In July 2017, Advanced Solutions International, developers of the widely-used iMIS association management system, announced the acquisition of Internet Vision Technologies, an Australia-based AMS and nonprofit management software developer with 160 clients.
This post is a little off-topic, but I thought it might be of interest to not-for-profit and association technology executives who aspire to understand the powerful forces beyond our control that affect our organizations’ operations.
Ed Schipul is CEO of Tendenci, an open source AMS — well, frankly, the only open source AMS. Very thoughtful and techie guy, but not someone who runs in the same circles as the other AMS vendors.
My eyes widened when I read on his blog that former FBI director James Comey testified that the Russians had hacked hundreds of — and perhaps 1,000+ — nonprofits and NGOs in their efforts to sway the 2016 US presidential election.
Ed believes that some of his clients were targeted:
I can personally confirm it was in the hundreds just based on our client base. This does NOT mean they breached, but targeted? Yes.
His analysis and advice is worth reading.
If you like what you’re reading on theNIRD.org, you may be interested in “Hot off the Press,” a segment of AMS Fest that will be broadcast on Facebook Live at 1pm CDT on Wednesday, June 7, 2017.
There’s a strong possibility that some significant announcements will be made during this 15 minute session, and by tuning into the Facebook Live broadcast, you’ll be among the first to know about them.
Yesterday’s post summarizing the past year’s investments in not-for-profit association technology companies has been revised. The updates to rumored price tags for the companies were made based on information received from a reliable source. And the total investments made in association technology companies over the past year has risen to $700M based on this update.
UPDATED May 17, 2017.
In preparing for my presentation at AMSFest, I went back and looked at all M&A and investment activity that has been reported so far on theNIRD.org.
Keeping in mind that what’s reported here is only what I’ve learned about (it’s likely there are more investments that haven’t been reported here), here’s what I’ve got since April 2016:
- April 2016: Fonteva took $2M in crowdfunded venture capital growth funding
- July 2016: Advanced Solutions International (iMIS) took $26M in private equity growth funding
- September 2016: MemberSuite accepted $11M in venture capital growth funding
- September 2016: Higher Logic accepted $55M in private equity growth funding
- January 2017: Higher Logic acquired Socious. The size of the deal was not disclosed, but it was rumored to be in the $15-25M range.
- February 2017: YourMembership was acquired by Ministry Brands. It is rumored that the sales price for YourMembership was around $230M.
- February 2017: Higher Logic acquired Kavi. The size of the deal was not disclosed, but it was rumored to be in the $10-20M range.
- February 2017: MemberClicks accepted a round of private equity growth funding. The investment was rumored to be between $15-20M.
- April 2017: Abila was acquired by Community Brands. The deal was rumored to be around $290M.
- April 2017: Aptify was acquired by Community Brands. The deal was rumored to be approximately $30-40M.
- April 2017: Blue Sky eLearn accepted an investment from Freeman Digital Ventures. Terms were not disclosed.
- April 2017: NimbleUser was acquired by Community Brands. The deal was estimated to be in the $15-25M range.
For those keeping score at home, that’s 12 deals for a minimum of about $700M invested in association technology companies in the past year. And those are only the deals we know about.
I received a tip yesterday afternoon that NimbleUser would be welcomed to the Community Brands family of companies. This post was scheduled yesterday evening, on the request of my source, and will be updated as new details, including a press release, are made available. The press release is scheduled to go out in the early morning hours according to my sources.
For those unfamiliar, NimbleUser’s flagship product is NimbleAMS, a Salesforce-powered AMS. They’re based in Rochester, NY, and Sigmund VanDamme is their Founder. NimbleUser may be best known in the association sector for their retro Airstream camper which they haul to major trade shows.
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 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:
- 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.
- 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.