WealthManagement.com – Procyon Readies New Deals Post-Constellation Minority Stake

Procyon Partners is honing in on its first deals following Constellation Wealth Partners taking a minority stake in the firm earlier this month, with one large RIA acquisition set to close by the end of the second quarter, and potentially another on its heels.

In an interview with WealthManagement.com, Procyon CEO and co-founder Phil Fiore detailed the firm’s goals in the wake of Constellation’s investment, saying the RIA intends to complete several transactions per year, earning cumulative M&A revenue between $8 and $20 million. According to Fiore, the firm would focus on firms with assets under management totaling between $300 million and $3 billion.

“But they have to be the right ones,” Fiore said.

The $8 billion Procyon Partners is based in Connecticut and part of the Dynasty Financial Partners network. Fiore co-founded the firm in 2017 after building prominent institutional consulting groups at Merrill Lynch and UBS. Earlier this month, Procyon announced Constellation’s stake, with Fiore calling it a “transformative moment” for the business. 

The capital from Constellation, a private equity firm founded by former Emigrant Partners CEO Karl Heckenberg, will help Procyon expand its talent pool and open new offices nationwide. Procyon will remain independently operated, which Fiore said was of paramount importance and limited the number of offers the firm received when it began seeking partners.

According to Fiore, the concept of a “strategic capital and thinking partner” was in Proycon’s business plan by year three, but the firm opted to meet with several private equity firms over several years to better understand what the PE space could offer it. 

Eventually, Procyon partnered with Houlihan Lokey to act as the firm’s investment banking advisor in the search. Last October, the firm sent out a confidential information memorandum to about 40 potential investment partners, getting 17 offers back and eventually meeting with five.

“The only reason why we didn’t get 40 back, quite frankly, is because of the size of the check. We didn’t want to sell a significant portion of the firm,” Fiore said. “It was always minority and always non-controlling.”

According to Fiore, Procyon didn’t pursue a minority investment from their back-office support partner Dynasty because “it’s really important, at some level, to have separation of church and state” (Fiore said the firm utilizes two custodians in Fidelity and Charles Schwab for the same reason).

While every potential PE partner promised capital and M&A deal flow proficiency, Fiore said Constellation’s differentiator was its advisory subset led by Lisa Crafford, Constellation’s managing director and head of advisory, who joined the firm from Pershing in 2023. 

Fiore said Crafford and other Constellation staff spent three days last week at Procyon conducting a deep dive and assessment of the firm, and intend to return in several weeks with a list of suggestions.

“So there’s a whole strategic consulting element relative to our infrastructure and our processes and how we’re doing things, how we’re executing and how we can be better,” Fiore said. “How do we fine-tune that? How do we make the Rolls-Royce even better?”

Fiore expected Procyon’s acquisitions in the months (and years) to come would be a mixture of expanding existing offices and planting flags in new cities and regions, citing Michigan; Columbus, Ohio; Chicago; and the state of Tennessee as potential locales. Particularly, Fiore found between the Mississippi River and the East Coast’s I-95 corridor to be fertile ground for a firm like Procyon.

“I just think as we start to go over the Mississippi and to that side of the country, we’ve just got to be thoughtful about making sure we build a larger complex,” he said. “If we’re going to hang a flag on that side of the Mississippi, we’re going to hang a real flag; I’m going to want to see $10 to $15 million in revenue out there.”

Fiore also acknowledged the difficulty of M&A at Procyon, which will likely limit the firm’s deal volume. He recalled how, 18 months after the firm’s launch, Procyon considered acquiring an unnamed large team that wanted to retain their own branding and create an affiliate relationship with Procyon. 

Fiore and his team opted not to make the deal, setting in stone the idea that firms would only join Procyon under the guise of being part of a single team, which Fiore acknowledged would not be for everyone.

“That business card is the same one I have,” he said. “It’s no different.”