Just before Christmas, 2001, Colorado Springs’ entrepreneur Michael Enos, CEO and president of H.I.S. Financial Services Corp., received the ultimate gift: his four-year old payment processing technology company and the firm’s strategic partner, The Logix Companies, LLC (based in Longmont) were purchased by one of the country’s largest commerce transaction and processing companies.
Concord EFS of Memphis, Tennessee announced its agreement to acquire Logix and locally-based H.I.S. Financial Services on Dec. 18, 2001. Concord is one of the country’s leading vertically-integrated electronic transaction processors whose primary activities include Network Services, providing ATM driving, online and signature debit card processing and STAR network access to the financial services industry. The company also provides credit, debit, check authorization, and electronic benefits processing transfer services to retailers and processes more PIN-based transactions than any other company.
“We have a lot of work to do,” Enos assesses, “but our day-to-day operations will remain unchanged. Our team is in place, and our mission to provide the highest quality, most cost effective electronic payment acceptance and processing solutions is clear.”
One interesting sidelight to the story is been the fact that H.I.S. represents one of the few local start-up companies to provide a significant return on investment to early investors. “Jeff Cooper at New Venture Resources took a chance on us, and is thrilled with the news of our purchase,” Enos adds.
H.I.S. Financial employs seventeen management, technical and support staff and is housed in the Alamo Corporate Center. In an early interview with The Colorado Springs Business Journal, Enos detailed his decision to join with strategic partner The Logix Companies, rather than pursue additional venture capital funding, noting that venture capital companies often want too much ownership in the early years. Based on the sale of his four-year old company in December, Enos’ calculated risk paid off.
When the transaction is completed in the first quarter of 2002, The Logix Companies and H.I.S. Financial Services will become wholly owned subsidiaries. H.I.S. will continue to focus its efforts on development of services for the electronic check conversion industry. Enos sees the move as extremely valuable to his company. “Effectively, we have become the first electronic check processor to be acquired by a major player in the payment services industry,” he says, noting that he had also been approached to sell key technology components to its competitors. But the young visionary was not ready to sell-out his leading edge technology, even as venture capital sources began to dry up. “This purchase by Concord supports our mission to provide the highest quality, most cost effective electronic payment acceptance and processing solutions,” he adds. Enos sees very little change in his day-to-day operations as a result of the change in ownership. “We are looking forward to moving ahead on development of new processing services – and to helping grow Concord’s stock value.”
H.I.S. Financial Services Corp. is a payment technology company specializing in electronic check conversion which includes the conversion of a paper check to an electronic funds transfer at the point of purchase. The company creates proprietary software that processes the ECC transaction and captures the check image. It also acts as the processor of the ECC transaction through the Automatic Clearing House (ACH), operated by the Federal Reserve.
Of the acquisition, Enos sees expansion and increased marketing ahead. “H.I.S. will gain the ability to bring new products and services to market more rapidly, and the move also enables us to compete more easily in the marketplace,” he notes. “The purchase also allows us to increase our product range dramatically. We will continue to provide our customers the best products and services in the electronic check conversion industry.” To date H.I.S. Financial’s customers include VISA and International Payment Services, the country’s third largest check verification and guarantee company. Potential new customers include retail, lockbox and insurance industry firms.