New York-listed Envestnet has entered into a definitive agreement to acquire all of the assets of Prudential Investments’ Wealth Management Solutions division, for a cash sum of $10 million, plus contingent consideration of up to $23 million to be paid over three years.

Jud Bergman, chairman and chief executive at Envestnet, described the move as a “consolidating acquisition” which reinforces the firm’s presence in the bank and wealth management market.

“By leveraging our core expertise in large-scale enterprise conversions in the context of a consolidating acquisition, we expect to accelerate our growth and create shareholder value,” he said.

Prudential WMS has worked with financial services firms in developing their wealth management offerings for about 30 years. The firm administered approximately $22 billion on behalf of institutional clients, as of December 31, 2012.

After including assets from WMS, Envestnet will have $139 billion in turnkey asset management platform assets and $392 billion in total assets, making it the largest independent wealth management platform by several rankings, the firm said.

The transaction is subject to customary closing conditions, including customer consents, and is expected to close in the third quarter of 2013.

“The combination of WMS and Envestnet will provide clients of WMS with an even stronger technology and wealth management platform,” said Stuart Parker, president of Prudential Investments.

Envestnet expansion

Total operating expenses in Q4 2012 at the Chicago, IL-based firm rose 52 per cent to $42.7 million from $28.1 million in the prior year, as cost of revenues also grew 54 per cent to $16 million from $10.4 million in the last quarter of 2011. This was due to the increase in revenue from AuM or AuA and additional expenses from acquired businesses.

The firm completed its acquisition of Tamarac, a provider of portfolio management technology for RIAs, in May last year, with the aim of combining the firms’ technology, products and back office. It also acquired Denver, CO-based Prima Capital in 2012 to boost its research services for advisors.

Meanwhile, in another M&A move in the industry last week, CIBC (or Canadian Imperial Bank of Commerce) pushed into the US private wealth market by entering an agreement to acquire Atlantic Trust Private Wealth Management from its parent company, Invesco, for $210 million.