ANALYSIS: Personify/Wild Apricot deal is brilliant

On September 26, 2017, Personify, widely known for their enterprise level AMS platform and high-profile customers, acquired Wild Apricot, an entry level membership management system. This acquisition is in addition to the November 2015, acquisition of Small World Labs, a leading online community vendor. Personify is backed by Rubicon Technology Partners, a private equity firm with offices in Menlo Park, CA and Stamford, CT.

Because they serve mostly micro-associations (very small staff or  volunteer run) Wild Apricot is relatively unknown among career association executives. Let’s fix that.

Toronto-based Wild Apricot is a pure SaaS (Software as a Service) technology company with over 22,000 customers. Personify is now boasting a customer base exceeding 30,000 customers. 21.5% of Wild Apricot’s business is based outside the US, giving Personify a foothold overseas.

This number has raised some eyebrows. An industry insider sent in this tip: “I would seriously question the number of customers that Wild Apricot and Personify are throwing around.” So I did some digging.

According to Michael Wilson, Chief Strategy Officer at Personify, the number is indeed correct and more than 50% are ongoing paying customers. Wild Apricot’s freemium model allows users to register for a free 30 day trial, begin managing their membership, and then start paying if they like the service. There’s also a completely free version for organizations with less than 50 members which is where the balance of the customer count comes from.  According to Wilson, “The model of allowing a free level expands the user base of clients that can advise us on how to continually improve the product in the best way.”  The CSO continued, “This is also good for the industry as it provides free software to small organizations that cannot yet afford to pay. Also, as they grow, we do too.”

Pricing ranges from $40/mo to $270/mo, so if we assume that the average paying customer is paying the $70/mo rate (the second to lowest rate) that would give Wild Apricot about $10M in annual revenue.

Their customer acquisition model is almost entirely word of mouth and inbound marketing — SEM, content marketing, social media marketing, and leveraging review sites. According to Personify, Wild Apricot has been the highest rated membership management system on technology review site Capterra for the past five years. Through these efforts, I’m told by Personify that Wild Apricot has grown 20% per year with a sales team of zero. Think about that. No sales team and about $10M in revenue.

Having no sales staff has a couple of important implications:

  • Wild Apricot can devote a greater share of its resources to R&D. Wild Apricot boasts an R&D staff of 100.
  • There’s no need to send sales staff to attend or exhibit at conferences and events — hence the lack of awareness of Wild Apricot among career association executives and association sector technology experts.

Because of the shroud of mystery over Wild Apricot, many industry insiders I spoke to initially scratched their heads on this acquisition. Two products, seemingly incompatible, and addressing widely different markets coming together? How does this make sense? One consultant remarked: “This acquisition only makes sense for Rubicon. It’s designed to boost top and bottom line and make EBITDA look better for the next buyer.”

But this deal is actually brilliant. Here’s why: Unlike other recent acquisitions which brought together similar products addressing similar verticals, Wild Apricot and Personify have almost — *almost*; hold on to that word — no overlap.

Some recent acquisitions in the association technology market are forcing the parent companies to reckon with issues such as:

  1. How to continue managing multiple, very similar platforms that serve the same customers.
  2. How to merge the similar platforms from a technology perspective
  3. How to merge the similar companies from a personnel perspective (e.g., layoffs or new roles)
  4. How to manage sales teams for two competing platforms under the same parent company who are competing for the same business
  5. How to choose which product to deprecate
  6. How to communicate about all of the above challenges to customers, prospects, and the broader market

Personify and Wild Apricot have no such dilemmas.

Remember that *almost*? Here’s the almost: During due diligence, the Personify team discovered that 25% of their customers have local chapters who are Wild Apricot customers. This creates an interesting opportunity: think about a huge international organization that needs a 500HP AMS to give them throttle for their complex scenarios, but their chapters just need a bike to get them around. What if those technologies played nicely together? Register for the international conference through your chapter’s website, renew your certification through your chapter’s website, international can crunch engagement data to serve chapters high-potential new volunteers, etc.

“This is an area we are really excited about,” said Wilson.  “This acquisition actually helps large organizations solve the dilemma of how to bridge the data and user gap between the large national headquarters and the local, often independent affiliates.”

This deal now brings Personify’s total client base to a reported more than 30,000 organizations when including the national organizations and local entities using Personify360, Small World Community, and Wild Apricot.

Perhaps the only downside to this acquisition is the perception in the broader market rumor mill that Personify has been distracted from its core business by pursuing a deal that — despite its brilliance — seems to be a mis-match.

For those that have worked in the association market for more than a few years, you may remember that after private equity investment dollars first came into Personify in 2013, there was a period of staff churn at the company. While that initial churn generated a few critics, it seems Personify has turned the corner and their arrow is pointing up.

I was given a confidential client retention number that I can’t share, but as a former membership director, I would have been very satisfied with the number. Personify was also recently named as one of the Top 20 Most Promising Cloud Solution Providers by CIOReview Magazine in 2017. Perhaps Personify is doing better than the critics think.

My bottom line: Some of the most knowledgeable and respected industry insiders were initially conflicted about this acquisition, but have come around. Pure SaaS play companies are among the most valued in the broader technology market. In my opinion, Personify has bagged a unicorn, and I believe it has taken their competitors by surprise. I personally think that this is a good deal for everyone involved, and good for the association technology market.