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Envestnet private sale odds plummet after Bill Crager responds to analyst’s question on possibility; stock market craters, reducing the odds of it happening to one in four, analyst says


Investors responded to remarks by Envestnet’s CEO – and to analysts – regarding yesterday’s earnings call by sending the company’s shares falling sharply and the future role of chairman Stuart DePina remains murky.

The widely anticipated sale of Envestnet may not be on the cards, after CEO Bill Crager dodged questions about the company’s valuation and potential takeover, leading an analyst to peg the likelihood of a less than 25% agreement.

Crager also delivered an “I get it” to analysts guiding them to expect Envestnet’s assets under administration to jump from $4.5 trillion to $10 trillion regardless of any outside help. in a few years.

“I will not comment on any rumors or speculation circulating in the press. If there is anything we feel is necessary to convey [or] announce, we would, of course, but we’ve been focused on execution,” Crager said at the company’s May 5 meeting. earnings call.

Analysts Devin Ryan (pictured) and Brian McKenna call the prospect of a deal ‘a toss up’

Yesterday, shares of Envestnet (ENV) slipped 5.5% to $75.11 in a broad downtrend. Today it solo fell another 10.4% to $67.27 [as of 3:10 pm ET]wiping out all the gains made since the announcement of the sale.

The decline overtook an overall sell-off in all markets that sent the NASDAQ down 5% yesterday and 1.43% today.

When reports of the potential sale of Envestnet first surfaced (February 22), its share price jumped 11% to $71. On April 18, it was trading at $83.57, down 3% from a 52-week high of $85.99. The shares, however, are still far from their 52-week low of $64.70.


Analysts at New York-based investment bank Jefferies Group now put the odds of a deal at less than 25%, according to a copy of the memo provided to RIABiz by the company.

Stuart De Pina
Stuart DePina did not respond to a request for comment.

“Either the talks have broken down or an agreement has been reached, but management is waiting to announce this as it does not want to interfere with the annual councilors’ summit, which will take place next week,” the note said.

“[It’s] a coin toss,” Devin Ryan and Brian McKenna, analysts at JMP Securities, say in a note to clients. “We are also not convinced that the conversations are over,” added the two men.

JMP is a small but influential San Francisco investment bank owned by Citizens Financial Group, Inc., headquartered in Providence, RI

JMP and Jefferies Group have not yet responded to a request for comment. Envestnet released a short statement.

“We don’t comment on rumors or market speculation, but if and when we have something to announce, you’ll hear from us,” a spokesperson said.

Value creation

Crager also teased that Envestnet is unwilling to sell at a discount simply because of short-term turmoil in the stock market.

“At our scale and our size, with our position in the market with [our] supporting finance you have a very valuable business… There is incredible value being created here.” .

Indeed, he projected that Envestnet could have up to $10 trillion in assets under its administration by 2025, up from $5.5 trillion today. See: Envestnet just surpassed $5 trillion in assets and 108,000 advisers on its platform, but earnings have been more stable as the rising tide of inflows floats on financial services boats.

shared tragedy

Crager also declined to comment on the accuracy of reports that Envestnet chairman Stuart DePina is expected to leave the company other than to remind analysts of the tragedy they experienced together.

Anil Arora
Anil Arora left Envestnet in October 2021.

“Stuart and I have been partners for a very long time. He ran the Tamarac business. He ran the Yodlee business after Jud [Bergman]the tragic death [and at the time] we said, ‘Hey, that’s the job we have to do.’ We put our heads down,” Crager explained.

“If there’s anything the company needed to announce [about DePina]we would announce it,” Crager added.

Citywire flagged the possibility of a potential DePina exit, April 29. InvestmentNews also flagged the possibility a few hours later, citing “Multiple Sources.”

DePina served as CEO of portfolio management software provider Tamarac from 2007 until 2019, when he took over as CEO of Yodlee, replacing Anil Arora. He became chairman of Envestnet in March 2020. See: Anil Arora resigns from Envestnet’s board on the same day his new company enjoys a stunning valuation.

crying wolf?

Crager also hinted that current media coverage of Envestnet – including reports of a sale – is likely to cry wolf, on the company’s earnings call.

A Texas red wolf.
A red wolf in Texas. The Texas gray wolf is now extinct.

He told an anecdote about Union General and former President Ulysses S. Grant. Early in his military career, Grant and a “dirty West Texas guy” were riding together one night and heard wolves howling.

The next day, the Texan asked Grant how many wolves he thought he heard. Grant replied “twenty”.

“Well, they came across the wolves…there were two of them. So there’s always a bit more noise than we’d like. But we’re headlong into executing our strategy,” Crager said. .

Bloomberg first reported that Envestnet went on sale on February 22. Barrons upped the ante (February 23), reporting that Envestnet has retained Piper Sandler to sell the company. Then Citywire Warburg Pincus and Advent International were the final bidders.

Envestnet has been seen as ripe for a takeover since co-founder and CEO Judd Bergman tragically died in a car accident in 2019. See: Jud Bergman, wife Mary Miller-Bergman tragically dies in San Francisco. RIA business community.

Piper Sandler has not yet responded to a request for comment. Warburg, which backs Edelman Financial Engines, and Advent International, which owns antivirus software company McAfee, declined to comment.

Seattle to Philly

Seattle-based DePina joined Envestnet in 2012, following its acquisition of portfolio management software provider Tamarac.

If he left the company, it would mark the end of the era in which Envestnet operated like a multi-headed hydra.

Until recently, four of its top executives were experienced CEOs themselves: Crager, DePina, Bergman and Arora.

DePina’s seemingly imminent departure comes as Envestnet moves its headquarters from Chicago to Philadelphia.

The move leaves him geographically clueless, according to an industry watcher. See: As private reports swirl, Envestnet moves headquarters from Chicago to Berwyn, Pa., making mainline Philly a “Central TAMP.”

Indeed, given that Envestnet will soon close Tamarac’s offices in Seattle, according to Financial-Planning.com reportDePina’s closest physical point of contact with the company he runs is 824.5 miles away in San Mateo, California.

Today, Envestnet maintains Ten desks, including a two-year-old child state of the art Office in Raleigh, North Carolina, one per room in Denver, Colorado, Powhatan, Virginia, San Mateo and Sparks, Maryland, and four overseas bases, including a giant office in Trivandrum, India, and three other offices in Bangalore, India, London, UK and Sydney Australia.

Crager resides near Berwyn, Amy Norcini, public relations director at Envestnet, told RIABiz last month.

“The majority of the management team are based in Berwyn or are close to this location,” she added.