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.
