Blackbaud announces acquisition of Kintera

...and then there were two.

In news just hitting the wires... Blackbaud announced today they are buying Kintera as an all-cash tender offer for all of the shares at a price of $1.12 per share.

Tim Williams, Blackbaud's Senior Vice President and Chief Financial Officer, stated, "In addition to the strategic reasons supporting the acquisition of Kintera, we believe the acquisition is attractive from a financial perspective as well. Subscription revenue was already the fastest growing source of revenue at Blackbaud and it was expected to become larger than license revenue at some point in the second half of 2008. With the acquisition of Kintera, this will become a certainty as we will add another significant source of subscription-based revenue from an on-demand service offering. The evolution of Blackbaud’s business model toward new revenue sources with ratable revenue recognition has been a significant and positive development over the past several years, and it complements the very strong cash flow profile of the Company.”

While the press release seems almost giddy, I'm not so sure nonprofits will be thrilled that their viable options for major providers continues to shrink. If I was a shareholder in BLKB, I would be concerned that $46 million is too much to pay for a provider that seemed destined to go out of business anyway.

Although, the only people who will suffer more than nonprofits looking for competition in the marketplace will be the folks at Convio who must be shitting themselves.

Kintera will continue to be led by its current President and CEO, Richard LaBarbera. The company is expected to formally launch the tender sometime next week and close on or around July 2.

UPDATE: 1232AM = Steve MacLaughlin at Blackbaud's Connections blog points out that:

Because both Blackbaud and Kintera are publicly traded companies there are very specific Federal Trade Commission rules about what can be said and done until the deal officially closes. This may take as many as 30 days and until then both companies will perform as separate units, competing with each other as they did prior to this announcement.

He goes on to say:

* Blackbaud becomes the leading provider of online solutions and services to the nonprofit industry with over 4,500 clients

* Both Kintera Sphere and Blackbaud NetCommunity are strong Internet solutions that largely serve very different segments, including The Raiser’s Edge, Team Approach, eTapestry, and non-Raiser’s Edge customers.

* Blackbaud plans to continue to support and invest in both products.

* Kintera’s other offerings, FundWare, P!N and certain capabilities within Sphere (e.g., Friends Asking Friends) are well-recognized and respected in the marketplace.

Hmmmmmm. Interesting.

Charity merger article in New York Times

Stephanie Strom (as always) has a great article in the New York Times today on the efficiencies that can be gained when two charities merge.

The article explores how Accenture helped the Hands On Network and the Points of Light Foundation merge.

Strom also cites examples like Safe Space NYC, the Children’s Village Inc. and Inwood House's creation of "a separate charitable organization to cultivate donors and solicit major gifts."

The Humane Society of the United States' partial mergers with two other animal advocacy groups, the Doris Day Animal League and the Fund for Animals, are also mentioned.

Merkle loses its domain

Michael Mathias, Senior Vice President & Group Leader, at MerkleDomain sent out an email earlier today saying:

Now that we have completed a very successful and smooth transition between Merkle and the former Domain agency, MerkleDomain will now officially be known simply as Merkle.

No word yet on whether Jeff Brooks will follow suit and ask readers of Donor Power Blog to simply call him Jeff from now on.

What will Blackbaud buy next?

The Nonprofit Times was quick to follow-up the Convio IPO news by reviewing some of the online chatter about what Blackbaud plans to do next.

When a company spends $90 million in two years, it tends to get tongues wagging. And there has been no shortage of opinions in the nonprofit technology community regarding the impact of the $24.8 million acquisition of online donor management and advocacy tool eTapestry by software giant Blackbaud.
...
Blackbaud might not be finished. In public announcements and filings, the firm disclosed it had established a credit line of $75 million. The acquisition of eTapestry leaves another $50 million.

I've made it clear, if they are interested in buying this website, they wouldn't need to spend all that cash. If you were running the ship at Blackbaud, what/who would you buy next? Do they make a purchase based on what they feel would make their company stronger? Do they make a defensive play based on what Convio is doing? Will they buy DonorPerfect?

I posted a couple weeks ago that there were rumors Oracle could be considering an acquisition of Blackbaud. I've been told that isn't going to happen, but who knows?

What about Kintera? Given the fact that the stock has fallen more than 80% from its high, it seems like a bargain now... or are others just waiting for Kintera to go bankrupt?

Does fundraising dip when nonprofits merge?

According to the Arkansas Democrat Gazette, there are 1,297 United Way organizations. In the past three years, 81 of the agencies have merged "in search of the efficiencies found when private companies streamline."

Nationally, other nonprofit organizations also are consolidating. Girl Scouts USA is hoping to shrink from 312 councils to 109. Red Cross chapters are also merging across the country in attempts to reduce costs by cutting overhead.

