SS&C Technologies To Acquire Advent Software For $2.7 Billion

SS&C Technologies To Acquire Advent Software For $2.7 Billion

SS&C Technologies announced Monday that it would acquire Advent Software for $2.7 billion in cash and the assumption of debt.

The purchase comes a week after media reports first speculated on a pending merger, sending shared of Advent up 10 percent. The purchase price, $44.25 a share, values Advent at almost 50 times trailing twelve month earnings.

"It's a very full price, but it's worth it," said Bill Stone, SS&C CEO, on a conference call, citing the "literally hundreds" of opportunities to upsell existing clients. 

Advent provides software and technology services for the financial industry, and brings more than 4,300 customers to SS&C, including asset managers, hedge funds, fund administrators, prime brokers, family offices and wealth management firms.

The purchase is a victory for Advent CEO Pete Hess, who joined the company in 1994 took over as CEO in 2012, a year the software firm was laying off staff. Under founder Stephanie DiMarco, Hess oversaw the acquisition of Black Diamond, a portfolio management and account aggregation software for wealth managers. Stone said he looked forward to continue working with Black Diamond head Dave Welling, and growing that part of the business.

This was not SS&C's first attempt to buy Advent, said Stone on the conference call, but their previous effort didn't pan out. "Pete's a very good negotiator," Stone said. SS&C has largely grown through acquisition, buying some 23 firms since 1995. This deal will inflate the company's debt to 5.3 times EBITDA. Stone said he was confident that could be paid down given high renewal rates and opportunities to cross-sell clients. 

Advent generated $397 million in 2014, and this acquitision values Advent at $44.25 per share. The companies already had a relationship with each other; Stone said that 2,400 SS&C employees use Advent’s Geneva every day.

“The transaction capitalizes on a broad trend: global financial services customers’ increased interest in outsourcing solution,” SS&C said in its statement. “Advent increases SS&C’s business and geographical diversification and scale and adds a stable and attractive revenue base, as demonstrated by its 90% recurring revenue rates over the last five years”

SS&C said that it expects $45 million of annual savings after three years, and believes it will deliver earnings-per-share of between $3.05 to $3.15 in full-year 2016. The acquisition was unanimously approved by both SS&C’s and Advent’s boards of directors.

The purchase will be funded by $3 billion of debt financed by Morgan Stanley and Deutsche Bank as well as a $400 million secondary equity offering.

TAGS: Technology
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