Carlyle and Bain Capital battle to buy wealth manager in potential $7bn deal
Private equity groups have been hunting independent wealth management groups for their recurring earnings
Carlyle and Bain Capital are vying to buy a wealth management platform overseeing nearly $160bn in client assets amid a wave of private equity deals targeting independent firms in the sector.
The rival private equity groups are the last remaining bidders in the race to buy registered investment adviser Wealth Enhancement after the group’s private equity owners put it up for sale, aiming at a valuation of roughly $7bn including debt, according to people familiar with the matter.
Under the ownership of private equity groups TA Associates and Onex, Wealth Enhancement has been on a dealmaking spree, buying at least six smaller registered investment advisers since last year in an attempt to add scale.
Wealth Enhancement is among the bigger private equity-backed independent wealth managers, which have been at the forefront of a wave of consolidation in the industry in recent years. Called RIAs, these firms compete with banks to advise wealthy individuals and business owners on how to invest in exchange for a fee.
The recurring revenues and sticky customer base mean the businesses are coveted by private equity. Mubadala Capital struck an $8.8bn take-private deal to buy CI Financial last year, following on the heels of Clayton Dubilier & Rice’s $7bn buyout of Focus Financial Partners in 2023.
Other large recent deals include Advent International’s minority equity investment in Fisher Investments and TPG’s investment in Creative Planning, two of the industry’s largest players.
Some private equity executives have worried that the industry is overinvested in the wealth management space, with some of the industry’s longer-held investments failing to deliver the returns expected.
Valuations of listed wealth managers like LPL Financial have also plunged this year amid fears over how artificial intelligence might affect the business of selling financial advice services in the coming years.
TA and Onex hired Evercore to sell Wealth Enhancement in recent months, the people said. The sale process is at an advanced stage but there are no guarantees that it will result in a deal and its current owners could decide to hold on to the asset, they added.
Carlyle and Bain declined to comment. Wealth Enhancement, TA, Onex and Evercore did not respond to requests for comment.