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FrontStream Acquires TRUiST

Seven months after acquiring two companies to expand its presence in the United States, FrontStream Payments, Inc. has added another firm to its stable. The Reston, Va.-based company announced the acquisition of TRUiST, a Washington, D.C.-based firm focused on corporate social responsibility and employee giving campaign processing.

Financial terms of all the deals were not disclosed. FrontStream is backed by a group of investors led by Arsenal Capital Partners, a New York-based private equity firm with more than $1.6 billion in committed capital under management.

FrontStream President and CEO Nina Vellayan expects the company will maintain a “good majority” of the 59 employees coming from TRUiST but not President and CEO William Horne, who will instead pursue other opportunities. The acquisition will bring the headcount at FrontStream to nearly 220 employees.

FrontStream will serve as the parent company of TRUiST and “continue to maintain and grow the strength of the brand.” The Reston, Va.-based management team will move to TRUiST’s Washington, D.C. office.

Approved on Friday, the TRUiST acquisition adds more than 350 corporate clients with almost $400 million in donations processed annually. “This gives us access to Fortune 1000 corporations,” Vellayan, a large source of corporation donations for nonprofits. It’s the fourth acquisition in 19 months for FrontStream, which has since created a nonprofit division now serving more than 20,000 clients and processing about $4 billion in transactions annually.

TRUiST offers campaign management, automatic payroll deductions, direct donation campaigns, volunteer management, corporate matching and disaster response programs.

TRUiST’s InstaGive donation platform, released last fall, is about the only crossover product in the deal, Vellayan said. FrontStream already offers donation processing products but InstaGive is simple and straightforward and could replace FrontStream’s MerchantGiving on the corporation side rather than for use by nonprofits, she said.

The company acquired peer-to-peer fundraising platform FirstGiving in August 2012 and donation management firm GiftWorks in Lancaster, Pa., and Artez Interactive in Toronto, Ontario, Canada, in August 2013. Artez is a provider of web, mobile and social fundraising solutions.

TRUiST was formed in 2008 out of a deal between United eWay, a subsidiary of United Way Worldwide (UWW) and CreateHope, Inc. Both were formed in 1999 and eWay sold its assets to Create Hope. As part of the transaction, UWW wrote off its investment in eWay and recorded a loss, net of the value of the TRUiST stock received. eWay received a 49 percent preferred stock ownership with voting rights and subsequently transferred ownership interest to UWW.

During 2009, United Way determined that the investment “was impaired” and wrote the investment down to $0, according to financial statements, and eWay was dissolved effective March 24, 2011.

UWW sold its ownership interest in TRUiST for a gain of $3.3 million in 2012 and invested a smaller ownership interest for $243,000, according to the nonprofit’s consolidated financial statements for 2011-12.

As part of a merger between TRUiST and TRUiST Holdings, LLC, in 2012, TRUiST continued as the surviving corporation with outstanding notes and accrued interest payable to UWW converted into preferred stock, which increased its ownership interest to 53.8 percent. UWW sold its interest in August 2012 for a $3.3-million gain and invested a smaller ownership interest of 14.8 percent for $243,529. Alta Equity Partners in Waltham, Mass., announced the acquisition of TRUiST in August 2012.

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