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Association Management Companies Are Your Nonprofit's Path To Success

January 31st, 2018
Heading Into Next Week’s AMCI Meeting, 3 Firms — Virtual, Drohan, PCS — Announce They’ve Merged

For the second time in two years, a big association management company merger kicks off the AMC Institute’s annual meeting.

Last year, it was the cross-ocean merger of Europe’s Interel with McLean, Va.-based Association Management Group.

This time around, three companies say they have combined to form the globe’s fourth-largest AMC with 235 employees.

Virtual Inc. of Wakefield, Mass., has merged with Drohan Management Group of Reston, Virginia, and Professional Credential Services of Nashville, Tennessee, to form a new firm offering professional services to technology and standards-setting organizations, business and trade associations, scientific professional societies, state governments, and professional licensing associations.

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Virtual is an AMC catering to tech and standards organizations. DMG is an AMC that supports trade associations and professional societies in business, law, healthcare, medical, scientific and other fields. PCS provides examination development, administration, licensing and certification services to organizations responsible for the regulation and management of occupations and professions.

PCS and DMG quietly joined forces two years ago, backed by a family-based private equity firm, Striker Partners of Wayne, Pennsylvania. No surprise, with money already in, Striker is contributing more to make the deal happen.

Virtual, looking for a financial partner to help monetize the equity stake held by exiting founder Bruce Rogers, got that and more: a three-way collection of largely dissimilar companies serving nonprofit organizations.

“At Striker, we’re all about growth,” Derek Spence, managing principal of Striker Partners, said in a statement. “Combining these organizations into a single enterprise represents an outstanding opportunity for three established leaders in the professional services space to pool their strengths for greater growth and profitability.”

Time will tell whether it’s truly synergistic growth. But the new company — to be called Virtual, with the Drohan and PCS names fading out over the next year — has identified the management team to steer the ship.

The expanded firm will be led by Andy Freed as CEO. Bill Drohan will serve in the dual role of president of DMG and president of Virtual, Inc. Craig Paxson will lead PCS and serve as Virtual’s executive vice president of service delivery. Other members of Virtual senior management include Terry Lowney, chief operating officer; Sean Hainer, chief financial officer; Kathy Gallagher, chief technology officer; Don Kaiser, executive vice president; and Greg Kohn, executive vice president, strategy.

Freed, on his company’s website, described the combination as “Virtual 2.o.”

“This new company will combine our technology industry expertise with a broader set of resources in membership, meeting planning, and certification services to create a one-of-a-kind professional services firm geared toward making our clients successful,” he said.

“With offices in Boston, Washington, D.C., and Nashville —not to mention our presence in Silicon Valley—we’ll have more than 230 team members, making us one of the largest companies of our kind.”

Drohan, who will be at the AMC Institute meeting next week in Vancouver, said, “What’s interesting is how the industry has merged and evolved.” Speaking of the five largest AMCs, he said, “I call them ‘association service conglomerates,’ if you analyze all of the companies … they all provide association management services, but they also provide other things.”

The five biggest firms by employee size — Switzerland-based MCI, Chicago-based SmithBucklin, Atlanta-based Kellen, Boston-based Virtual and Brussels-based Interel — all have disparate service offerings to nonprofits, Drohan said. Largely, they’ve gained product and service lines through acquisition. 

Four of the five have offices outside the United States, but all operate internationally, he said.

After 32 years at the helm of his namesake company, Drohan is stunned by the industry’s growth.

But maybe he shouldn’t be.

“The not-for-profit growth is what really drives it, and we service that not-for-profit growth,” he said.

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