Share your perspective on the Personify-Wild Apricot deal

I’m preparing an analysis of this week’s Wild Apricot acquisition by Rubicon-backed AMS, Personify. If you’re a client or prospect of either Wild Apricot or Personify, I’d love to hear from you.

I’m also eager to hear from consultants and other vendors who work in or around the AMS market with their comments.

Remember: I accept (but not necessarily publish) anonymous tips, and you can rest assured that I will only divulge your name if you ask me to.

SURVEY: How do funding models affect buying decisions?

I’m conducting a three-minute survey on how various funding models affect decision-making in the buying process. If you’re reading this in your email inbox, please click through to complete the survey. A summary of the responses will be posted here, and an analysis of the data will be presented at AMS Fest in Washington, DC, November 13-14 as part of a session on M&A and investment activity in the not-for-profit technology sector. Your response will be held in confidence.

ANALYSIS: NimbleUser joins Community Brands family

A mere three weeks after Aptify and Abila got under the Community Brands umbrella, on April 26, 2017 it was announced that NimbleUser would be joining them.

NimbleUser is a Rochester, NY based company that has spent the last decade building a Salesforce-powered AMS called NimbleAMS. Prior to releasing the NimbleAMS product in late 2011, NimbleUser was an iMIS reseller and Solution Provider. A family owned business up until a few days ago, Sig VanDamme is the Founder, his wife, Dawn, serves as CEO, and Joe Klimek serves as President.

Industry observers had mixed reactions to the deal. Some were surprised, knowing that Sig and Dawn have a strong commitment to the city of Rochester, and their company culture —  a deal that could risk the product of their life’s work seemed out of alignment with their values.

Others saw the writing on the wall: NimbleUser was one of only a few enterprise AMS companies to have not taken any funding. NimbleUser needed growth capital to accelerate product development. A phone interview with Sig VanDamme confirmed it. He said the alternative, continuing to fund research and development out of their own revenues, would result in delayed time to market for a number of initiatives they had on their roadmap.

Interest among association technologists in Salesforce-based AMS products has been climbing along with Salesforce’s rise to become one of the world’s most innovative and largest companies. Hitching your AMS to a database core that receives almost a billion dollars of R&D annually is attractive. But all that R&D money comes at a cost: Salesforce-based platforms are among the most expensive solutions on the market, competitive with other enterprise-grade AMS platforms.

NimbleAMS competes head-to-head with Fonteva’s MemberNation platform, which is also Salesforce-powered. They also compete (less directly) against other enterprise-grade AMS platforms like Personify, iMIS, Abila’s netFORUM Enterprise, and Aptify.

That’s right! If you’re keeping score at home, Community Brands now has three enterprise-grade AMS platforms in its pen: NimbleAMS, Aptify, and netFORUM Enterprise. While it’s still very early in Community Brands’ history, this fact should serve as evidence that they intend to deliver on the promise to allow its companies to compete for business. After all, why would anyone add another competitor to the pen if you didn’t really expect them to fight it out?

At the same time, some industry insiders acknowledge that this deal reduces choice for enterprise-grade AMS products; three of the seven are now owned by the same parent company. In interviews I conducted with association technology consultants, some prospects now feel like they’re “negotiating with themselves.” How much leverage does a prospect really have when they press two companies owned by the same parent for better contract terms?

What does this deal mean for NimbleAMS customers? In my view, not much. A Salesforce-powered AMS should be expected to stand on its own for as long as Salesforce is in business. Any risk that Nimble might be merged with Aptify or netFORUM Enterprise is very remote. However, based on a pattern that I’ve witnessed with other family owned companies that become investor-backed, there is a higher risk that the business processes will be more substantially impacted than a company that passes from one investor to another. NimbleUser customers should be prepared for some adjustments in the transition.

ANALYSIS Part 4 of 4: YourMembership leads the Community Brands consolidation

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.

I’ve been analyzing 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.

Today’s post is about YourMembership.

It’s safe to say that YourMembership (YM) is the lead company in the Community Brands consolidation. The CEO of YM, JP Guilbault, has ascended to the title of CEO of Community Brands and holds the title of CEO for both Aptify and Abila.

For background, in the past five years, YM has made a rapid rise to become a powerhouse AMS. In late 2012, YM (which stood with about 1,000 clients at the time) acquired Affiniscape, an Austin-based AMS with about 1,200 clients, making them one of the major AMS players in the small to mid-sized association market.

The Affiniscape acquisition was bumpy for customers, according to most accounts, and on ReviewMyAMS.com, you can see a pattern of customer dissatisfaction on YM right after the merger. Much like the Avectra/Abila merger, many of the Affiniscape staff departed shortly after the acquisition. Despite assurances made at the 2012 Affiniscape users conference that a best of breed AMS would come from the careful analysis of both products, clients were notified after the acquisition that their product would be deprecated, and a migration to YM would their only choice — unless they wanted to move to another AMS. Clearly, this angered many Affiniscape clients. Adding insult to injury, many Affiniscape clients felt their migrations to YM weren’t handled with care. Ultimately YM doubled down its investment on migrations and the experience improved. It took years for YM to undo the damage, but they eventually did, and now they enjoy a mostly happy clientele. JP Guilbault admits that he reflects on the Affiniscape acquisition as a learning experience, and one that he vows not to repeat.

