The Inside Take on Envestnet's $4.5B Sale to Bain Capital

What You Need to Know

Envestnet said Thursday that it had entered into a $4.5 billion agreement to be bought by Bain Capital.
Some observers have painted the deal as a sign of Envestnet’s struggles, but that framing misses the bigger picture, three senior executives say.
Bain is not focused on cuts but on helping the firm expand its position, one exec says.

Envestnet confirmed Thursday that it had entered into an agreement to be bought by Bain Capital in a transaction valuing the company at $4.5 billion — $3.5 billion in equity and $1.0 billion in debt.

The announcement ended years of speculation about the financial technology firm’s long-term future, brought to a head in April by reports that the firm had engaged Morgan Stanley to speak with potential buyers. The conjecture heated up again earlier this week with a new report from Reuters suggesting the firm had decided to sell to Bain Capital.

Now, the details of the transaction are confirmed, including the decision by BlackRock, Fidelity, Franklin Templeton, State Street and Reverence Capital to join in the deal as minority shareholders.

Some early observers have interpreted the sale as a sign of big challenges facing Envestnet, arguing the firm needs to “right the ship” by paying down debt and more fully integrating its many acquired businesses and capabilities.

But in an interview Thursday with ThinkAdvisor, a trio of senior Envestnet executives said that framing misses the bigger picture. Envestnet is already a market leader in key segments of the wealth management and advisor industries, they said, and the new backing by Bain Capital will give the firm new resources and flexibility to achieve its closely related integration and growth goals.

On the call were Tom Sipp, executive vice president of business lines; Molly Weiss, chief product officer for wealthtech and solutions; and Dana D’Auria, group president of Envestnet Solutions and co-chief investment officer.

The trio each gave their respective views of how Envestnet will benefit from the new ownership structure, emphasizing that Bain is coming to the table to support the firm, not disrupt its longstanding strategy.

A ‘Monumental Day’

“This is a monumental day for Envestnet,” Sipp said. “We are entering the next chapter for the company with the best partners we could possibly have. Bain thinks very long term, and they’re very strategic. Plus, they bring experts to the table that will be very, very helpful to make us better and deliver faster on our vision.”

Sipp pointed to the strategic backing from BlackRock, Fidelity, Franklin Templeton and State Street as “a stamp of approval” for Envestnet’s strategy. He noted that Reverence Capital’s support of Bain in the deal as a minority backer will also bring key insights and expertise to the table.

“When you combine the new backing with the fact that we will be private, it’s a really big deal,” Sipp continued. “It allows us to get out of the focus on the quarterly earnings cycle and to be truly strategic about how we proceed for the long term.”

(The firm’s stock traded down slightly Thursday, the day of the announcement, and while the stock price is up about 24% in 2024, it is down more than 15% from five years ago.)

Asked whether he expects any big changes in the firm’s strategy under Bain’s leadership, Sipp said the answer is a clear “no.” There will naturally be some changes as the ownership transition unfolds, and there will be new efficiencies and automations, he said, but the core of the strategy is clear to everyone.

“They’re extremely aligned with our existing strategy and our existing leadership,” Sipp said. “So, this is more about asking how can they be helpful in allowing us to move faster and deliver more to our clients in a holistic, better way?”