In October 2017, Higher Logic announced that it had acquired two email distribution platforms used widely in the association sector: Real Magnet and Informz. Higher Logic acquired online community platform Socious and online collaboration platform Kavi Workspace earlier in 2017. In September 2016 Higher Logic accepted a $55M round of growth funding from JMI Equity.
One of the most fascinating parts of this story is the level of orchestration that was required to pull off these deals. Higher Logic and its private equity firm were able to negotiate two deals, with two competing companies, which closed within 30 minutes on the same day, and with the two acquired companies each unaware that the other was about to be acquired. If either Informz or Real Magnet learned of the other deal, it may have blown — or severely complicated — the deals. This was an expertly coordinated pair of transactions.
These are also smart acquisitions. Email notifications are the lifeblood of the Higher Logic community platform. Higher Logic already has some of the most advanced email notifications in the market, but they are not an email distribution platform. By aligning their community expertise with bona fide email expertise, Higher Logic has created a point of leverage to dramatically improve their platform’s email functionality.
Informz and Real Magnet have more than 1,600 customers combined. This gives Higher Logic a foot in the door to sell their product to the acquired companies’ customers, and vice versa. This also brings Higher Logic’s total clientele to over 2,500.
Higher Logic is already tracking 5 billion user interactions per year on its platform. Emails delivered by Real Magnet and Informz account for another 7 billion interactions collectively. With more points of interaction to mine, Higher Logic can build an even more reliable member engagement profile for its clients.
Furthermore, Real Magnet in particular offers robust marketing automation features that fit nicely with Higher Logic’s existing automation rules. Imagine being able to kick off a marketing automation campaign based on a member’s community activity, or vice versa. The ability to induce engagement in a community based on an interaction with an email is pretty compelling. It creates a virtuous cycle of member engagement which is proven to increase retention.
The potential downsides of this deal are:
- That Higher Logic is acquiring two very similar companies. This creates uncertainty among the customers and staff of the acquired companies, and we’ve seen first hand the communication challenges this has presented to another brand in the space that is consolidating multiple similar companies. Is one product going to be deprecated, or will they be merged? Will there be reductions in force? Will the company culture change because of this? These aren’t unconquerable questions, but they do create a minor communications crisis that Higher Logic, Informz, and Real Magnet need to manage.
- That Higher Logic may have alienated other email distribution platforms with these deals. They have partnerships with email platforms other than Informz and Real Magnet. How are these deals perceived by the email platforms that are now on the outside looking in? Higher Logic has a reputation for playing nicely with everyone. Is that reputation now tarnished in the eyes of the other email platforms? How should other Higher Logic partners interpret this event? Does it foreshadow that Higher Logic would consider acquiring an LMS or a mobile app platform, for example? These also are not insurmountable issues.
All in all, I think this is good deal for Higher Logic, Informz, and Real Magnet customers. I’m very excited to see how these technologies come together to drive more member engagement.