Principal Financial Group announced a definitive agreement with Ascensus to acquire its employee stock ownership plan (ESOP) business. At the deal’s closing, Principal will add about 800 plans and over 165,000 participants to its workplace savings and retirement solutions business, which ranks as the number one ESOP service provider in the U.S.
With this acquisition, Principal will fully own Ascensus’ ESOP recordkeeping business, its ESOP Economics consulting group, and Telescope software. All products, clients, and employees will transition to Principal at the time of close, which is anticipated around the end of the second quarter of this year.
As Ascensus ESOP clients and participants are transitioned, they will be exposed to enhancements on the Principal recordkeeping platform, such as digital access, support, and account management tools, as well as audit process improvements to reduce time.
The interest in ESOPs has grown in recent years as owners look to transition their businesses or become more competitive with talent recruitment and retention. In total, there are about 6,500 ESOPs in the U.S. after the number of newly created ESOPs increased 39% from 2020 to 20212. As of December 31, 2023, Principal and Ascensus served over 2,000 employee stock ownership plans and approximately 765,000 participants.
Perella Weinberg Partners served as financial advisor to Principal, with Skadden, Arps, Slate, Meagher & Flom acting as legal counsel. The terms of the deal are not being disclosed.
KEY QUOTES:
“Growth is an integral part of our retirement strategy at Principal, and we’re excited to add scale and deepen our expertise with the addition of experienced talent and solutions from Ascensus. This acquisition strengthens the systems and capabilities that have made Principal a leader in retirement.”
- Teresa Hassara, senior vice president of workplace savings and retirement solutions at Principal
“After getting the opportunity to review Ascensus’ ESOP business more intimately, we found it to be very complementary to the expertise Principal has as a total retirement solutions provider. The acquisition positions us to offer greater value, enhanced services, and stronger products to our ESOP clients, and the integration of strong talent from Ascensus will be essential to support the growth of our ESOP business.”
- Andrew Matos, head of stock plan services for Retirement and Income Solutions at Principal
“We have great respect for Principal, their expertise, and their commitment to serving their clients with excellence. We’re confident that the valued client relationships and associates transitioning through this transaction will benefit greatly from the leadership, capabilities, and continued investment Principal has in the ESOP marketplace.”
- Ascensus president Nick Good
