January 24, 2006

Blackbaud acquires rival in $6M deal

Kyle Stock  /  Post and Courier

Blackbaud Inc. said Monday it has snapped up a Manchester, N.H.-based rival for $6 million in cash.

The Daniel Island company acquired Campagne Associates Ltd., an 18-year-old firm that also makes and services software to help nonprofits raise money. Campagne adds about 2,000 clients to Blackbaud's 13,000 and 35 employees to Blackbaud's 1,000-person payroll.

"They've been a good competitor and their product is a good product," said Blackbaud Chief Financial Officer Tim Williams. "Based on the work we did, we feel good about the price we paid."

Campagne was debt-free, and Blackbaud had $20.7 million in cash on hand at the end of September. A few weeks ago, Blackbaud's board of directors signed off on a plan to pay Campagne $6 million plus an undisclosed additional amount that will depend on how Campagne customers perform for the Lowcountry firm. Blackbaud said it will continue to support Campagne's main software product, GiftMaker Pro, while offering those customers an "upgrade" to its own platform, The Raiser's Edge.

Campagne's story is similar to Blackbaud's. It was founded by a young information technology worker named Ric Pratte, who was asked by his employer, a Massachusetts hospital, to develop a software program to track donations. Pratte and his college roommate, Craig Ahlquist, launched the business in 1987. Campagne said it was the first company to make Windows-compatible fundraising software. Its Web site is now folded into Blackbaud's, but until recently it read, "Campagne isn't just a company: we're a family."

A phone recording Monday said Campagne's offices were closed for the day because of inclement weather. Ahlquist and Pratte did not respond to messages Monday afternoon. Blackbaud said the acquisition would not have a significant impact on its 2006 financial results. The company will provide more detailed analysis when it announces its fourth-quarter and 2005 full-year earnings results on Feb. 16.

Williams said Blackbaud is considering plans to buy other competitors. "It's an area that the company has actively pursued," he said. "We have a history of doing this and doing this well."

For the three months ended Sept. 30, Blackbaud reported net income of $7.72 million, a 1.8 percent increase over the same period a year earlier. Driven by huge gains in the first and second quarters, Blackbaud earned $27.1 million in the first three quarters of 2005, a 60.2 percent improvement over the year-earlier period. In late October the company predicted that it would earn between $44.8 million and $45.1 million in 2005, or 61 cents per share. Blackbaud shares fell 34 cents, or 2 percent, to $16.62 in trading Monday on Nasdaq. The value of the company's stock has almost doubled since it was first sold to the public in July 2004.