Envestnet Confirms Sale to Bain in $4.5B Deal

What You Need to Know

Reverence Capital will take part in the transaction. BlackRock, Fidelity, Franklin Templeton and State Street will take minority stakes.
Assuming the deal closes, Bain can be expected to cut resources and make new investments into Envestnet.
One industry consultant sees a cautionary tale in the fast pace of Envestnet’s acquisition strategy.

Envestnet announced Thursday that it has entered into a definitive agreement to be acquired by Bain Capital in a transaction valuing the company at $4.5 billion.

Reverence Capital also agreed to participate in the transaction, according to the announcement, while BlackRock, Fidelity Investments, Franklin Templeton and State Street Global Advisors have committed to taking minority stakes in the soon-to-be private company.

Under the terms of the agreement, which has been unanimously approved by the Envestnet board of directors, Envestnet shareholders will receive $63.15 in cash for each share of common stock they own.

The transaction is expected to close in the fourth quarter, subject to customary closing conditions, including approval by Envestnet’s shareholders and regulators. Upon completion of the transaction, Envestnet’s common stock will no longer be publicly listed, and Envestnet will become a private company.

Bain also owns a 29% stake in Carson Group and 20% of CI Financial.

Ending the Speculation

Confirmation of the deal comes a few days after Reuters first reported the pending sale, a development that sparked much discussion in the financial services industry about Envestnet’s journey in recent years.

In short, some see a cautionary tale in Envestnet’s fast-paced M&A strategy — particularly since the death in October 2019 of Jud Bergman and his wife, Mary Miller-Bergman, in a car crash.

While the firm’s stock price is up about 25% in 2024, it is down 14.5% from five years ago. Bill Crager, who co-founded the firm with Bergman, stepped down from the CEO role on March 31.

Bergman was seen as the visionary behind Envestnet’s acquisition-driven strategy, having piloted the firm through major growth and a series of key deals, including the purchases of Yodlee, MoneyGuide and others.

What has proved challenging in subsequent years, as Crager himself noted during an interview with ThinkAdvisor in April, is creating a whole that is truly more than the sum of its parts. That is, Envestnet has not yet been able to fully consolidate and integrate its diverse offerings in a way that appeals to financial advisors.

Upon exiting the firm, Crager said this goal was now within close reach, arguing the company was in a solid position “to execute on the strategy that’s been laid down [using] the capabilities it has.”

“It’s very much an execution challenge versus creating and building the next frontier,” Crager said, adding that he still loved the company and looked forward to continuing on as a senior advisor during Envestnet’s next chapter.