Churches tech directors along with many people who work in the church technology market have been talking about the changing and consolidation of the church technology market over the past three years. In 2012, private equity-backed Ministry Brands came on the scene with easyTithe, SimpleGive and SiteOrganic and quietly began acquiring additional church technology firms.
What began with just a few companies has now grown to include the acquisition of 25 brands, all formerly independent owner-run businesses. While consolidation often happens in many markets of all kinds, it’s rare that one firm would acquire so many in one small vertical industry. This has raised just a few eyebrows, to say the least.
The big question remains: Is consolidation of church technology firms good for churches? While good business practices are always the goal, because the majority of church tech firms aim to be of service to churches and abide by a higher sense of right and wrong, it’s normal for people to ask questions. What works for the secular business community might not be embraced in the religious market.
Other larger church technology companies have made acquisitions over the years such as ACS Technologies acquiring Church Helpmate this year, Solomon Learning Management System in 2015, along with Parish Data System and The City in years past.
It’s normal business practices to look for companies who have already developed technology that would round out a company’s customer offerings instead of building that technology themselves. It makes good business sense.
What is different in this case is that Ministry Brands has acquired many different companies that offer the same technology solutions to the same market; they’ve acquired five church management brands, nine online giving brands; one background check brand; and seven church website brands. That’s a lot of competing brands. Not only have other church technology firms taken notice, but churches have taken notice too.
The question that everyone seems to be asking is, ‘Can a company of this magnitude and with this many brands serve the Church well?’
Ministry Brands made time to share with me their vision, which I found quite fascinating. While their company has remained virtually silent on all fronts and has not announced any of its acquisitions save the biggies, such as Shelby and Fellowship One, and did not even have a website presence until earlier this year. the timing seems right for them to shed light on their approach to helping churches.
Change Breeds Natural Concerns
When asked about these market changes, Brad Hill, Chief Operating Officer for Ministry Brands notes: “In the church, we work with a lot of pastors and up until a couple of years ago, there weren’t really very many good examples of acquisitions in the church market. There is concern and natural speculation. What does it really mean when there’s a change in ownership? First and foremost, our primary concern is customers and employees.”
For their smaller brand acquisitions, the company opted not to make any kind of announcement to the church customers. It would be business as usual. For larger brands such as Fellowship One and Shelby, they announced to their churches that things would stay the same.
“We told them, ‘if you’ve been a Shelby customer, you’re going to interact with the same people you’ve always been working with.'” They have had the goal to not disrupt service, but continue to serve the church in the same capacity.
While this is true with some brands, other brands such as Parish Soft endured the layoff of 35 employees, which Ministry Brands says that it has aimed to avoid, but is inevitable in business.
“It’s a small minority of cases where we purchase a company and need to make adjustments with staff. One of the benefits of us being involved in a number of companies in the space as we look to best practices and what’s the right ratio of tech support per customer, we look at this and know how companies can run in a healthy way. As a former mom and pop church tech company owner, I understand that you bring people on and they become like family. Maybe a company brought on wasn’t in a healthy place, we have to make some difficult decisions in order to make the business sustainable for the long term. Our posture is if we ever get in this situation, we aim to reposition employees without them having to relocate. If they didn’t stay on with Ministry Brands, they wouldn’t have had the same opportunities,” remarks Hill.
While companies often aim to avoid layoffs, some companies in the church market take special care to avoid them at all costs.
John Gilman, Senior Director with ACS Technologies notes, “In every case it seems to be less acquisition, and more merger. For the companies themselves approached ACS Technologies first to help them maintain their culture and serve their clients as they were unable to transition into future technologies nor had the strength of customer support that ACS Technologies is known for. Seems these were not as business and profit-driven as much as centered to the beneficial experience for their clients for in every acquisition, there was not a single layoff of staff.”
While some have feared that many brands would be rolled together or eliminated entirely, Ministry Brands in fact aims to keep all the brands they’ve acquired intact and whole. Although at present there are two brands currently not listed on their website: ROAR and XXXX.
“Our Overall guiding principle is that we want each of the brands to retain their integrity and independence. Each brand has their own unique make up,” notes John Dalzell, executive vice president of sales and marketing.
That said, they’ve begun the past year building deeper integrations between many of their brands to better benefit churches. Most recently, Fellowship One GO is a new product that has recently been released that has either been built or refined from other products into one umbrella solution including ChMS, website, online giving, mobile, background checks, and messaging.
