Envestnet to Acquire FolioDynamix

Jud Bergman at the Envestnet Advisor Summit in 2015. Jud Bergman at the Envestnet Advisor Summit in 2015.

Envestnet announced Monday that it is spending $195 million to acquire wealth management platform FolioDynamix. The deal will bring Envestnet’s total platform assets to nearly $2 trillion across 10 million investor accounts.

“Acquiring FolioDynamix advances our growth strategy and creates value for our shareholders,” Jud Bergman, chairman and CEO of Envestnet, said in a statement.

He added on a conference call on Monday that this move puts Envestnet on a path to be “the financial wellness network,” connecting enterprises, advisors and clients for the best possible outcomes.

Over the past two years, Envestnet has been developing an open-architecture strategy it calls “Open ENV,” Bergman said, that he believes makes the firm “uniquely positioned” to integrate FolioDynamix’s platform into its own.

“Open ENV creates a quicker path to integration between Envestnet and FolioDynamix, more capabilities [with] the least disruptive approach that enables us to introduce more services and capabilities to our combined base of customers,” he said.

Bergman said on the call that he expects no disruption of trading services on FolioDynamix’s platform through the transaction. 

(Related: Bionic Advisors: Envestnet and the Kasparov Principle)

“We are excited to join forces with Envestnet, enabling us to expand how we serve our customers,” Joseph Mrak, chairman and CEO of FolioDynamix, added. “Integrating FolioDynamix’s powerful trading tools into Envestnet’s unified wealth management, financial planning and data analytics platform offers each of our customers the best of both worlds.”

The deal is expected to close by the end of the first quarter in 2018. In addition to FolioDynamix’s trading tools and commission and brokerage support, Envestnet also expects to acquire about $10 million in tax benefits, according to the company.

In a statement, Envestnet said it believes the transaction will “be modestly accretive to adjusted EBITDA and adjusted net income per share immediately, and to achieve its post-integration financial performance goals, including approximately $20 million in identified cost synergies within 36 months of closing.”

As of the end of June, FolioDynamix supported more than 3.2 million investor accounts with over $800 billion in assets. Envestnet currently serves more than 57,000 advisors and 2,900 companies.

FolioDynamix is the most recent in a long line of acquisitions for Envestnet. The firm purchased Wheelhouse Analytics last fall, following acquisitions of data aggregator Yodlee and financial planning software Finance Logix in 2015. Prima Capital and Tamarac were both acquired in 2012.

(Related: A Look at Envestnet’s Leaders and Acquisitions)

Bergman noted that the acquisition will be the firm’s sixth significant transaction since going public in 2010, and allows the firm to expand its “industry footprint [and] further leverage our operating scale and data analytics capabilities as we continue to build the financial wellness network and help our clients deliver better outcomes.”

He continued, “Together, we will have the broadest, integrated suite of products and services for enterprises and financial advisors, boosting their productivity. We are eager to welcome and continue to serve FolioDynamix’s clients.”

--- Read Envestnet Wants to Help Advisors Beat Robos at Their Own Game on ThinkAdvisor. 

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