Envestnet going private in planned $4.5B deal with PE firms, BlackRock, Fidelity and others

Wealthtech platform titan Envestnet has agreed to be acquired by private equity firm Bain Capital in a planned $4.5 billion cash deal announced on July 11.

The transaction, backed by Reverence Capital, includes minority investors and heavyweight firms like BlackRock, Fidelity Investments, Franklin Templeton and State Street Global Advisors. Those same four firms also recently struck a separate deal with Envestnet in June that gives their advisors exclusive access to the wealthtech's unified managed account (UMA) tools.

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"We look forward to working with Envestnet's talented and experienced leadership team and supporting their growth strategy through organic and inorganic initiatives, making further investments in its differentiated product offering, and delivering enhanced value to customers and partners," Marvin Larbi-Yeboa, a partner at Bain Capital, said in the release.

Private equity buyouts are increasingly common in wealth management, but Envestnet stands among the larger wealthtech players to be acquired, in a move that will take the company private. The Berwyn, Pennsylvania-based Envestnet serves 48 of the 50 largest wealth management and brokerage firms and roughly 109,000 advisors — all representing more than $6 trillion in platform assets. 

"The board and its advisors conducted a process to maximize value for shareholders," Envestnet's interim CEO and board chair, Jim Fox, said in the release. "I'm proud of what Envestnet has achieved over the years in becoming the leading wealth management platform in the industry."

Because of Envestnet's size and complexity, buyers were limited, wrote analysts at Citizens JMP Securities in a note following Envestnet's announced agreement to be acquired. 

"It is a complicated company and execution of the roadmap we envision is not easy. As a result, we think these dynamics limit the potential group of available buyers to a relatively small subset," the note said. "While we see tremendous optionality for these buyers (better monetize the suite of technology and distribution), we have appreciated that buyers would be cautious to not overextend themselves given the complexity of execution."

JMP analysts lowered Envestnet's rating to "market perform" from "market outperform" in response to the sales price per share being on "the low end." 

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Envestnet's shares fell slightly on the day of the announcement, closing at $61.65 per share from the morning's open of $62 a share. The transaction is expected to close in the fourth quarter of 2024, pending shareholder and regulatory approvals.