EnvestNet acquires Portfolio Management Consultants for an undisclosed sum.
A rumored merger between managed account distributors EnvestNet and Portfolio Management Consultants has been confirmed and is set to close between August 15 and August 31 for an undisclosed sum, the companies announced today. PMC will be spun off by its parent, the Ziegler Companies, which will retain a 15% to 20% minority ownership in the company. The combined firm, based in Chicago, will be called EnvestnetPMC. The merger brings EnvestNet's technology to PMC's considerable client base; EnvestNet's current $200 million in assets under management will soar to $5.92 billion, edging EnvestnetPMC into second place behind Lockwood Financial of Malvern, Pa. PMC really was a pioneer in the business, said Bill Crager, executive vice president of Envestnet. They didn't have the technology to grow the business. We thought it was a terrific marriage. While PMC had not been shopping for a transaction of this nature, technology issues had caused to weigh its options. For some time, we had been seeking a technology platform either to bring into the PMC unit itself or seek an alternative, so we were at least looking for a technology platform to help enhance PMC's operations,' said Ziegler spokesperson Evan Bane. The merger impacts the money manager roster for the combined platform on several levels. Each platform independently features approximately 40 managers, but the firm is aiming at a combined force of 65 to 75. With an overlap of only 14 firms, EnvestnetPMC will cut around a dozen managers from its ranks, according to Crager. Furthermore, each firm has traditionally had a different approach to its selection of managers. According to Crager, PMC embraced the concept of bringing institutional money management to retail investors through its platform. EnvestNet however, has looked at a broader scope of advisors, some of whom want the lesser-known institutional managers, and others who prefer familiar mutual fund names. While Crager said that EnvestnetPMC will draw from both platforms, its slate of managers will likely resemble EnvestNet's more closely, since the firm will continue to draw from both the institutional and retail sides of the money management business. Nonetheless, the firms intend for EnvestnetPMC to be more than just a larger version of EnvestNet. We'll have a new brand that will be launched at the end of the merger, said Crager. It'll signify the essence of what we want to signify, that EnvestnetPMC represents the sum of things to come. EnvestNet currently has 62 employees between its New York and Chicago offices and PMC has over 75 employees in its Denver office. A transition team will determine whether any jobs will be cut in the three offices after the firms merge. We need to evaluate where our combined needs are, so we haven't made any determination yet, explained Crager. PMC's CEO, John Mulherin, will join the new firms board of directors. John Merrell, currently president of PMC, will become president of EnvestnetPMC. Judson Bergman, EnvestNet's founder, will remain CEO at EnvestnetPMC.