ANALYSIS: What’s driving this spike in down-market M&A activity?

Wild Apricot, Weblink, GrowthZone, BuilderFusion, and MemberClicks have all been part of an acquisition within the past 60 days. The number of organizations affected by these deals is around 40,000. If we assume that the average small organization affected by these deals has 500 members, we can project that about 20M memberships are wrapped up in this wave of acquisitions.

What’s driving this rash of acquisitions in the down-market AMS space? Three things:

  1. The Domino Effect. Since the blockbuster Community Brands consolidation in March 2017, more and more investors have been looking at the association space. Last week I attended a 300 attendee conference for a small niche of the association market and met a private equity fund manager who was there scouting out companies potential investment or acquisition. This isn’t a rare occurrence. Rarely does an association industry conference go by that there isn’t an investor or two scoping out the trade show floor for a potential deal.
  2. FOMO. Fear of Missing Out. With the quickening pace of M&A in our technology market, many companies don’t want to be on the outside looking in. Some technology company founders and owners see the alliances being drawn, and they fear if they don’t get into one of their own, they’ll miss out on opportunities.
  3. Enterprise AMS platforms are spoken for. All of the enterprise grade AMS companies are either spoken for, or are fiercely independent (though we’ve seen some fiercely independent company founders get acquired or bought out this year). There also just aren’t as many enterprise AMS platforms as there are smaller AMS players.

Implications of all this activity?

  • Inevitably, some percentage of customers won’t like the acquisition, and will switch to another vendor. One industry expert estimated that in one of the larger acquisitions in the past five years, between 20-40% of the clients of the acquired company migrated to another AMS.
  • New AMS platforms are cropping up to fill the void left by the acquired companies.

Author: Ben Martin, CAE

Chief Engagement Officer at Online Community Results, and Founder of theNIRD.org.

3 thoughts on “ANALYSIS: What’s driving this spike in down-market M&A activity?”

  1. Thanks for the summary. I’d add an implication to your list. Typically there are challenges with post-acquisition integration go much broader than what is visible to customers. There may be both voluntary and involuntary moves among staff, including some excellent folks who for whatever reason don’t find themselves a home in the new, bigger entity.

    This means that if anyone in the association technology space is looking to staff up, they should keep an eye on the staff from both recently-acquired companies, and their purchasers.

  2. Another possible reason is that there were trillions of dollars on the sideline right now and investors need to get that off their books…this also might mean some of these companies are getting inflated valuations. Just saying…

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