ANALYSIS: Community Brands consolidation – Part 1 of 4

In the week since the Community Brands deals were announced, I’ve spoken with senior executives at Abila, Aptify, YourMembership, and some of their competitors. I also attended the Abila Users & Developers Conference, speaking with their customers and consultants, and listened to a keynote presentation from JP Guilbault, Community Brands’ CEO.

Over the next few days, I’ll analyze the implications of this deal from the standpoint of each company wrapped up in the transaction. Let’s start with the newly-formed parent company.

COMMUNITY BRANDS

  • Community Brands is a sister company to two others with a longer track record: Education Brands and Ministry Brands. All three companies are backed by private equity firm Insight Venture Partners, and I understand that Ross Croley, CEO of Ministry Brands, provides strategic direction for the three companies.
  • Under Croley, Ministry Brands built an empire by acquiring dozens of companies in various technology verticals in church technology systems (fundraising, websites, accounting, etc.). It’s expected that Community Brands will emulate the business model of Ministry Brands. Therefore, we can expect Community Brands to acquire several more association technology companies over several years. I wouldn’t be surprised to see Community Brands amass a portfolio of 10 or more companies by the end of 2017.
  • I’ve been told that Ministry Brands has allowed the companies it has acquired to continue to operate under the same branding, and it has not been typical for them to force migrations or decommission products. Likewise, JP Guilbault has promised no forced migrations for customers of the Community Brands line of products.
  • Allowing brands to continue to operate begs the question: how can Community Brands sustainably and profitably maintain multiple competing products? It can be argued that the products don’t really compete; that they operate in different niches. But I’m aware of several instances where one brand is currently competing with another for a sale. Another way Community Brands can earn more profits on their structure is to consolidate behind-the-scenes business units such as marketing, technology infrastructure, accounting, etc.
  • JP Guilbault ascends to CEO of Community Brands, and holds the title of CEO for Aptify, and Abila. He retains his CEO title at YourMembership. He is expected to announce leadership teams for the trio of companies shortly, and insiders anticipate he’ll name something on the equivalent of General Managers to run each of the three under his leadership.

There are two extreme points of view on the potential effects of this deal. I believe the truth is somewhere in between, but understanding both sides will help you inform your own opinion and draw your own conclusions. Let’s start with the skeptical point of view and then turn to the optimistic point of view:

  • Skeptical:
    • This deal is effectively cornering a substantial slice of the association technology market under one umbrella company. Community Brands boasts 13,000 customers. As more companies are acquired, that customer count will grow. Does this deal reduce choice in the market? That’s debatable. It has been promised that the brands will be able to continue operating independently, and there will be no forced migrations. However, is it really just a false choice when the brands are all owned by the same parent company? For example, in the rental car industry Enterprise, Alamo, and National are all owned and operated by the same parent company. Yes, you have a choice between these three companies, but your money is ultimately going to the same place.
    • Promises have been made that there will be no forced migrations. But we’ve heard from skeptics that a common practice in business models like that of Community Brands is to invest more heavily in a few select products, making it more attractive for customers to move to the products that are getting more investment. Over time, this leads to “voluntary migration” of customers to “golden child” products. Skeptics say this tactic amounts to deliberately influencing customers towards voluntary migration, essentially leaving them with no alternative but to switch. If Community Brands can engineer a process for easily porting customers from under-resourced products to golden child products, it’s an attractive calculated risk.
  • Optimistic:
    • The companies will have access to new and more resources than they’ve had before.
    • The conglomeration will be able to scale better and faster than the companies could separately. A rising tide raises all ships.
    • Research and development resources that have been scattered around multiple companies and priorities can now be focused on the same challenges and opportunities.
    • The association technology ecosystem is highly fragmented. Investment of time and money is dispersed and unorganized. Consolidation is necessary to give membership organizations access to world-class technology tools that can take them to the next level.
    • Associations currently spend too much money on integrating technology vendors, which siphons resources away from accomplishing their missions. Access to a suite of products that are integrated out-of-the-box will help fix this problem.

Let’s be reminded that YourMembership (which I consider to be the lead company in this trio) acquired Affiniscape several years ago. That deal was a true acquisition and catapulted YourMembership into one of the largest AMS platforms by customers. In that acquisition, Affiniscape customers were forced to migrate, and that process was painful for YourMembership and Affiniscape clients. YourMembership learned some hard lessons, and I expect they won’t be repeated.

