Carlyle and Bain Capital are competing to acquire Wealth Enhancement, a US wealth management platform overseeing nearly $160bn in client assets, in a deal that could value the business at approximately $7bn including debt, according to a report by the Financial Times.
The two private equity firms are the final bidders in a sale process launched by Wealth Enhancement’s current owners, TA Associates and Onex, according to people familiar with the matter.
The process is at an advanced stage, although there is no guarantee that a transaction will be completed. TA and Onex could ultimately decide to retain the asset, the sources said.
Wealth Enhancement has expanded rapidly under its current private equity ownership, acquiring at least six smaller registered investment advisers since last year as it seeks to build scale.
The company is one of the larger private equity-backed independent wealth managers in the US. Registered investment advisers, or RIAs, compete with banks and other financial institutions by providing investment advice to wealthy individuals and business owners in return for fees.
The sector has attracted significant private equity interest because of its recurring revenues and relatively sticky client relationships.
The potential transaction would follow a series of large deals in the wealth management industry. Mubadala Capital agreed an $8.8bn take-private acquisition of CI Financial last year, while Clayton, Dubilier & Rice acquired Focus Financial Partners for approximately $7bn in 2023.
Other recent transactions include a minority investment by Advent International in Fisher Investments and TPG’s investment in Creative Planning.
The sector’s appeal has also prompted concerns among some private equity executives that the market may be becoming overcrowded, with some longer-held investments failing to generate expected returns.
Publicly listed wealth managers, including LPL Financial, have also faced valuation pressure this year amid growing investor concerns about the potential impact of artificial intelligence on the future provision of financial advice.
TA Associates and Onex appointed Evercore to advise on the sale, according to the sources.
