Genstar Capital, a leading private equity player in the wealth management space, is making a majority investment in Docupace, which provides back-office software and support to advisory firms.
Genstar's recapitalization of the firm follows FTV Capital's majority investment in 2020. FTV will remain a minority investor.
Since FTV took ownership, Docupace has grown significantly, with more than 130 enterprise customers and processing more than 130,000 electronic documents daily, according to CEO David Knoch, who became CEO after FTV took over.
In an interview with WealthManagement.comKnoch said the industry had yet to broadly design “a better answer to back-office automation” than Docupace's innovations.
“I think we've built a strong back office ecosystem and have attracted the attention of the market broadly, including private equity firms like Genstar,” Knoch said, noting that the Docupace crew had known the team at Genstar for some time.
According to Knoch, Genstar's investment will help the firm “accelerate” its current product development roadmap, which includes a complete overhaul of Docupace's user experience and improvements to its integration architecture for customers.
Additionally, Knoch expects more M&A opportunities for the firm after the investment closes by the end of the third quarter of this year.
Docupace acquired two companies in 2021: PreciseFPa digital account aggregation and access provider and Giacomo, which provides compliance, data integration, financial reporting and advisor compensation systems. But since then, Docupace has kept quiet about the acquisitions.
“There are many reasons for this, not the least of which is the overall U.S. shopping market,” Knoch said. “But we have an opportunity today in partnership with Genstar to bring other great technologies to Docupace, to this back-office ecosystem, to complement our product development efforts.”
Knoch would not specify acquisition targets, but said Docupace's goal was to create a back-office ecosystem for the industry, and any such capabilities the company does not currently offer would be potential targets. There is also no single partner or provider that spans the entire industry, with most solutions targeted at large and midsize firms, Knoch said.
“I think any firm of any size has as much right to great operational experience as any other firm, especially large firms, so we shouldn't end up with a distinction between the largest and the smallest as it is.” today,” he said. “We can use the ability to do M&A or acquisitions to make a solution like Docupace more widespread across the industry and give any firm of any size an opportunity to have a great back-office ecosystem. “
Genstar Capital, founded in 1998 in San Francisco, manages over $49 billion in assets across over 40 portfolio firms. It targets investments in the financial services, industrial, software and healthcare industries.
Genstar's first wealth management investment was in 2015, when it took a controlling interest in Mercer Advisors. The firm acquired majority control of Cetera in 2018 and Cerity in 2022. Genstar director Sid Ramakrishnan said the firm had followed Docupace's transformation for several years and was ready to help it “in its next chapter of growth”.
“The wealth management ecosystem is very complex and increasingly so, and firms need scalable operations that serve financial advisors and their clients,” he said.
FT Partners and RBC Capital Markets served as financial advisors to Docupace and Genstar, respectively. Gibson Dunn was legal counsel to Docupace and Ropes and Gray served as legal counsel to Genstar. Terms of the deal were not disclosed.