In a move that should shake up the staid portfolio management and performance reporting segment of the advisory industry Advent Software Inc. announced today that it has entered into an agreement to buy Black Diamond Performance Reporting.
"Advent's acquisition of Black Diamond will accelerate our combined ability to help advisers succeed by giving them an innovative, purpose-built platform so they can grow their practices and delight their clients,” said Advent's founder and chief executive Stephanie DiMarco in a statement.
"Black Diamond has a well-earned reputation for innovation and client focus, and I am thrilled to have them join the Advent team," she added.
“I'm excited about joining forces with Advent. We are both driven by providing the best solutions for our clients,” said Black Diamond's founder and chief executive Reed Colley in the same prepared statement.
“Black Diamond now gains access to resources to accelerate both our product development and growth."
Reactions mixed
“Black Diamond is probably one of Advent's strongest competitors and while they probably need to iron out some overlap this could be a good fit for them [Advent], complementing their offerings at the lower end especially,” said Alois Pirker, research director at Aite Group LLC.
“This is me totally theorizing off the cuff but with APX [Advent] they really shifted things up market and so I can see them keeping that and selling Black Diamond more for the entry level firms,” he added.
“Black Diamond has a lot of traction in the market right now, when Fidelity added them to the WealthCentral platform that spoke volumes,” said Mr. Pirker.
Another great point of potential synergy raised by Mr. Pirker was Advent's strong presence in the data aggregation market with its Advent Custodial Data product.
Both ACD and Black Diamond are web-based offerings and could be fairly easily bundled from an engineering and technology perspective.
Others in the industry expressed a more tentative outlook.
“It could end up being a net loss for advisers,” said Eric Clarke, president of
Orion Advisor Services LLC a popular competitor to Black Diamond.
“I think many advisers are going to fear that now Black Diamond will go the way of TechFi,” he added.
TechFi Corp., then a relatively new but increasingly popular portfolio management system was purchased by Advent in 2002 by rival Advent for $23 million. Three years later, Advent discontinued development and support of the application — though it did offer to provide many of Techfi's customers annual renewal license keys that would allow the software to continue running.
“TechFi was a great and innovative competitor then as Black Diamond has become now,” added Mr. Clarke.
In a conversation a few hours after the announcement Advent president Peter Hess responded that advisers need have no fear of history repeating itself.
“The space we are in today is a different time and place and Advent is a very different company than we were at that time, our commitment to Black Diamond is one hundred percent,” he said.
He added that Advent was creating an independent business unit around Black Diamond with Mr. Colley continuing to lead it as general manager.
“We obviously expected this question now let us prove it, we intend to keep the culture and focus intact and provide them [Black Diamond] with additional resources,” he added.
Mr. Hess explained that in addition to the Black Diamond platform, Advent would continue to develop and offer its other platforms including Advent Portfolio Exchange, Moxy, Advent OnDemand, Axys, and Geneva.
The company would also continue to serve what it sees as three distinct business constituencies including domestic advisers, asset managers and finally hedge funds and alternative managers respectively.
Terms of the agreement
According to a post on the
Advent blog, Advent will pay approximately $73 million for all of the outstanding ownership units of Black Diamond, subject to adjustment for third-party expenses and certain other specified items. The acquisition is subject to customary closing conditions and is expected to be completed during the second quarter of 2011.
Following the acquisition Black Diamond and its existing management team will “lead the advisory strategy for Advent, operating as an independent business group within the Company” according to the blog and prepared statement.
Black Diamond's founder and chief executive Mr. Colley will become general manager of the Black Diamond group, reporting to Peter Hess, Advent's president.
Ongoing innovation
Last month Black Diamond announced it had integrated its reporting technology into
Trust Company of America's custodial platform.
In September
Fidelity Institutional Wealth Services announced that it would integrate Black Diamond's BlueSky portfolio management and reporting platform into its WealthCentral technology platform for registered investment advisers.
Black Diamond launched BlueSky a year ago and with it advisers can build, customize, and store reports and grant client access through a Black Diamond-hosted firm-specific web portal.
Black Diamond currently tracks $75 billion in assets, has 280 client firms with almost 200,000 accounts. The company was launched in 2003.
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