Genstar Capital, a premier 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.com, Knoch said the industry had not yet broadly devised “a better answer for automating the back office” than Docupace’s innovations.
“I think we built a strong back office ecosystem and captured the attention of the marketplace 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 the Docupace user experience and improvements to the integration architecture for clients.
Additionally, Knoch expects more M&A opportunities for the firm after closing on the investment by the end of the third quarter of this year.
Docupace acquired two companies in 2021: PreciseFP, a digital account aggregation and onboarding provider and jaccomo, which provides compliance, data integration, financial reporting and advisor compensation systems. But since then, Docupace has gone quiet on acquisitions.
“There’s lots of reasons for that, not the least of which is the overall acquisition marketplace in the U.S.,” Knoch said. “But we have an opportunity today in partnership with Genstar to bring other great technologies into Docupace, into this back-office ecosystem, to complement our own product development efforts.”
Knoch wouldn’t specify acquisition targets but said Docupace’s goal was to create a back-office ecosystem for the industry, and any such capabilities the company doesn’t currently offer would be potential targets. There’s also no single partner or provider spanning the entirety of the industry, with most solutions targeted at large- and mid-sized firms, Knoch said.
“I think every firm of every size is as entitled to a great operational experience as any other firm, particularly the large firms, so we should not end up with a distinction between the largest and smallest as it exists today,” he said. “We may use the ability to do M&A or acquisition to make a solution like Docupace more ubiquitous across the industry and give every firm of every 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 “on the next chapter of growth.”
“The wealth management ecosystem is highly and ever-increasingly complex, and firms need scalable operations that serve financial advisors and their clients,” he said.
FT Partners and RBC Capital Markets served as the financial advisors for Docupace and Genstar, respectively. Gibson Dunn was Docupace’s legal counsel, and Ropes and Gray served as Genstar’s legal counsel. The terms of the deal weren’t disclosed.