Lauren Taylor Wolfe goes for the jugular with bold move to claim majority control

Lauren Taylor Wolfe, co-founder and partner of Impactive Capital, an activist investment management firm, is taking a hardline approach in her campaign to gain control of Envestnet, a financial technology company based in Berwyn, Pennsylvania. In a press release issued on January 4th, Wolfe called for a “change at the board level,” and announced that she is nominating herself, as well as three other individuals, for seats on the company’s board.

According to the press release, Wolfe believes that Envestnet’s current board is responsible for “rampant ‘shareholder value destruction'” through self-dealing, poor managerial performance, and a lack of fiduciary responsibility. Wolfe also accuses the board of “abandoning expense discipline” and “ignoring its duty to maximize shareholder value.”

In her quest for control of the company, Wolfe is requesting four of the seven seats on the board, which would give her effective control. Along with her own nomination, Wolfe is also nominating Thomas C. Naratil, Wendy E. Lane, and Michael J. Stanton for seats on the board. Naratil, a former co-president of global wealth management at UBS Group AG, has a history with Envestnet as both a partner and client for nearly a decade. Lane is the chair of Lane Holdings, Inc., and Stanton is a former CFO of Diligent Corp.

In response to Wolfe’s press release, Envestnet released its own statement saying, “The Envestnet Board of Directors and management team are committed to acting in the best interests of the company and all shareholders, and the Board will present its recommendation regarding director nominees in the company’s proxy materials.”

This isn’t the first time that Impactive Capital and Envestnet have clashed. Last November, Impactive requested a seat on the company’s board, but their request was denied. In retaliation, the hedge fund sent a scathing letter to Envestnet’s management, but their efforts were ultimately unsuccessful.

This latest move by Impactive Capital, and in particular by Taylor Wolfe, is being viewed by some as a hostile takeover attempt. Mike Wunderli, Managing Director at ECHELON Partners, said in an interview, “This looks like a hostile takeover… of the Board. In this case, Impactive is clearly trying to make the case to [Envestnet] shareholders that the current board has led to disappointing performance and a lagging share price.”

Despite her criticisms of the company’s management and board, Wolfe does acknowledge that Envestnet is a “high-quality business with substantial opportunity for value creation, particularly given its dominant market position.” However, she argues that this potential can only be realized with a change in leadership and a renewed focus on maximizing shareholder value.

The situation at Envestnet is likely to come to a head at the company’s next annual meeting, where shareholders will vote on the proposed board nominees. Until then, it remains to be seen whether Impactive Capital’s campaign will be successful in bringing about the change they desire at the company.