Ironically, while costs may be reduced - there appears to be anecdotal evidence that fundraising is also reduced following a merger.

The United Way of Northwest Arkansas formed July 1, combining the 14 employees from the United Way of Washington County and United Way of Benton County.

The group’s $ 4. 5 million fundraising goal, announced earlier this month, is $ 100, 000 less than the separate bodies collected last year.

“There is uncertainty at first, but after two or three years, it goes back up,” Darling said. “I’m hopeful that we won’t see that dip, but we aren’t going to raise a lot more money just because we’ve merged together, either.”

The United Way of America has never researched the short term impact of mergers on contributions, but the national organization says it is interested in looking into it.

Turf battle erupts in Vermont over autism fundraising walk

Last year, Autism Speaks organized its first fundraising walk in Burlington, Vermont. The walk attracted more than 400 participants and raised nearly $35,000. By many accounts the event was a success, however some parents began to question why they were raising money for national research when local families in Vermont needed immediate assistance.

As a result, one of last year's community sponsors - a group called Autism Support Daily - decided to organize their own walk and call it the Second Annual Vermont Walk on Saturday, September 29th. Rather than give up the event they helped organize - Autism Speaks is fighting back by organizing their own walk on Sunday, September 30th at the same park!

As a result of this dispute, it's likely both groups will only raise a fraction of what was raised last year. While both groups have maintained an amicable relationship in public - some of the messages in private message boards have expressed frustration and confusion.

In response to an email from this blog, Lynn George, the President of Autism Support Daily had this to say:

We appreciate that Autism Speaks raises money for much needed research, however, the families in our area are struggling and need as much support as we can provide for their children now.

While the total amount of money at stake in this "turf battle" is not major - it remains to be seen whether pressure from local groups will potentially erode the fundraising base for large national groups like Autism Speaks.

Autism Speaks was founded in February 2005 by Bob Wright, Vice Chairman of General Electric, and his wife Suzanne, to improve public awareness about autism and to promote autism research. In 2006 the organization merged with National Alliance for Autism Research (NAAR) and with Cure Autism Now, a 10-year-old organization based in Los Angeles that is primarily involved fund-raising for a variety of autism research.

Blackbaud buys eTapestry

Paul Clolery at The Nonprofit Times reported earlier this week on yet another consolidation in the online fundraising arena:

Nonprofit software provider Blackbaud has made its second major acquisition this year, buying online donor management and advocacy tool eTapestry. During the past two years Blackbaud has spent more than $90 million on acquisitions in the nonprofit software and advocacy marketplace.

The eTapestry deal further consolidates the online advocacy message delivery and fundraising market. Convio in Austin, Texas acquired GetActive Software of Berkeley, Calif., earlier this year.

Blackbaud will pay $24.8 million for eTapestry and up to another $1.5 million under a two-year, stock-based performance incentive arrangement. eTapestry had unaudited revenue of approximately $7 million for 2006, according to a Blackbaud spokesperson. The company did not make any of their executives immediately available for interview but did provide statements.

Blackbaud's stock price surged 10% following Monday's news.

Maybe Blackbaud would be interested in buying this blog? I'd be a lot cheaper than $25 million. If you want to read more about the acquisition, go here.

Convio acquires GetActive

Convio, Inc. today announced that it has executed a definitive agreement to acquire GetActive Software, Inc. Both companies provide eCRM software and services vendors within the nonprofit sector.

Convio's clients include American Red Cross, American Diabetes Association, American Society for the Prevention of Cruelty to Animals, AVON Foundation, Easter Seals, Farm Aid, National Multiple Sclerosis Society, Sierra Club, The Susan G. Komen Breast Cancer Foundation and Thirteen/WNET New York.

GetActive has more than 800 clients, including The Humane Society of the United States, AFL-CIO, University of California, CARE, Oxfam America, U.S. Chamber of Commerce, and the National Association of REALTORS®.

Valassis to buy Advo for $1 billion in settlement

For all you direct mail junkies... here is a bit of news from the DMNews website:

Valassis Communications Inc. said Dec. 19 that it would buy fellow direct marketer Advo Inc. for $1.08 billion, an 11 percent discount to the original price in a deal ending a four-month legal battle.

Valassis a newspaper insert distributor based in Livonia, MI, will pay $33 a share in cash for Windsor, CT-based Advo, below the $37 a share it agreed to pay when the two companies first struck a deal. Including $125 million in Advo debt, the deal is valued at about $1.2 billion.

The transaction will create the nation's largest integrated media services provider, featuring comprehensive product and customer offerings in the industry serving 20,000 advertisers worldwide, including 94 of the top 100 advertisers in the United States. Advo's shared mail distribution business penetrates up to 114 million households, or 90 percent of U.S. homes, adding substantially to Valassis' weekly newspaper distribution of more than 60 million households.