On the heels of Bain Capital’s $5.6 billion acquisition of PowerSchool last month, Bain Capital Private Equity has announced its $4.5 billion all cash purchase of Envestnet. With private equity firms’ dry powder at record highs earlier this year, Bain appears eager to deploy its cash stockpiles in pursuit of returns.
“Envestnet manages over $6 trillion in assets, oversees nearly 20 million accounts, and enables more than 109,000 financial advisors,” according to the deal’s press release. The company states that its system “currently supports over 800 asset managers on its Wealth Management Platform.”
Wealth Management is at an inflection point as the sector faces, “a confluence of disruptive forces reshaping its landscape,” according to ThoughtLab. “As a significant wealth transfer from the older generation meets the digital-first expectations of the young, the demand for technological sophistication and personalized services is intensifying.”
After years of growth, the sector faced a large drop in 2022 before rebounding during 2023-2024. Wealth Managers often rely heavily on the stock market to lift the value of the assets they manage for their clients – but that leaves them vulnerable to bear market periods. Financial advisers have responded by employing new technologies to attract money from more investors while seeking to better invest the funds they already manage. For example, technology can enable clients to create their own accounts and guide them through choosing their investments, freeing up wealth managers to service more clients than before. Further, artificial intelligence can help advisers quickly derive from clients’ emails customized investment insights and create educational materials tailored to their questions.
According to Yoni Assia, Founder and CEO, eToro, “Technological transformation (first digital and now AI) has lowered the barriers to entry and significantly increased retail participation,” enabling wealth management to cater to clients beyond the high net worth individuals. “You no longer need six figures to invest. This means that there is a vast and growing total addressable market for wealth managers and other direct- to-consumer investment providers/brokers.”
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Bain is advised by law firm Ropes & Gray LLP and a host of financial advisers: J.P. Morgan Securities LLC, RBC Capital Markets, BMO Capital Markets, Barclays, and Goldman, Sachs & Co. LLC. Envestnet is advised by law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP and financial adviser Morgan Stanley LLC.
