Done Deal: Blackbaud, Convio Begin As One CompanyBrendan Kearney / Post and Courier
More than three decades after its founding in New York, Monday in Texas was another "Day 1" for Blackbaud. After months of regulatory scrutiny prolonged its merger with a former rival, the Daniel Island software company and Convio, which also sells fund-raising technology to nonprofits, are now officially one.
Blackbaud's top executives traveled from Charleston to Austin to mark the combination of the companies and to hold an all-hands meeting live-streamed to all of Blackbaud's and Convio's offices from around the United States to Europe and Australia.
Jana Eggers, one of those higher-ups, likened consummation of the deal and the beginning of the combined company to bringing a baby to term, albeit in less than half the standard nine months. "I think all of the emotion and excitement and some of the fear and all of that –- it's all here," said Eggers, Blackbaud's senior vice president for sales and marketing. "It's very, very exciting."
Blackbaud paid a total of $325 million for Convio, based on a $275 million valuation of the company, or $16 per share, plus the $50 million Convio had in cash on hand. Late last week, more than 90 percent of the Convio's shares had been tendered, allowing a short-form consummation of the deal.
Because the merge rinvolved heavyweights in the nonprofit technology world, it was held in abeyance by a U.S. Department of Justice antitrust review. The government lawyers wanted to make sure the combination of the public companies would not hurt the competitiveness of the market.
Blackbaud had a pre-merger headcount of 2,400, with roughly 1,100 working out of the local headquarters building. Convio, which counts more than half the top 50 U.S. charities among its more than 1,500 customers, had about 450 employees. Eggers described a "very iterative approach" with federal regulators studying the proposed merger, unfolding in two- to three-week cycles over the past few months.
"Unfortunately it's not that direct," Eggers said. "They don't come in and say, 'Here's what we think the situation is. Dispute this.'"
Blackbaud CEO Marc Chardon suggested during an earnings call last week that he had begun to consider the possibility that the review could end unfavorably. For instance, the regulators could have undertaken a second review, which could have dragged on many more months, or outright rejected the deal. Eggers said she never worried the acquisition wouldn't close. She said it was more, "How much time are we going to lose waiting for this to happen?"
"I felt very comfortable with the feedback from our attorneys and knowing the industry that there wasn't something there," Eggers said. "But I'm happy it's done." She seemed a little weary of questions about the extra time it took for the deal to close. Chardon had predicted it would be done by the end of March.
"I'll be honest, we were pretty darn close," Eggers said. "We weren't on the bull's eye but we were only about a ring off." Eggers said she's heard from a lot of customers over the past few months, some excited about working with one company instead of two, while others viewed the merger with trepidation.
"The first thing they want to know is, 'What's going to happen to my product? I chose you for a reason ... and I don't want that to change,'" Eggers said. Blackbaud says it plans to support Convio's products and that the companies' combined research and development teams will work with customers on future products.
"The second thing is, 'Is this going to distract us?'" Eggers said. Moving ahead while integrating was a point of emphasis at Monday morning's all-hands meeting, she said. Blackbaud plans to keep Convio's offices for now. But some redundancies seem inevitable, as both companies have offices in the Washington, D.C., area, for example.
Asked about possible layoffs, Eggers wouldn't make any guarantees either way. Instead, she pointed to the more than 200 job openings Blackbaud has posted, which she said represents more than enough slots for people who might have to switch roles in the new Blackbaud.
She noted former Convio CEO Gene Austin is now president of Blackbaud's Enterprise Customer Business Unit, and Charlie Cumbaa, who Austin replaced, is now senior vice president of new business development.
"I can't tell you that every situation will always work out that way but I can tell you look at the opportunities we have and that's what we're focused on," Eggers said. Eggers also acknowledged establishing a major office in Austin, one of the nation's top high-tech centers, would benefit the company talent-wise going forward.
"We're looking for the best people," she said. "We believe that some of those best people will absolutely be in Austin." She said Convio was planning to expand its offices in the Texas state capital "and we're all for that."
"The talent pool here is terrific," she said.