The Community Brands deal is not a merger, and I believe JP Guilbault when he says there won’t be forced migrations on his watch. The story of Ministry Brands, and JP Guilbault’s reputation for following through on his promises, inform my perspective on this.

But let’s also remember that the association technology market is incredibly volatile due to the investment money flowing (around $1 billion in the past year). A new investor with different objectives could step in and decide that migrations fit better into its investment objectives.

That’s why theNIRD.org exists. To inform you about M&A and investment activity in the association technology sector.

Stay tuned for an analysis of how the Community Brands deal affects Abila, Aptify, and YourMembership customers — coming soon.

Color commentary on Community Brands during Association Chat today, April 11

On Association Chat today at 2pm EDT, join me, KiKi L’Italien, JP Guilbault, Loretta DeLuca, Reggie Henry, and Layla Masri as we discuss the recent Community Brands consolidation of YourMembership, Abila, and Aptify. RSVP now.

What to do right now if you’re an Abila or Aptify client

The dust is settling after last week’s announcement that Abila and Aptify had been acquired by Community Brands, a new umbrella company that will also comprise YourMembership. A deal of this magnitude had been rumored back in March. JP Guilbault, CEO of YourMembership, assumes the role of CEO of Community Brands and will also take over as CEO of Abila and Aptify.

I’ll post an analysis of the deal in the coming days.

Many IT Directors and CTOs are wondering what to expect and what to do now. Based on my experience with other acquisitions, here are the steps that any Abila or Aptify client should take immediately (YourMembership clients are less likely to experience any disruption due to the consolidation):

  1. Pull out your contract and note the cancellation terms. Put appointments in your calendar to remind yourself of your next opportunity to cancel your contract. Based on my experience with YourMembership, I think Abila and Aptify customers will be pleased with the kind of service you receive from Community Brands. But if you’re not happy with the way things are going, you don’t want to miss an opportunity to cancel and be stuck in an unpleasant contract for yet another year or two. Also memorize or make a note of your Service Level Agreement, especially as the SLA relates to customer service and response time.
  2. Make plans to attend your AMS’s upcoming user conference. Abila’s conference is this week in Nashville. YourMembership’s is later this month in Orlando. Aptify’s is October 15-18 in Las Vegas. If you can’t make your own user conference, you may want to consider attending one of the other Community Brands conferences. These conferences will give you the opportunity to hear directly from JP Guilbault and other Community Brands personnel about plans for the products. JP is also a very approachable person, and in my experience is happy to talk one on one with any customer.
  3. Start networking with other personnel at your AMS and at the other Community Brands companies. There will be restructurings, reassignments, resignations, and reductions in force as a result of this consolidation. Keep your lines of communication with your AMS open by having multiple points of contact. You’ll be happier if one or more of your contacts happen to leave the company.
  4. Do not hesitate to complain loudly and to the most senior personnel if your SLAs are not being met. Community Brands has promised a smooth transition. Your staff and members should not be inconvenienced by this business transaction.

In full disclosure, I’m a former Avectra employee (before the acquisition by Abila), and YourMembership is a former client.

YourMembership-led Community Brands acquires Abila and Aptify

This is a developing story and will be updated.

UPDATE APRIL 7 12:03pm

The following press release was sent out by the YourMembership staff:

We are thrilled to announce important news to the association industry. Every so often, there’s an opportunity to bring together organizations where the combination of the products, people and customers can yield opportunity and results on a scale unimaginable. Such an opportunity has arrived.

Today, Abila and Aptify have joined forces with YourMembership to form a powerful and unified family of technology-leading brands to better serve associations, nonprofits and government entities, as well as the communities they serve. Together, we will operate under the name of Community Brands, building a connected eco-system of software and services. We are creating one of the world’s largest technology and services groups dedicated to helping member- and donor-centric organizations.

For more information, please read the entire press release below. Please contact Michael Piotrowski in regard to any questions or to set up an interview with JP Guilbault, President of Community Brands.

Contact:
Michael Piotrowski
mpiotrowski@yourmembership.com
727.497.5975 (office)
727.492.5988 (mobile)
*** PRESS RELEASE ***
Community Brands Is Born from the Combination of Three Association and Nonprofit Tech Leaders
Abila and Aptify join forces with YourMembership to create a powerfully connected family of brands to deliver more value and innovation to associations, nonprofits and government entities.

