RUMOR: Community Brands is about to announce a new family member

I have it from a well-placed source that Community Brands will announce that it has added a new member to its family of customers. The YourMembership users conference wraps up tomorrow, and this deal could be seen as the big news to cap off this gathering of the lead company in the Community Brands consolidation.

ANALYSIS Part 2 of 4: Aptify joins Community Brands

In the time 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, based on the conversations I’ve had with my sources.

Let’s turn our attention to the most interesting addition to the Community Brands family, Aptify.

Of the three companies coming together under the Community Brands family, Aptify is the most surprising according to industry observers. The founder of Aptify, Amith Nagarajan, has long boasted the idea that Aptify is a privately owned firm that was fiercely committed to its independence from the influence of investors, and it was an important aspect of their sales pitch.

Aptify even went so far as to become Evergreen Certified, which touts the benefits of privately held businesses:

Taking advantage of the ability of closely-held private companies to have a longer-term view, greater confidentiality around strategies, and more operating flexibility than public or exit-oriented businesses.

Given this commitment, it seems shocking that Nagarajan would sell Aptify. But people close to Nagarajan had different perspectives on his decision. Some said the exit was unexpected, with Nagarajan still substantially involved in decision-making at Aptify and constantly touting the company’s Evergreen status.

Others weren’t surprised, knowing just how much investment money is flowing through the sector, and stating that he had expressed boredom with a technology environment that moved slowly compared to some of the other markets in which he has founded businesses. His need for speed comes as no surprise to those who know him well. Nagarajan is widely regarded in the association sector as a brilliant technologist and entrepreneur, and is rumored to have a dozen companies in his portfolio.

Nagarajan will stay on as a strategic advisor to Community Brands, but will not have any day-to-day responsibilities.

Aptify brings an upper-echelon clientele to Community Brands. Their 100+ clients tend to be among the largest associations measured both by members and revenue. This may be because Aptify is more white-glove-service oriented than many of its competitors, with a large professional services team, much of which works in India. This offshore development team may also be an asset to Community Brands.

Aptify also brings an Australasian office (based in Sydney) to Community Brands, giving the consolidated company a foothold in a new growth market.

Most industry observers I spoke to expect Aptify customers to experience a more difficult transition to new management than other customers. Aptify customers almost universally know Nagarajan, the company founder, personally. As a privately-held business, Aptify had a substantially different culture than equity-backed YourMembership and Abila. Employees at Aptify are experiencing their first change in ownership. Many customers have highly customized databases (though Aptify prefers to call them “configured”). Management at both YourMembership and Abila have been less inclined to take on custom work, and there will be tension between that posture and Aptify’s willingness to give clients virtually whatever they wanted (as long as they paid for it).

This transition isn’t a bad thing; whatever difficulty is experienced by Aptify customers and employees will be temporary. Based on experience with similar deals, we can expect that Aptify will emerge stronger in the end.

Industry insiders will be watching closely for clues on how Community Brands intends to manage two products in its suite (Abila’s netFORUM Enterprise and Aptify) that compete in the same niche.

It will also be interesting to see what happens to Aptify employees after the dust settles. Aptify’s business model is very different than that of Abila or YourMembership, and it’s difficult to imagine how Community Brands personnel could reconcile competing service strategies if asked to serve two kinds of customers: those who are accustomed to white-glove-service and those who expect more out-of-the-box solutions.

Aptify’s purchase price was rumored to be in the range of $75 million.

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.

Higher Logic acquires online collaboration platform Kavi

Online community platform Higher Logic has acquired Kavi (pronounced KUH-vee), an online collaboration platform used primarily by standards developing organizations, many of which are associations.

Read the press release.

This comes just a month after Higher Logic acquired Socious, another leading online community platform in the association market.

Read about Higher Logic and Kavi on Crunchbase.

Higher Logic acquires Socious

Higher Logic, an online community platform, acquired Socious, another online community platform in January 2017. Read the press release.

Read about Higher Logic and Socious on Crunchbase.

Read more about the deal at Online Community Results.