Dynasty Financial Partners, a service provider for 46 independent wealth management firms with a collective $64.6 billion in assets, filed Wednesday with the Securities and Exchange Commission to go public.
The company plans to raise $100 million, a common placeholder used to calculate filing fees that is often changed. Shares will be listed under the symbol “DSTY” on the NASDAQ Global Market. No timing of the listing was shared in the filing; this is often dependent on market conditions and other factors. Dynasty declined to comment on the IPO, citing the waiting period that bars companies from releasing more information publicly after filing to go public.
Dynasty’s platform provides technology and services — marketing, investments, compliance and practice management, and others — to wealth managers, who pay Dynasty a recurring fee based on their client assets. The company also has one of the biggest turnkey asset management platforms (TAMPs) which manages portfolios on behalf of advisors, and it offers loans to, and purchases equity stakes in, RIAs. It is an established company among a relatively small but growing group of firms focused on servicing RIAs, but it’s considered to be an “emerging growth company” under federal securities law and thus eligible for reduced public company reporting and other requirements.
In its filing with the SEC, Dynasty showed that it has improved its profitability. It reported revenue of $49.2 million and net income of $10.6 million through the first three quarters of 2021. Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, was $12 million during the same period. In 2020, Dynasty’s total revenue was $46.2 million, net income was $4.8 million, and adjusted EBITDA was $5.6 million.
According to its IPO filing, Dynasty’s core platform generates 54 percent of its revenue, its TAMP generates 19 percent, and its financing line of business generates 7 percent.
Among its strengths, Dynasty listed its experienced management team and the platform’s ability to help wealth managers grow and scale their businesses.
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The size of Dynasty’s RIA network hasn’t changed much in recent years. The network once had as many as 50 RIAs, but that number had shrunk to 45 at the start of 2020 and now sits at 46. Shirl Penney. Dynasty’s founder and CEO, told RIA Intel in 2020 that the network wasn’t a good indicator of the health of the business; that RIAs come and go as expected; and that the ones joining Dynasty were larger and generated higher fees. Going forward, Dynasty plans to grow the network and cited in its filing Wednesday the RIAs who have agreed to join and are in the process of transferring to its platform.
Dynasty also plans to continue adding services for its RIAs and to consider future acquisitions. Last year, it created a referral program designed to introduce wealthy investors to its network of RIAs, launched an effort to juice the organic growth at the wealth management firms, and partnered with the MIT Sloan School of Management on a three-day “Advisor to CEO Program.”
Last year, Dynasty invested in the compliance software company SmartRIA.
Many of the risks that Dynasty laid out for prospective investors are related to market conditions. Since much of Dynasty’s revenue comes from the asset-based fees it charges, a fluctuation in the value of those assets would impact revenue.
Penney, a former director at Citi’s Smith Barney, founded Dynasty in 2010. As Dynasty has grown over the last decade, so has Penney’s profile in the wealth management industry — the chief-of-staff position at Dynasty is now a highly sought-after job.
In 2019, Dynasty relocated its headquarters from New York City to St. Petersburg, Florida, due to the ease of transportation to other cities, affordable real estate, lower taxes, and high quality of life.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.