Will Envestnet Find a Buyer? The Publicly Traded Fintech Is Looking for One, Again

The publicly traded fintech is currently considering two options: finding a buyer for its data aggregator Yodlee, which collects consumers’ financial information from various accounts, or exploring offers for the entire company, four banking sources said. Fortune. Envestnet hired different investment banks to advise on each deal. (This week was the deadline for Yodlee’s offers, one banker said.)

Private equity firms, including Bain Capital, are reportedly testing the waters. Bain declined to comment for this article, and an Envestnet spokeswoman said Fortune:Envestnet “does not comment on market rumors or speculation.”

Launched in 1999, Envestnet provides technology and automation software to more than 108,000 advisors and 16 of the top 20 U.S. banks, according to the company websiteThe Berwyn, Pennsylvania-based company, which has $5.8 trillion in platform assets, went public in 2010 at $9 a share. Since its IPO, Envestnet has made 25 acquisitions, including seven large deals and the rest partial acquisitions, Peter Heckmann, a senior research analyst at DA Davidson, wrote in an April 1 note.

Envestnet has been up for sale since the company’s co-founder and CEO, Jud Bergman, died in a car accident in October 2019. Envestnet then promoted Bill Crager, co-founder and chairman, to CEO. Crager resigned As of March 30, he remains a senior advisor and James L. Fox becomes interim CEO.

Possible sales of Envestnet have been widely reported. Several months after Bergman’s death, Envestnet hired Goldman Sachs to sell Yodlee, Barron’s reported in February 2020. Two years later, in February 2022, Envestnet has for saleThis attempt came close to finding a buyer: Advent Investment and Warburg Pincus were the last bidders, but dropped out of the deal, Barron’s reported. Last week, Reuters said that Envestnet was explore options This could include a potential sale after receiving a buyout participation.

Envestnet tried again to get rid of Yodlee in December, Bloomberg reported. The data aggregation provider, acquired in 2015 for about $660 million, competes with Plaid, which bought Quovo in 2019 in the open banking space. Of the two, Plaid’s technology is preferred by most bankers, several said Fortune.

That also means Yodlee has been a drag on overall business, the bankers added. In February, Envestnet took $191.8 million fourth-quarter, a non-cash impairment charge related to its unit that houses Yodlee, Chief Financial Officer Josh Warren said in a statement. February 22 Earnings Conference Calladding: “Although performance was below what Envestnet anticipated, various strategic and operational initiatives are underway that we believe will position the company well going forward.”

Envestnet may have to be a little more flexible in its search for a buyer. AssetMark Financial, an Envestnet rival majority-owned by Huatai Securities, was close to selling for $40 a share earlier this year. Some potential buyers said that price was too high. GTCR, a Chicago buyout firm, agreed Thursday to sell acquire AssetMark for $2.7 billion, or $35.25 per share. The deal represents about nine to 10 times AssetMark’s consensus forecast for adjusted EBITDA of $278 million for 2024, among the lowest multiples seen in the fintech space recently, DA Davidson’s Heckmann said in an April 25 note.

After hitting a 52-week low of $33.12 in November, Envestnet shares have nearly doubled since then, largely on talk of a sale, and were trading near $63 as of midday Friday. Heckmann thinks Envestnet could sell for $81 to $86 a share, or $4.4 billion to $4.7 billion, according to his April 25 note. The right buyer could pay even more, he added: “We believe Envestnet is well positioned to generate attractive revenue and earnings growth over the medium term.”

Another banker who spoke with Fortune Envestnet should be more realistic. “At some point,” the second banker said, “Envestnet will have to cash in. Just throw in the towel and get a low offer.”