ACA Group Announces Agreement to Acquire UMB Distribution Services, LLC

Rhea-AI Summary

ACA Group, a leader in governance, risk, and compliance solutions, announced plans to acquire UMB Distribution Services, a unit of UMB Financial (Nasdaq: UMBF). Expected to close in Q4 2024, this acquisition will add over $48 billion in client assets to ACA's portfolio, expanding ACA Foreside's distribution leadership, which currently services $2 trillion in assets. The acquisition will enhance ACA's service offerings with a comprehensive suite of compliance and technology solutions. Financial terms were not disclosed.

Positive

• ACA's acquisition of UMB Distribution Services will add over $48 billion in client assets.
• ACA Foreside, currently distributing $2 trillion in assets, will expand its distribution leadership.
• The acquisition will enhance ACA's service offerings with advanced compliance and technology solutions.
• This will be ACA’s sixth acquisition in three years, reflecting a strong growth strategy.
• The transaction allows ACA to better serve their clients with a comprehensive suite of solutions.

Negative

• Financial terms of the acquisition were not disclosed, leaving some uncertainty for investors.
• The transaction is expected to close in Q4 2024, which may lead to a prolonged period of uncertainty.

Financial Analyst

The acquisition of UMB Distribution Services by ACA Group is a significant move that will impact their market position and financial stability. ACA Foreside's control over the distribution of over an estimated $2 trillion in assets is noteworthy. The addition of $48 billion in client assets from UMB enhances ACA's asset management portfolio, which could lead to substantial revenue growth. Given the increasing focus on compliance in the financial services sector, ACA's expanded role may also lead to improved operational efficiency and cost savings due to economies of scale.

Short-term, investors might expect some integration costs which could affect profitability. Long-term, however, the enhanced market presence and additional client base should strengthen ACA's revenue streams and market influence. This aligns well with ACA's strategic growth vision, suggesting a positive outlook for steady financial health and potential stock appreciation.

Market Research Analyst

This acquisition is poised to reinforce ACA Foreside’s dominance in the financial distribution market. The assimilation of a new set of asset management clients with mutual fund, ETF and closed-end fund products signifies an expansion into diverse financial products. This diversification can lead to a more resilient business model, less susceptible to market volatility in any single segment.

The deal underscores the trend of consolidation in the financial services industry, where larger firms acquire smaller entities to enhance their service offerings and market share. For retail investors, this move signifies ACA's commitment to expanding its capabilities and client base, which typically correlates with enhanced service offerings and potential for higher returns on investment.

Acquisition expands ACA Foreside’s distribution leadership, now distributing and servicing over an estimated $2 trillion in assets.

NEW YORK--(BUSINESS WIRE)-- ACA Group (ACA), the leading provider of governance, risk, and compliance (GRC) solutions to clients in the financial services industry, today announced its intent to acquire the broker-dealer distribution business from UMB Fund Services, a subsidiary of UMB Financial Corporation (Nasdaq: UMBF) (UMB). The transaction is expected to close in the fourth quarter of 2024.

ACA’s distribution division, ACA Foreside, is the industry’s largest third-party distributor by number of funds, currently distributing and servicing $2 trillion in assets across hundreds of fund families. The lift out of UMB’s distribution business expands ACA Foreside’s internal distribution team, co-led by Teresa Cowan and Chris Lanza, and will include the addition of asset management clients with mutual fund, exchange-traded fund (ETF), and closed-end fund products. The transaction will introduce over $48 billion in client assets to ACA and allow current UMB clients the ability to leverage ACA’s expansive advisory support and industry-leading technology.

“We are thrilled to announce this acquisition, which is a pivotal moment in our journey to continue redefining the landscape of financial services. This strategic action underscores our commitment to innovation and positions us to better serve these clients with a comprehensive suite of compliance and technology solutions,” said Chris Lanza, Partner and Co-head of ACA Foreside.

“We are excited about the opportunities this acquisition brings to our strategic growth vision alongside the ability to expand our market presence and deliver exceptional value to our clients and stakeholders,” shared Patrick Olson, Chief Executive Officer at ACA.

ACA Foreside will be responsible for legal underwriting services, marketing material review, registered representative licensing and supervision, negotiating and maintaining broker-dealer selling agreements, and more. This would be ACA’s sixth acquisition in the past three years.

“This transaction supports our efforts to focus on our core competencies and continue strategically growing our fund administration, fund accounting and transfer agency business,” said Maureen Quill, Executive Vice President, Executive Director for Registered Funds of UMB Fund Services. “We will continue to service many of these clients through our core lines of business and look forward to maintaining and growing those relationships. We are confident our clients will have a smooth and seamless transition for distribution services through both UMB’s and ACA Foreside’s continued focus on delivering best-in-class service.”

Financial terms of the transaction were not disclosed.

About ACA

ACA Group (ACA) is the leading governance, risk, and compliance (GRC) advisor in financial services. For over 20 years, we’ve empowered our clients to reimagine GRC to launch, grow, and protect their business. Our global team of 1,250 employees includes former regulators and practitioners with a deep understanding of the regulatory landscape. Our innovative approach integrates advisory, managed services, distribution solutions, and analytics with our ComplianceAlpha^® technology platform. For more information, visit www.acaglobal.com.

About UMB

UMB Fund Services, headquartered in Milwaukee, Wis., offers a complete line of products and services to the fund industry, including fund administration, fund accounting, tax, investor services and transfer agency, and custody.* It serves more than 360 clients with combined assets of more than $440 billion as of April 30, 2024. For more information, visit UMB Fund Service’s website. *Service provided by affiliate.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240530305541/en/

ACA Media:

BackBay Communications

Malea Lydon

aca@backbaycommunications.com

UMB Media:

UMB

Jory Hennelly

jory.hennelly@umb.com

Source: ACA Group

FAQ

What is the significance of ACA Group acquiring UMB Distribution Services?

The acquisition will add over $48 billion in client assets to ACA's portfolio and enhance their service offerings with advanced compliance and technology solutions.

When is the acquisition of UMB Distribution Services by ACA Group expected to close?

The acquisition is expected to close in the fourth quarter of 2024.

How does the acquisition of UMB Distribution Services impact ACA Foreside?

The acquisition will expand ACA Foreside's distribution leadership, currently servicing $2 trillion in assets, and enhance their service offerings.

What are the financial implications of ACA Group acquiring UMB Distribution Services?

While the financial terms were not disclosed, the acquisition will add over $48 billion in client assets to ACA's portfolio.

What is the stock symbol for UMB Financial involved in the acquisition?

The stock symbol for UMB Financial is Nasdaq: UMBF.