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Transactions

June 2011
Vancouver, Canada
has been acquired by
Kansas City, Missouri


Background

Subserveo was a young technology firm with tremendous potential.  The company built a robust compliance and surveillance software solution for Broker-Dealers, Wealth Managers and RIA firms.  The solution delivered daily analysis of all transactions, orders and account holdings supported by an extensive library of FINRA, SEC, IIROC and UMIR-based tests.

Since Subserveo was still in an early stage of development, they concentrated on further developing their technology platform and growing the client base. While being acquired was not on the agenda, the recognition of Subserveo’s market potential and ability to provide a SaaS-based compliance solution caused other firms to notice.  That was when they turned to M&A to help.



Overview

A number of industry players, including DST Systems, had taken notice of Subserveo’s market launch. DST Systems had historically operated in the mutual fund processing space, but sought to leverage their  financial services expertise into other markets and diversify their business.   DST announced in 2011 their intention of entering the core brokerage processing and insurance spaces as part of their diversification strategy. DST realized that organic development in any suitable timeline would be a challenge. They would have to spend time analyzing key building blocks for the brokerage vertical, and then analyze which firms were considered market leading firms.  In addition, compliance was a long time pain point for brokerages.  M&A helped DST Systems understand that Subserveo was ideally positioned to be a key building block for executing their compliance strategy.

M&A organized a team to manage the transaction process.  The team worked with Management to position the company for a potential transaction; led preparations for due-diligence reviews; identified key strengths and weaknesses, and worked with the company to strengthen those weaknesses before presenting to outside parties. 

Given that Subserveo was a nascent firm just beginning to gain traction in the marketplace,   the acquirer would  need to understand the potential growth that Subserveo could provide and that in order for Subserveo’s management and shareholders to sell at the early stage, the business would only trade at a significant premium over any typical market multiple.  Approximately six months after engaging M&A, Subserveo was acquired by DST Systems.  The acquisition of Subserveo considerably strengthened DST’s position in the recently entered Brokerage Services space.  At the same time, shareholders of Subserveo were able to realize the value from their investment with an exit to the leading player in the industry.

M&A Role

Marlin & Associates managed the process, assisted in the negotiations and acted as exclusive strategic and financial advisor to Subserveo, Inc.

Press

DST Systems, Inc. Acquires Subserveo, Inc

June 20, 2011

KANSAS CITY, Mo., June 20, 2011 /PRNewswire/ -- DST Systems, Inc. (NYSE:DST - News) announced today that it has acquired Subserveo, Inc. ("Subserveo"), a Vancouver, B.C.-based provider of automated compliance and surveillance solutions to broker-dealers and investment advisors throughout the U.S. and Canada.  Terms of the transaction were not disclosed.

Subserveo, which provides broker-dealers with access to an affordable, rules-based automated compliance solution, will be operated as part of the recently launched DST Brokerage Solutions, further underscoring DST's commitment to the brokerage marketplace and its vision to address broker-dealers' unique challenges through an expanded platform of products and solutions.  

Subserveo will go to market as DST Subserveo in Canada and will be marketed as the compliance solution within DST Brokerage Solutions in the United States. Shannon Byrne Susko, president of Subserveo, will lead DST Subserveo and will report to Mike Abbaei, DST Brokerage Solutions president.

"With Subserveo, compliance officers and branch managers at broker-dealers can conduct automated oversight of daily trading activity and customer suitability, making compliance initiatives more efficient and cost effective," said Abbaei. "In addition, broker-dealers benefit from the compliance expertise of the Subserveo team. We are thrilled to have Shannon and her team join the DST Brokerage Solutions organization."

Through DST Brokerage Solutions, broker-dealers can take advantage of a full array of solutions tailored to meet their unique needs, including:

  • Automated Compliance Solution
  • Business Strategy, Technology and Operations Consulting
  • Brokerage Subaccounting
  • Broker-Advisor Portal
  • Business Process Management and Workflow
  • Portfolio Aggregation, Management and Reporting for Advisors
  • Print and Electronic Customer Communications and Output
  • Enterprise Social Networking Platform

 

DST Systems, Inc. provides sophisticated information processing and computer software products and services to support the mutual fund, investment management, insurance and healthcare industries. In addition to technology products and services, DST provides integrated print and electronic statement and billing output solutions through a wholly owned subsidiary. DST's world-class data centers provide technology infrastructure support for mutual fund companies, healthcare providers, banks, mortgage bankers and insurance companies around the globe. DST is headquartered in Kansas City, Mo., and is a publicly traded company on the New York Stock Exchange.

Marlin & Associates acted as exclusive strategic and financial advisor to Subserveo.

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