On April 16, Reuters reported that Envestnet is exploring a potential sale of itself and has been working with investment bank Morgan Stanley. As a result, the firm’s shares rose 9.3% versus a 0.2% decline in the Morningstar US Market Index.
Activist investors could successfully pressure Envestnet to substantially increase its operating margins. If that fails, Envestnet's recurring revenue business model could be attractive to strategic and financial acquirers.
Bears
Envestnet’s data and analytics segment faces strong competition from other data aggregators such as Plaid and other alternative data providers.
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Envestnet provides wealth-management technology and solutions to registered investment advisors, banks, broker/dealers, and other firms. Its Tamarac platform provides trading, rebalancing, portfolio accounting, performance reporting, and client relationship management software to high-end RIAs. Envestnet’s portfolio management consultants provide research services and consulting services to assist advisors, including vetted third-party managed account products. In November 2015, Envestnet acquired Yodlee, a provider of data aggregation, which is reported in the firm's data and analytics segment. In 2019, Envestnet acquired MoneyGuidePro to bolster its financial planning tools.