Envestnet Sold to Bain Capital for $4.5B After ‘Tumultuous’ Year

Envestnet is one of the largest wealth management software companies in the US and serves approximately one in three financial advisors.

Photo of the Bain Capital website and Envestnet logo
Photo via Connor Lin / The Daily Upside

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Envestnet was rumored to be on the auction block this week for a second time in as many years — but this time, the gavel dropped.

One of the largest wealth management software companies closed on a sale to private equity firm Bain Capital that would value it at approximately $4.5 billion and affect roughly 1 in 3 financial advisors in the US. Known as a turnkey asset management provider, Envestnet serves approximately 109,000 advisors with a cumulative $6 trillion in assets. 

It takes the company private — and its financials out of the prying eyes of the investing public — and becomes one of the most impactful acquisitions in recent years.

Going Once, Going Twice

It’s not the first time rumors have swirled over Envestnet’s fate. After a failed attempt to go private in 2022, Envestnet has endured an attempt at a hostile takeover by activist investors and a leadership shakeup. “This transaction turns the page on several tumultuous years for Envestnet,” said John O’Connell, CEO of wealth management consulting firm The Oasis Group.

Bain will likely sell underperforming aspects of the business and make changes to its executive staff. “Advisors will absolutely be impacted by this change,” O’Connell told The Daily Upside. Still, the 25-year-old company is a financial services goliath and also owns Yodlee, a data aggregator that sits on a gold mine of financial information from almost every credit card company and mortgage lender in the country. As they say, data is the new oil. 

The challenge for Bain will be how it merges the revenue streams into a coherent business model that pushes shareholder value forward. “A private equity firm can hit the reset button,” industry consultant Carolyn Armitage told The Daily Upside. “Bain’s fresh perspective is likely what is needed to get Envestnet out of its slump.”

Barbarians at the Gate. Bain has made a major private equity push into the US wealth management industry in recent years, and could become the largest player if the deal is finalized: 

  • The potential Envestnet acquisition follows a $1 billion investment in the Canadian-based CI Financial last year. The company rebranded to Corient Private Wealth and now has $164 billion in AUM.
  • In 2021, Bain bought a stake in Carson Group, one of the largest and most well-known RIAs in the country. 

PE investments in wealth management firms topped $2 trillion in 2023, up from just $400 billion in the previous year, according to data from Echelon Partners. “[Bain] would not invest in Envestnet if they did not feel that their investment will have excellent returns,” O’Connell said.

This story has been updated to reflect the final terms of the Bain Capital deal. A previous version was based on reports.