payment process.”
“It came very clear to us that they're the right partner to lead us further in this journey,” Adams added.
Under the acquisition, Adams’ new position with AvidXchange will be senior vice president of financial services. He’ll work on the company’s strategic approach to the banking industry and report to Dan Drees, the chief growth officer.
AvidXchange will absorb BankTEL’s employees and offices in Mississippi as well as Birmingham, Ala.