a “fintech” company that had attracted buyout interest from several private-equity firms, may be staying a public company.
Private-equity firms including Advent International, Warburg Pincus and Hellman & Friedman were among the bidders initially vying for
(ticker: ENV) with offers ranging from $90 to more than $100 a share, according to people familiar with the matter.
Shares closed at $70 on Friday, giving the company an equity value of $3.9 billion, with $850 million in long-term debt.
A deal above $90 would have valued the company at $5.8 billion to $7 billion, according to Peter Heckmann, a senior analyst at D.A. Davidson.
Yet Advent didn’t follow through with offers, according to people familiar with the situation. Warburg also passed, the people said. “It didn’t happen for whatever reason,” one private equity executive said.
The companies had no comment.
Founded in 1999, Envestnet provides technology and automation software for financial advisors and companies, including banks, wealth managers, and brokerage firms. The company went public in 2010 at $9 a share.
A sale of Envestnet has been expected since Jud Bergman, the co-founder and CEO, died in a car crash in 2019. In January 2020, Barron’s reported that large private equity firm were interested in Envestnet. A month later, Envestnet hired Goldman Sachs to handle strategic options for Yodlee, its data aggregation business, after receiving interest from private-equity. Deal talks faded as the pandemic hit and merger activity was put on hold.
Envestnet then tried to sell the whole company in February, 2022, targeting private-equity firms, Barron’s reported. The auction attracted the interest of several buyout firms, include Advent and Warburg, according to four people familiar with the situation.
Earlier this month, during a call to discuss the company’s first quarter results, Envestnet CEO Bill Crager wouldn’t comment on a possible sale.
One reason the deal may have fallen apart is simply because of the stock market’s declines, pressuring valuations across the fintech sector.
Shares of publicly traded financial companies are down 25% to 30% this year. Envestnet’s stock has declined about 19% since hitting a 12-month high of $85.99 in October.
Globally, mergers are down by 20% this year, to 11,448 transactions valued at $1.7 trillion, according to Dealogic. The number of announced U.S. deals has fallen 13%, to 3,414, totaling $809 billion.
Envestnet still looks like an attractive buyout target, according to Heckmann.
“We continue to believe Envestnet is a high-quality, vertical market leader with many of the characteristics we value in the FinTech space,” he wrote in a note published May 6. “We suspect, like many companies, management has periodic conversations with financial buyers interested in the industry.”
Envestnet could fetch $100 to $115 a share, by his estimates, valuing the company at 20 to 24 times his estimate of $291 million in adjusted 2023 earnings before interest, taxes, depreciation, and amortization.
If no buyers stepped up at $90, however, it may be a while before Envestnet can sell itself.
Write to Luisa Beltran at email@example.com