Advent to buy Black Diamond for $73 million

I think the Advent acquisition of Black Diamond is a win-win-win all the way around. A win for Advent because they now have a viable product in the RIA space (Axys is old technology, and APX didn’t fit for many RIAs), now Black Diamond has deeper capital source to support their growth, and RIA firms now have a viable (and web-based) product/service to replace Axys (and then some).

Interestingly, when the news broke, I was having lunch with a former client (the CEO of a $1B firm) who is in the middle of an Axys to Black Diamond conversion which we started when I was Interim COO at the firm. Mid-switch is a scary time to hear the news, but if Advent executes this well (which basically means giving Reed and his team total control over the offering for the RIA space) the RIA firms will really benefit. And Advent can focus on the global banking, fund, and institutional space that fits their other products.

And that means a 4th winner — the clients of the RIA firms. Sure, I know many will complain and say BD sold out, but when you really think about it, this is a good outcome for all.

I am a Black Diamond customer, and I am skeptical. Please point out any similar merger in history that resulted in greater innovation, better products, better service, and a lower cost of ownership to the customer. I think the BD product is cool, and an important step forward in how RIAs do business. Advent represents a model we have seen before and rejected.

BD will have a chance to prove me wrong. I kinda hope they do. Reed’s self-serving email to us earlier today (subject, and I am not making this up: “Our Path to Greatness”) announcing the sale was not a great start.

This acquisition makes sense. Black Diamond has been focused on building a web-based portfolio report delivery platform. Advent has focused on more traditional areas it is known for. I believe this will open up some new and interesting opportunities for Advent to further expand its product line by leveraging what Black Diamond has built.

It is true that acquistions can be tough, both on the acquiree and their clients, but only time will tell how well Advent will execute here. This announcement puts increased pressure on other portfolio management and reporting platforms. More innovation and streamlined integration is more important than ever for Advent’s competitors. It will be interesting to see the acquisitions that will be spurred along by this announcement.

What does Orion’s CEO really know about the “cultures” of the two compeitive companies? And why does his opinion on his competitor’s “cultures” matter?
My guesss is his initial response to the news was “Oh *^$%!”

I think competitors pick up a thing or two about the cultures of companies in a close-knit industry. Cultures matter in mergers and the opinion of industry participants matter to me.

Brooke

I am in complete agreement with Paul Meloan’s comment above. I was in charge of finding a reporting system for our firm a couple of years ago and talked, emailed and researched them all. In defense of Advent it was a finalist but once the pricing was brought into the mix, BD won hands down. Advent revisited this with us a week or two ago and we stressed pricing was a major factor so any CEO worth his weight knows if you can’t beat them, buy them.