DOJ: It Is Time To Let Blackbaud/Convio Deal Close

April 18th, 2012  |  Published in Musings

This may not be a very popular position to take inside the nonprofit community, but it is time for the Department of Justice to wrap up their work and let the Blackbaud/Convio deal close.

The role of the DOJ in evaluating proposed mergers and acquisitions is a valuable one. But, the process has gone on long enough and the facts are not exactly hard to determine. It is time to move forward.

Will Blackbaud's acquisition of Convio result in fewer products in the market? Yes — though it will take several years. And quite frankly, some of these products need to go away.

Will the acquisition give Blackbaud a monopoly: No. (Insert legal disclaimer here. I am not an attorney)

The DOJ has three options:
1. If the DOJ keeps extending the process and then does not allow the transaction to close, they will effectively kill Convio. Convio is rumored to be suffering significant personnel losses and their close rate on new business has to be suffering. Soon, their renewal rates will fall. Extend this for 6-9 more months and it will take Convio a minimum of 2-3 years to regain lost ground, if they are lucky (very lucky).

2. If the DOJ wraps up their work and allows the transaction to close then the nonprofit market can begin to absorb the change. Additionally, the pace of innovation will increase. Yes, the space will lose a vendor. But, as stated above, the space may effectively lose a vendor regardless.

3. I guess the DOJ could extend the process and then approve the deal. Excuse me for being naive, but given how much effort they have put into this process, I don't see the benefits of extending the process further. Perhaps they need some time to analyze the data they have collected. But, they are going to have to make a decision without perfect information.

Option 2 makes the most sense to me. There are exciting new entrants into the market, companies that have not been given enough credit that will receive more attention, and alternative ways to approach non-profit CRM. Again, this will take time. But, what I am seeing in the marketplace excites me.

Side note: If this deal does close, Blackbaud will have a very real social obligation to the nonprofit sector to do "the right thing." Meeting this obligation won't be cheap. That is a topic for another post (perhaps a reserve on Blackbaud's balance sheet for "doing the right thing").

Side note #2: If you are a troll money manager trying to figure out if you can make money by shorting Convio stock in case the deal collapses, please stop contacting me. While I have an opinion, I don't have a crystal ball nor do I have any inside information. Find a better use for your time.

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