Conduent is continuing to shed parts of its business as part of a planned divestiture with the latest portion going to Avenu Insights & Analytics.
Florham Park, N.J.-based business process services firm said it would sell its Local and Municipal Constituent Government Software Solutions business for an undisclosed amount to edge closer to cutting $1 billion in revenue associated with non-core assets.
The deal, which still needs regulatory approval, was announced Monday morning. Conduent stock closed down slightly at $18.77 at the end of trading on Monday.
Paul Colangelo, CEO of Avenu, told CRN that once it is completed, the deal -- which was financed by Mill Point Capital -- triples the number of Avenu customers from 1,000 to 3,000.
“It gives us quite an increase in presence and products and services on the administrative side,” he said. “Think of it from an adjacency standpoint. Where we’re more focused on the finance and tax modules of the local government, now were able to go very much horizontal and support them in other areas of local government.”
Colangelo said while the deal -- which would close in the third quarter this year -- came together quickly, Avenu has been watching Conduent for some time.
“We’ve been tracking and monitoring, quite honestly for almost a year, a few of the earnings calls that Conduent was having,” he said. “They were divesting some of their non-core assets and so we’ve been tracking it.”
Avenu, he said, seeks to help local governments face their financial challenges and provide better constituent services.
“State and local governments are faced with unbelievable pension liabilities and other types of liabilities,” Colangelo said. “They’re faced with antiquated IT systems, and an aging workforce.”
He said Avenu helps them with its administrative service that provides solutions to pension management, taxes, permitting and licensing, as well as records management, while the “revenue enhancement” portion of the business looks for areas where the government is owed money.
“Things like revenue discovery and recovery. Sales and use tax audits. Compliance audits. Are localities getting the appropriate revenue they’re supposed to based on their franchise agreements? Unclaimed property audits,” he said. “We see this as a real tailwind in our business in terms of what we provide and how we match some of the opportunities to work very closely with local governments.”
Xerox created Conduent when it spun off its business services division in 2016. The company formerly known as Affiliated Computer Services was purchased by Xerox for $6 billion from founder Darwin Deason. ACS was known for creating electronic solutions for local government, such as toll collection systems and photo traffic enforcement, prior to being owned by Xerox.
Conduent sold the former Dallas headquarters of ACS in 2017 which resulted in $24 million in income and it has closed more than 130 offices in locations around the world, the company has previously said.
Conduent has said it is evaluating all of the assets it inherited when it split from Xerox, with the goal of creating a leaner organization that's more targeted to their core operations.