Bain Capital to Acquire Envestnet in $4.5 Billion Deal

Bain Capital is set to acquire financial software vendor Envestnet (ENV) in a $4.5 billion deal, adding a prominent player to its portfolio that counts 16 of the 20 biggest U.S. banks among its customers. Envestnet, based in Berwyn, Pennsylvania, provides software for wealth managers and data for financial institutions and investment research firms. The deal is backed by a cohort of investors, including Reverence Capital, BlackRock (BLK), Fidelity Investments, Franklin Templeton, and State Street Global Advisors. Bain Capital is offering $63.15 per share in cash, close to Envestnet's recent stock price. The acquisition is seen as a strategic move for Bain, securing ownership of a company that has shown resilience this year after addressing scrutiny over its margins and stock performance. Activist investor Impactive Capital had previously pushed Envestnet to improve margins and reduce costs, leading to the addition of three new directors and a 10% reduction in headcount. Envestnet's stock has risen 24.6% year-to-date, bolstered by takeover interest and collaborations with major financial firms to develop custom investment strategies. Market Overview:

• Bain Capital to acquire Envestnet in $4.5 billion deal.
• Deal backed by investors including BlackRock and Fidelity.
• Bain Capital offering $63.15 per share in cash.

Key Points:

• Envestnet has improved margins and reduced costs.
• Stock up 24.6% year-to-date due to takeover interest.
• Collaborations with major financial firms for custom investment strategies.

Looking Ahead:

• CEO Bill Crager transitioning to senior adviser role.
• Deal reflects lower-end valuation multiple for tech and services company.
• Significant value expected for Bain Capital and investors.

Envestnet reported a better-than-expected profit in the first quarter, contributing to its regained poise in the market. The company is currently undergoing a leadership transition, with CEO Bill Crager stepping down in January to continue as a senior adviser. Morgan Stanley (MS) advised Envestnet on the deal, while J.P. Morgan (JPM) Securities advised Bain Capital. The transaction reflects a valuation multiple at the lower end of expectations for a leading vertically-focused technology and services company. Analysts at D.A. Davidson had estimated the sale could fetch up to $80-85 per share. The deal is expected to provide significant value to Bain Capital and its backing investors, enhancing their portfolio in the financial software sector.