ST. PETERSBURG, Fla.—April 7, 2017—YourMembership (YM) today announced Abila and Aptify are joining forces with YourMembership to create a powerful and unified family of brands and a connected eco-system of software and services to better serve associations, nonprofits and government entities. These three market-leading technology companies are combining to form Community Brands, becoming one of the world’s largest technology and services groups offering a suite of solutions designed for cause-oriented organizations. JP Guilbault, president and CEO of YourMembership, has been named president of Community Brands, and will also lead Abila and Aptify as part of Community Brands.

“Building on the success of these industry-leading brands, we will accelerate development and innovation of our solutions,” Guilbault said. “We anticipate great advancements as our combined talent and use of best practices will strengthen each brands ability to focus on the specialized needs of their target customers, while bringing new offerings to market faster to solve a vast array of unmet needs.”

Community Brands is committed to delivering the most intuitive, easy-to-use technology solutions at the best value for the markets served. This family of brands is a strong step forward in assembling a group of technology innovators to support those organizations whose mission it is to advance important causes around the world.

“With the knowledge that technology and business models are evolving, organizations need applications that are flexible and seamlessly connect to create even more value in attracting and retaining members, donors and organizational talent,” Guilbault added.

“These companies represent the world’s strongest combination of nonprofit management solutions, bringing together a unique set of capabilities to meet this market’s needs. The creation of Community Brands is an important step to drive continued innovation and growth within the association and nonprofit sectors,” commented Deven Parekh, managing director of Insight Venture Partners, a leading global private equity firm focused on the software industry and the primary investor in Community Brands.

About Community Brands
Community Brands is the market-leader of technology and revenue solutions for more than 13,000 associations and nonprofit organizations. Its connected eco-system of software and services are transforming the value organizations recognize from their technology investments. For more information, visit CommunityBrands.com.

About YourMembership
YourMembership, established in 1998, empowers associations and constituent-based organizations worldwide to deliver more value to their users through association management and learning technology, as well as innovative non-dues revenue programs, including certification and online education, career centers and programmatic advertising. YourMembership’s cloud-based association management and learning platform enables associations to effectively brand their organization, engage their audience, and streamline their administrative processes. YourMembership provides the most comprehensive suite of technology and revenue solutions to more than 5,000 customers in 32 countries. For more information, visit YourMembership. To learn more now, call +1 727.827.0046. To get the latest industry updates, read The YM Blog. Get social with YM on Facebook, Twitter and LinkedIn.

About Abila
Abila is the leading provider of software and services to associations and nonprofit organizations to help them improve decision making, execute with greater precision, increase engagement, and generate more revenue. With Abila solutions, association and nonprofit professionals can use data and personal insight to improve financial and strategic decision making, enhance member and donor engagement and value, operate more efficiently and effectively, and increase revenue to better activate their mission. Abila combines decades of industry insight with technology know how to serve nearly 8,000 clients across North America. For more information, please visit www.Abila.com. To subscribe to the Abila blog, visit Forward Together at http://go.yourmembership.com/e/134231/2017-04-07/2bdyzl/84575877.

About Aptify
Founded in 1993, Aptify pairs flexible membership management software with a complete suite of strategic and professional services, making it the go-to technology partner for member-based organizations. Aptify’s products and services are centered around providing expert solutions to enterprise-level, member-based organizations, giving them what they need—in whatever format they need it—to help them make better decisions. With offices in Tysons Corner, Va.; Chicago, Il.; New Orleans, La.; Sydney, Australia; Dublin, Ireland; and Pune, India, Aptify supports the missions of organizations worldwide. Aptify is a proud member of the Association Success family of companies.

About Insight Venture Partners
Insight Venture Partners is a leading global venture capital and private equity firm investing in high-growth software and internet-enabled companies that are driving transformative change in their industries. Founded in 1995, Insight has raised more than $13 billion and invested in more than 250 companies worldwide. Our mission is to find, fund and work successfully with visionary executives providing them with practical, hands-on growth expertise to foster long-term success. For more information on Insight and all of its investments, visit http://go.yourmembership.com/e/134231/2017-04-07/2bdyzq/84575877 or follow us on Twitter: @Insightpartners

UPDATE APRIL 6 9:59pm EDT:

The following message was sent to Abila clients from YourMembership CEO JP Guilbault today:

I’d like to share some exciting news. Abila is joining forces with YourMembership and Aptify to form Community Brands to help cause-oriented organizations achieve success faster, grow stronger, and reach your potential.