Comments Hill, “We’ve successfully navigated the integration of the church calendar with the church management software and have provided a marriage so to speak between Fellowship One with both Ekklesia and Clover Websites.”
The goal is for duplication of calendars to be avoided and for seamless connection between multiple technologies to ease the administrative burden of church users.
“Part of our DNA and fabric is to get churches to the right solution, even if it’s a different brand than what they came in for, says Dalzell. “We’ve had some concern about telling our story and our passion; we’re really just being stewards and making good products.”
For Church Office Online, one of the longer-standing brands acquired by the company in 2014, innovation and growth have been synonymous with being a part of this bigger team.
“Before we were purchased, we were beginning to see some challenges. We needed to bring on more people. Now, with Ministry Brands, we have programmers, support staff, things in their ministry ‘kit bag’ so it made a lot of sense for us. We’re all believers here at Church Office Online and to have a company approach us who had the same values and beliefs really enhanced our company,” said Tim Wall with Church Office Online.
While it might be somewhat of a problem for normal companies to have so many competing brands under one roof, because the sales team at Ministry Brands are believers and put the churches they serve first, they work together and even trade leads for new business when a different product would suit a particular church better.
“Church Office Online does compete against other brands within Ministry Brands, but we make it work to the church’s advantage,” adds Wall. “We now have our own online giving platform and new church management software. We also offer coaching seminars and webinars via The Rocket Company to benefit our clients.”
“Ministry Brands is all about being good stewards and resourcing the church. We’re able to pray together online and support one another. It is a business, and we take care of business but it’s also about taking care of churches and serving them well.”
On the Horizon
Most recently, the Wall Street Journal reported that Ministry Brands, backed by private-equity firms Genstar Capital and Providence Equity Partners, has retained Bank of America Corp. to explore a sale of the company
“In the business world, it’s quite commonplace for various people to own and finance the company. We’ve been quite scrutinous in how we allow owners and leaders to work with us. We pump the brakes. Are they going to be mindful and respectful of how we’re invested here? We want to continue growing, and we realize we’re going to need more investors.The transaction amounts to a sale (the WSJ article was written for the audience of investment community), and the deal is big enough to change of structure of ownership,” states Hill.
Hill is confident that raising additional funds and bringing in new investors would not change the aim and focus of the company as a whole.
However, others in the market are speculative that different investors who would own a majority stake in Ministry Brands through might bring with them other objectives that would run contrary to what is expected in the church tech industry.
For equity-backed church and nonprofit fund accounting software company, Aplos Software, executives opted to reject traditional Silicon Valley-based funding and form their own capital company to keep their mission at the forefront:
“For most equity-backed technology firms, there’s this pressure to grow quickly. This can cause stress for the church. Most of the time the strategy is to grow fast, apply the growth rate to give biggest multiple to sell,” comments Eric Nasalroad, Chief Operating Office for Aplos Software. “We’ve been able to add features that the customer needs, and we wouldn’t have been able to do this without funding.”
As Hill reflects on what has worked well for Ministry Brands, he adds, “In a time when tech is growing and changing, it takes a lot to keep up. I can tell you without reservation–with capital and team to continually invest–this has been so much better for all the churches we work with. There are a whole host of reasons to accept investment.”
While it can be tempting to lose focus, Hill believes they will be able to help more churches do a better job of leading their congregation through the technology advancements on the horizon. They are poised to improve, enhance, grow, and add additional technologies with this next influx of capital.
“We have to check our motivations every single day – we’re all human and pride can get in the way – the tools and resources we have are totally new; no one has ever done this for the Church before. We feel we are filling an important spot,” says Hill.
At the end of the day. perhaps it’s time to shift our mindset and embrace the possibility that the church tech market has expanded beyond the days of the ‘mom and pop’ church software company. With all the growth of technology use among lay people, and the growth of churches adoption of technology at all sizes, it might be time to consider the ‘opening up’ so to speak of this small niche into something greater.
“It’s incredible that the church tech community could have a billion dollar company and that the investment world sees the church tech community as something that’s worthy of investment. That’s encouraging. It would be amazing if churches would take notice and use their products,” comments Matt McKee, entrepreneur and former owner of ROAR which he sold to Ministry Brands in 2013.
Time will tell how churches will be served through this market shift.