Update on Black Diamond-Advent merger

On May 12, Advent Software announced that it was acquiring Black Diamond Performance Reporting for $73 million. This is news because the biggest company in the industry was purchasing the firm that was most rapidly eating into its market share for RIAs.

It was viewed by observers as both a stroke of genius and as a possible disaster — depending on how execution of the integration went down . Advent – for better or worse – is known for doing things its own way, and if it used that kind of control in its integration of Black Diamond, few people saw a scenario with a happy ending. So much of the value of Black Diamond lies in its superior feel for the RIA market.

In the two months since the deal was first announced, and six weeks since the deal closed, it has been very quiet. But David Welling, chief solutions officer for Black Diamond, offered a few thoughts about what’s happening behind the scenes as the two companies try to unify their operations into one.

Here are four things to know about how the knitting together of the two companies is progressing:

1. Advent and Black Diamond will continue to have separate sales teams focused on each of the business units (e.g. Black Diamond for Advisory, Advent for Asset Management and Hedge Funds), Welling said.

The structure of sales teams was flagged as a challenge by experts from the start. The good news is that having two sales teams assures that the people most familiar with the products continue to pitch them and to clients. “The sales and relationship management teams are also collaborating extremely well,” Welling says.

Yet there’s also a potential for conflict. The sales teams of Black Diamond and Advent compete in the field all the time and segmenting the teams may not solve everything. RIAs are snowflakes with thousands of admixtures of wealth management and investment management. Even some hedge funds are fast becoming RIAs and taking on direct clients. Discretionary decisions on pricing and service are made every day to win deals. How is that going to work now when one side or the other perceives that the pricing went too low?

Steps are being taken to assure that there is harmony between the sales teams, according to Advent spokeswoman Katherine Calvert.

The two sales teams are coming together this week for mid-year training. “The Black Diamond teams are joining us this year, which will be great – our sales teams have spent some time together already, but this will be a great chance to really bring the collaboration and best practices to the next level.”

2. Advent and Black Diamond are cooking up plans to make it easy for Axys clients to move easily to Black Diamond’s Blue Sky system by making the transition easier. “It makes a big difference when you are moving from one platform to another under the same company,” Welling writes in an e-mail. Needless to say there are thousands of advisory firms that will be interested to hear details of this plan as it emerges. Observers have often wondered why Advent didn’t create the equivalent of a trade-in on Axys to APX. Maybe it’ll now do something like that in relation to Blue Sky.

3. The two companies are already planning their first shared conference. The AdventConnect conference runs in Boston from Sept. 12-15. There will be more than 10 Black Diamond and advisory educational sessions and Black Diamond staff will also provide private consultations. As a welcoming gesture, Advent cut registration fees in half just for B-D clients. Advent clients pay $1,395 for the event, according to the company’s website. “In addition to the client conference in Boston, which we are really excited about, we are putting plans together to continue to create even more forums for Black Diamond clients to share their feedback and to hear directly from Pete [Hess] and Reed [Colley] about the opportunities this acquisition offers to accelerate Black Diamond’s great work,” says Calvert.

4. Though the companies plan to act autonomously in many regards, they will also work together where it’s prudent, according to the Welling e-mail. “We are being careful not to tackle too many 'integration’ projects out of the gate. There are certainly opportunities in sharing infrastructure and plumbing (e.g. third party data services that supplement custodial data, Advent Custodial Data platform that provides access to 400+ institutions etc.) These will be great wins as we can leverage plumbing that is already built and even more of our development resources on innovating the front end advisor experience.”