But doubling their customer base with Affiniscape was only the beginning. YM acquired job board platform Job Target and learning management system platform Digital Ignite. Years after these acquisitions, the former CEOs of Job Target and Digital Ignite are still on staff with YM, their offices are still in place, as are many employees of those acquired companies. I believe this is evidence of a learning lesson from the Affiniscape acquisition, and is hopefully a foreshadowing of what should be expected for the Abila and Aptify deals, as well as future deals.

These acquisitions, combined with the development of an expertly executed marketing and sales strategy over the past five years resulted in YM being catapulted to one of the leading AMS and technology providers in the market, both in terms of customers and revenue. For this effort, YM was acquired by Ministry Brands in February 2017 for a hefty price tag of approximately $300 million, it’s rumored.

YM customers will be the least affected by this consolidation, according to the industry observers I’ve spoken to. They expect the inertia of JP Guilbault’s tenure with YM to continue for the foreseeable future. Because of this, we can predict that the products, office culture, pricing models, customer service practices, and staff from the legacy YM company to be more difficult to unseat going forward under Community Brands than those of Abila and Aptify.

Therefore, Abila and Aptify personnel and customers should expect aspects of YM’s business practices to be applied to them. That change may be painful at first, but in the long run, it will probably be for the best, as the personnel will be more efficient as duplicative processes are eliminated.

Most consultants and YM customers we’ve spoken to are taking a cautious, wait-and-see approach. Most customers seem to have gotten over the problems experienced during the Affiniscape merger. But like any AMS customer base, there is a contingent of unhappy YM customers, and this contingent sees the Community Brands consolidation as a distraction from the work that needs to be done to stabilize and enhance the products. And to be fair, there is a contingent of YM customers that is excited about the growth and innovation opportunities afforded by YM’s access to hundreds of millions of dollars to invest in their products.

Perhaps the greatest opportunity for YM in the short term is to expand its ancillary products and services into the new customer bases. I’m interested to see how aggressively YM Learning, YM Marketing, and YM Careers will be promoted to Abila and Aptify customers.

Industry insiders believe YM, as the lead company in this consolidation, will be challenged to balance profitability on the one hand, with guarantees of no forced migrations on the other. In particular, YM’s Digital Ignite is a direct competitor to Abila’s LMS, Freestone. And Abila’s netFORUM Pro is often considered head-to-head against YM’s AMS. In a typical consolidation, one product would be deprecated in favor of the preferred product. But as we’ve described in these analyses, this is not your typical consolidation.

ANALYSIS Part 3 of 4: Abila 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.

I’ve been analyzing 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.

Today’s post is about Abila.

For background, Abila was formed out of the merger of Avectra and Sage Nonprofit Solutions in July 2013, a deal financed by private equity firm Accel-KKR. Up to that point, Sage and Avectra had little in common. Avectra offered two tiers of its AMS software (netFORUM Pro and netFORUM Enterprise), and Sage offered a suite of products for charitable organizations, the most significant of which was a fund accounting package (Sage MIP). Krista Endsley, Sage’s General Manager, was named CEO of Abila after the merger.

Significant turnover at the Avectra offices ensued soon after the merger. Virtually the entire executive suite turned over. Some industry insiders characterized the transition as rocky, and one longtime Avectra client I spoke to called it “chaos.” My sources tell me that Abila leadership, in hindsight, regretted the mass exodus of personnel.

With its round of funding from Accel-KKR, Abila went on to acquire Peach New Media, provider of an LMS platform called Freestone. With an expanding line of products, industry observers expected to see Abila take a page out of YourMembership’s playbook and make additional acquisitions; but those deals never materialized.

Abila’s CEO Endsley departed the company in February 2017 and was replaced by Craig Charlton, an Accel-KKR advisor. Her departure was coupled with rumors (substantiated by well-placed sources) that Abila had been shopping around for a buyer since 2015. The Abila deal closed one month after Charlton was hired. Some conjectured that Charlton was hired just to get a deal done, but he vigorously denies that rumor.

Abila brings a large DC-area office to Community Brands, an asset that YourMembership has lacked.

Abila’s customer base of approximately 8,000, when taken as a whole, could be described as all over the map. There are approximately 300 large association clients running netFORUM Enterprise, around a thousand netFORUM Pro clients (trending small-medium sized), about 6,000 nonprofit (not association) clients running Sage products, and around 100 Freestone clients.

The short term effects of the Community Brands deal aren’t that significant for Abila customers, in my view. Many Abila staff have been through a merger before, giving them experience to draw from, and I predict the disruption for Abila customers will be minimal. From experience, we’ve learned that the transition from one private equity firm to another gets easier with each subsequent investment.

The long term effects will be interesting to watch. Community Brands staff will be challenged with how to manage three Abila products that compete with other products in the Community Brands portfolio.

  • netFORUM Enterprise vs. Aptify
  • netFORUM Pro vs. YourMembership
  • Freestone vs. Crowd Wisdom (aka YM Learning and Digital Ignite)

Abila’s purchase price was rumored to be in the $150-$200 million range.

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.