Dynasty Financial Partners signals IPO is still the plan

An updated filing with the Securities and Exchange Commission appears to squash reports that Dynasty Financial Partners is shelving plans to make an initial public offering, though the firm may be rethinking how much it is looking to raise.

In a Form S-1 filed Wednesday, Dynasty reported that it now has 48 wealth management firms in its network and $67.5 billion in assets under advisement as of June 30, compared to 46 firms and $65 billion AUA it listed in a form filed in May. However, the latest filing no longer indicates that Dynasty is seeking a $100 million aggregate offering price for its IPO.  

Dynasty first filed to go public in January. However, a recent report from Citywire citing unnamed sources indicated the firm was putting those plans on hold to raise capital through private markets.

A spokesperson for Dynasty declined to comment, citing a mandatory quiet period that prevents the company from speaking publicly about the IPO.

The updated filing is a clear signal that an IPO is still a near- or midterm goal for Dynasty, said Brian Hamburger, president and CEO of compliance consulting firm MarketCounsel.

“I have represented plenty of companies that are pursuing an IPO, and if those objectives change … you withdraw your S-1,” Hamburger said.

The accountants, attorneys and bankers — Goldman Sachs is serving as underwriter — needed to go public don’t come cheap, and a firm isn’t likely to continuing paying for those services if it's planning to take a different path, he said.

Dynasty is profitable, according to the financial information disclosed in the filing. In the six months ending June 30, it generated $7 million in net income, compared to $6.9 million in the same period a year earlier.

If Dynasty weres cancelling plans for an IPO, it wouldn’t make sense for it to continue disclosing this information, said Louis Diamond, president of financial adviser recruiting firm Diamond Consultants.

“Why would you want to keep giving competitors information and keep being transparent when you don’t have to?” Diamond asked. “It’s so expensive to go public, it’s not good business to call it off unless they are truly going in another direction.”

It isn’t unusual for firms to press pause on plans to go public, he added. For example, several companies did so during the pandemic.

The IPO market is on pace for its worst years in decades, having raised just $5.1 billion so far in 2022, according to the Wall Street Journal. IPOs typically have raised around $33 billion by this point in the year.

Dynasty could just be waiting for the market to thaw, Diamond said.

“At the end of the day, Dynasty is still a leader in the industry, their business metrics are really good, and if they did an analysis and thought going public was the right strategy, I don’t think anything has changed,” he said.

It also isn’t unusual for a company to adjust valuations in the face of a difficult market, Hamburger said. For example, high-profile consumer brands like Instacart and Stripe have also put their IPOs on hold and slashed internal valuations.

“If I am Dynasty, and I’m not, I don’t want to be the first person to jump into the water right now. It’s freaking cold,” Hamburger said. “Let a big consumer brand dip its toe into the water and show that it's safe.”

An InvestmentNews article in the past week reported that the rough market in the first half of 2022, with the S&P 500 stock index down 21%, has created potential problems for listings for the remainder of the year. Those listings include companies in the burgeoning wealth management industry like Dynasty.

Given the environment, it would be more concerning if Dynasty went ahead with an IPO, Hamburger said.

“It would be a sign of desperation, that there is no other way to raise capital and that they need an immediate infusion,” he said. “Real leadership is staying the course and remaining disciplined.”