Private Equity Success Stories – Community Brands
Private equity is a form of financing where pools of capital are used to invest in or acquire privately held companies across various industries. The private equity model has been around for decades and has gained investor interest due to its history of high returns and unique risk profile. Despite some of the inherent risks with private equity investing (i.e., liquidity risk, market risk, operational risk, etc.), success stories marked by sustained growth and sizable returns exist. This blog post brings into focus the story of Community Brands, a well-known case study in the technology industry.
Formation of Community Brands
In 2017, the Community Brands platform was created through a merger orchestrated by Insight Partners and Harvest Partners, two prominent New York-based private equity and venture capital firms. The merger combined three association and nonprofit technology players – YourMembership, Abila, and Aptify. YourMembership and Abila both provide association management software to nonprofit, professional association, and municipality customers while Aptify offers membership management software to member-based organizations. The rationale behind the merger was to create a powerful platform, Community Brands, capable of expanding offerings and accelerating solution development to better serve the unmet needs of mission-driven organizations. Financial terms of the merger were undisclosed, but at the time of the merger in 2017, the three companies served a combined 13,000+ customers globally.1
To complete the picture around the formation of Community Brands, it’s important to better understand the history and role of Ministry Brands. In 1997, Ross Croley founded In10sity Interactive, provider of web design services, and grew the company through five acquisitions before becoming part of the newly founded Ministry Brands in 2012. Ministry Brands was very acquisitive in its early years and grew to serve over 55,000 churches as a point solution provider of church websites and digital donations.2 In 2016, Ministry Brands was acquired by Insight Partners through a US$1.4 billion recapitalization and later rebranded to Community Brands.
Investor Actions to Propel Growth of Platform
Since 2017, Community Brands has undergone a series of financings to help support the growth of the platform. In 2018, Community Brands secured a US$55 million senior term loan from AB Private Credit Investors. Two years following the debt raise, in 2020, Community Brands also received an undisclosed amount of development capital from Greater Sum Ventures (GSV). Also founded by Ross Croley, GSV is an established Tennessee-based middle-market private equity firm investing primarily in software and tech-enabled services companies. Since its founding in 2015, GSV has performed more than 250 investments and has played an instrumental role in the impressive scale achieved by both Community Brands and Ministry Brands.3
With access to expertise and outside capital from investors, Community Brands was able to explore an inorganic growth strategy consisting of add-on acquisitions. From 2017 through 2022, Community Brands and its investors completed 20+ buy-side acquisitions to expand product capabilities, add key subject-matter expertise, and deepen customer relationships.4 Acquisition targets have consisted primarily of providers of community-focused software with employee counts ranging between 10 and 70, based in the United States and the United Kingdom.5 Many of these targets serve customers in the education, nonprofit, and association end markets with feature sets spanning event management, payments, fundraising, and member management.
Community Brands Today
In 2021, it was announced that New York-based private equity firm Reverence Capital Partners would acquire Ministry Brands through an LBO for an undisclosed amount. As part of the transaction, Ministry Brands would become a separate standalone entity, with material rollover investment from former parent, Community Brands, and a full exit from former majority investor, Insight Partners. The transaction would allow Ministry Brands and Community Brands to operate independently with a more focused investment strategy for each of the company’s customers and employees. Initially a point solution provider of church websites, Ministry Brands has evolved into a broader integrated platform serving 95,000+ faith-based organizations with solutions spanning engagement, donations, accounting, and church management.6
Today, Community Brands is a leading provider of community-focused software, serving over 100,000+ customers in 30 countries.7 Associations, nonprofits, and other organizations depend on Community Brands and its 2,000 employees to help manage memberships, donations, and events, among many other functions. While it is difficult to determine the exact magnitude of investor returns due to undisclosed financial terms of the initial merger in 2017 and subsequent financings, it was reported in December 2022 that Insight Partners was weighing a US$2 billion sale of Community Brands.8 This would represent a landmark transaction for all stakeholders involved and certainly speaks to the impressive growth that Community Brands and its investor base have achieved since the platform’s formation.