Is
InvestLink, a unit of
United Asset Management (UAM), up for sale? That's a very good question. Rumors have been flying around the industry over the past few weeks that the vendor is looking to sell its New York City-based recordkeeping software unit.
Tim Slavin, president and ceo at InvestLink, would not comment on the story. Nor would a spokesperson for UAM.
But a document sent to the 401kWire.com on
Deloitte & Touche stationary would seem to suggest but not prove conclusively that the unit is for sale.
Although no names are mentioned specifically, there is little doubt as to what firms the letter refers to: "The Corporate Finance group of Deloitte & Touche LLP has been retained by a major finance services company to evaluate strategic alternatives for one of its wholly-owned, non-core subsidiaries."
"This subsidiary is a global leader in the area of developing, marketing and supporting user-friendly software applications for the recordkeeping, administration and servicing of retirement plans, including Defined Contribution (401k, 403b, 457, Cash Balance and ESOP) and Defined Benefit Plans. Our client has elected to focus on its core businesses, which do not include software development. It is therefore evaluating alternatives, including divestiture, for this subsidiary."
"The subsidiary's global strategy involves capitalizing on the strong growth expected in the retirement plan business over the next five or ten years, especially in the e-commerce segment of delivery of financial service information to retirement plan participants both in the U.S. and in emerging Defined Contribution structures internationally," the document continues.
The tone of the letter sounds genuine and seems to the fit into the larger context of events at UAM.
Thus far, it has been a rocky couple of years for UAM. There has been a major shakeup in the firm's executive suite.
Norton Reamer, founder and ceo of the firm, has announced that he will retire in a few months. And his heir apparent
Charles Haldeman, president and coo, has left the firm to join
Lincoln Financial Group as chief executive at
Delaware Investments. A national search for a new ceo at UAM is now underway.
Further, UAM's stock price has underperformed over the past five years (follow this link for a comparison of UAM's performance with the S&P:
UAM Chart). The firm has been struggling with its core business as reflected in the stock price.
Another complication has been UAM's inability to sell its
Pilgrim Baxter unit, apparently due to the fact that the industry found the asking price too high and the funds' performance weak.
If you examine the companies owned by UAM, it quickly becomes apparent that InvestLink is the business unit not like the others; there are roughly 50 asset management companies, and one technology company: InvestLink.
Any reasonable person would expect UAM to consider a sale of InvestLink because InvestLink does not fit into its business model. Therefore, the rumors are to be expected.
And if the rumors are true, this could be good news for InvestLink. First, the rumors are out there. They exist. InvestLink has to take time to deal with those rumors, thus affecting its business, which is to sell recordkeeping software.
The sooner these rumors are settled, the sooner InvestLink can get back to its business.
Also, InvestLink will only benefit from an owner that has the same strategic objectives that it has. Slavin once told this reporter in another context for another story, "InvestLink is a unit that makes money." If his contention is correct, then clearly InvestLink will excel in a new environment where its talents and abilities are more in tune with the corporate parent's.
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