Bain Capital is in advanced talks to acquire financial software company Envestnet for about $3.5 billion, Reuters reported.
Takeover rumors have swirled around Envestnet, an acquisitive fintech company, for several years. The article cited anonymous sources who described the matter as “confidential” and said neither Bain nor Envestnet responded to requests for comment. Bain is a large investor in the advisor universe and holds sizeable minority stakes in Omaha-based RIA Carson Group and Corient, among other operations.
Envestnet provides services and tools to more than 108,000 advisors, and 16 of the top 20 U.S. banks, according to Reuters. The firm explored a sale back in 2022 but was unable to reach a deal.
Bill Crager, one of Envestnet’s co-founders, announced his resignation as CEO in January and became a senior advisor to the company in April. Crager succeeded the firm’s other co-founder and first CEO, Jud Bergman, after Bergman and his wife were killed by a drunk driver in a car collision in San Francisco on October 3, 2019.
Envestnet, which got its start with a platform for separately managed accounts, probably has been the most aggressive acquirer of fintech concerns targeted at the advisor audience. Its largest acquisition probably was PIEtech, creator of financial planning software manufacturer MoneyGuidePro, which it bought for $500 million in March 2019. Other major acquisitions have included Tamarac and Yodlee.
Critics have argued, among other issues, that Envestnet has failed to integrate its various acquisitions and consequently has not taken advantage of having so many leading technologies on a single platform. Nonetheless, they maintain the firm owns some excellent assets and could generate solid investment returns to an owner who could achieve more synergies.
As an example. fintech experts point to Envestnet's 2014 acquisition of Placemark Capital, a TAMP (Third-Party Asset Management Platform) for $66 million. Placemark was doing direct indexing long before it became part of the advisory industry's jargon and Envestnet could have been a market leader in that business.
With many of its acquisitions, Envestnet ended up acquiring assets andd technologies without coordinating the different platforms. "They added costs that were ongoing without adding coordinated capabilities," one fintech executive said. "Integration is really hard."
More than a year ago, Envestnet announced plans to take on Schwab and Fidelity and enter the market for custodian services to RIAs. Plans reportedly have been pushed backed to the second hald of 2024.
Custodian services is a notorious low-margin margin business. Nonetheless, a number of new entrants have emerged, including Apex Clearing, TradePMR, Goldman Sachs and Altruist, in the wake of Schwab's acquisition of TD Ameritrade.