Advent Software (NASDAQ: ADVS), a leading provider of software and services for the investment management industry, has signed a definitive agreement to purchase Black Diamond Performance Reporting LLC ("Black Diamond"), a leading provider of web-based, outsourced portfolio management and reporting platforms for independent advisors.
"Advent's acquisition of Black Diamond will accelerate our combined ability to help advisors succeed by giving them an innovative, purpose-built platform so they can grow their practices and delight their clients," said Advent's Founder and CEO Stephanie DiMarco. "Advent is passionate about helping our clients to be great, and we share that passion with Black Diamond -- we are excited about their commitment to advisors' success and vision for their clients. Black Diamond has a well-earned reputation for innovation and client focus, and I am thrilled to have them join the Advent team."
"I'm excited about joining forces with Advent. We are both driven by providing the best solutions for our clients," said Black Diamond's Founder and CEO Reed Colley. "Black Diamond now gains access to resources to accelerate both our product development and growth. The combination of Black Diamond and Advent is a great mix of our focused, innovative solutions with one of the most trusted pioneers in investment management technology. Together, I am confident we will continue to redefine how advisors use technology to grow their practices and achieve great results for their clients."
Organizational Focus on Client Opportunities
After the transaction is complete, which is expected to occur in the next several weeks, Black Diamond and its existing management team will lead the advisory strategy for Advent, operating as an independent business group within the Company. Reed Colley, Black Diamond's Founder and CEO, will become General Manager of the Black Diamond group, reporting to Peter Hess, Advent's President.
With the acquisition of Black Diamond, Advent will have three business groups chartered with delivering value to distinct segments of the investment management industry: domestic advisors; asset managers; and hedge funds and alternative managers. The Company will continue to invest in and evolve the Black Diamond platform, as well as its Advent Portfolio Exchange (APX), Moxy, Advent OnDemand, Axys, and Geneva platforms, with each serving distinct client segments.
"Advent is committed to being the most innovative, responsive and reliable partner to the investment management industry," said Advent's Mr. Hess. "We understand 'one size doesn't fit all' when it comes to addressing the diverse and evolving needs of the industry, and that's why our multiple-platform strategy has been so successful. Together, we believe Advent and Black Diamond can be even better, faster, and stronger, and we're proud to add this powerful new alternative for advisors to our family of purpose-built solutions."
Complementing the Company's portfolio management, accounting, trading and compliance platforms are Advent's robust data services offerings, as well as Tamale RMS®, Advent's industry-leading research management solution, which will continue to operate as its own business group focused on driving adoption of RMS across all segments of the investment management industry.
Terms and Effect of Agreement
Under the terms of the agreement, Advent will pay approximately $73 million for all of the outstanding ownership units of Black Diamond, subject to adjustment for third-party expenses and certain other specified items. The acquisition is subject to customary closing conditions and is expected to be completed during the second quarter of 2011.
Black Diamond has grown revenues over 40% per year over the last two years. Upon closing, the Company expects Black Diamond to contribute just under $1 million per month of recurring revenues. Advent expects the acquisition to be neutral to non-GAAP earnings per share in 2011 and slightly accretive to non-GAAP earnings per share in 2012 (Non-GAAP earnings exclude amortization of purchased intangibles and stock compensation expense). The acquisition will be dilutive to GAAP earnings per share in both 2011 and 2012.
After closing, in connection with the Company's second quarter earnings announcement conference call, Advent will provide updated guidance for 2011 revenues, operating margin and operating cash flows.