The first question you likely have is: “What does this mean for me and my organization?” I want to assure you we will protect your investment in your current product. Your day-to-day interaction with us will not change. Over time, you will see technology, service, and support improvements; and, through it all, our focus will be on providing you the best experience possible. Our primary goal is to make advancements and access to next-generation technology platforms less resource consuming, while increasing the speed by which you gain recognized and measurable value.

In the long run, we see this as a huge benefit to our customers and to the markets we serve. Our plan is to deliver the best solutions and build integration paths between solutions that make it easier for organizations to fulfill their missions and achieve their goals. Our family of brands will focus on meeting the unmet needs of associations, nonprofits, government entities, and other member-centric organizations by providing seamless interoperability and technological choice.

We believe organizations need platforms, technology, and standards that grow with them. We want to remove data silos and the costs associated with difficult integrations and customizations, while maintaining the ability to upgrade systems. We want to provide the flexibility to adjust to business models, as well as member and/or donor needs and expectations, which are evolving at breakneck speed. We believe together we can achieve these objectives faster. Our focus on member- and donor-centric organizations, as well as governmental entities, remains unchanged.

I will be attending the Abila user conference in Nashville next week. I look forward to meeting many of you there, where I can share more information and answer your questions. For those not attending the conference, we will be conducting listening tours to seek input from our customers and partners as we advance technology to better serve your organization.

I know this is a great deal of change, particularly in light of the recent announcement of Craig Charlton as the new CEO. Rest assured, your success remains our priority, which will not change. Craig will support us greatly through this transition.

We value you as a customer and thank you for your ongoing support. As president of Community Brands and CEO of all the companies within it, my line is always open. Please don’t hesitate to reach out.

UPDATE APRIL 6 9:15pm EDT: We’re hearing from multiple sources that a new company called Community Brands is the umbrella company that has taken over management for YourMembership, Abila, and Aptify.

Write an opinion piece for theNIRD.org

I’m going to try out a new post format for theNIRD.org: Opinion pieces.

Many readers of theNIRD.org are in-the-know about deals in the association technology market, and while I love hearing from them by phone or text message, I’d love to get fleshed-out opinions about events and rumors in the market.

You can submit your opinion piece (anonymously, or under your name) on our tip page. We’ll never publish your name without your consent, but the more information you can provide about yourself and how you came about the details that inform your opinion, the more likely I’ll be to publish it. All opinions must be backed by verifiable facts, news stories, or other evidence, and be written in a polite, neutral tone. Be nice.

Some things I’d love to hear from our expert readers:

  • Predictions
  • Analysis
  • Rumors
  • Trends
  • Job changes among senior staff (hires, firings, resignations)
  • The effects that M&A and investments have on association executives and the members they serve

RUMOR: Major technology consolidation likely in 2017

Earlier this month we posted a rumor that one of the largest private equity backed AMS companies was about to be recapitalized. Since that rumor was posted, we’ve heard from multiple sources that the recapitalization is more likely to be an outright acquisition.

But there’s more…

Several of our sources believe that a series of investments, mergers, and acquisitions are currently in various stages of negotiation that would ultimately result in an unprecedented consolidation of association technology firms under a single umbrella company.

One of our sources says a few of these deals have already been struck, but the announcements are being delayed in order to coordinate a single announcement covering all of the acquisitions and investments.

Catch theNIRD.org LIVE at AMS Fest in Chicago, June 7-8

I’m leading a session at AMS Fest in Chicago (June 7-8) on the effects of high finance on the association technology market. You’ll get a no B.S. analysis from me on how the money affects products, customer service, innovation, and more.

And in a nod to the popular “Ask Me Anything” format, you’ll also be able to anonymously submit questions to me so that you can pepper CEOs and senior executives from AMS companies with your tough questions about how various finance models impact the business and its customers.

The last AMS Fest sold out, so register for AMS Fest now.

RUMOR: Major AMS about to be recapitalized

We’re hearing rumors, from people in positions to know, that one of the largest AMS companies, which is already private equity backed, is about to be recapitalized.

MemberClicks accepts growth equity funding

AMS platform MemberClicks accepted an undisclosed sum from Five Elms, a growth equity firm based in New York, in February 2017. Click here for the presser.

Read about MemberClicks on Crunchbase.