The first quarter of 2015 was busy for technology companies that serve advisors, as many were acquired or sold a significant portion of their company. The most notable deals included SS&C Technologies' purchase of Advent, which includes Black Diamond; eMoney being acquired by Fidelity; Envestnet acquiring Upside; and Northstar, which owns Orion Advisor Services, selling a majority interest in their company to TA Associates.
Whenever these types of transactions occur, I always receive a number of emails and phone calls from advisors asking about the deals: Should they take any action? Will their costs change? What does this mean for the products they're using? These are all pertinent questions, and although we do not know all the details, nor can we predict the future, there are possible implications to advisors' firms.
My first recommendation to advisors after a deal is announced is to be patient. You should expect to hear a number of great reasons why the deal is good for their users. That may not be the case, though, so listen to what they say, then wait—the "proof is in the pudding," as the saying goes.
We do see companies continue their entrepreneurial development initiatives after being acquired by larger entities, like Advent's purchase of Black Diamond in 2011 and Envestnet's acquisition of Tamarac a year later. The technology offerings of both companies continue to be very competitive and attractive, and the deals they made seem to have enhanced the companies.
Pay attention to who is ultimately in charge of the company after the deal closes. This is the area that makes advisors most nervous. Given the relationship aspect of our profession, we greatly value the people running the companies that support our firms. Often, the existing management team remains in place, but it won't take long for you to figure out if they still have the same level of control and authority. If new leadership is introduced, this is not necessarily a negative. However, it will likely mean that future changes are in order as the new leaders take charge and begin to implement their ideas.
