With annual revenue at Focus Financial Partners growing steadily, the firm is expanding beyond U.S. shores and working with about $1 billion in deployable capital.
The New York-based RIA aggregator completed seven transactions including incoming partner firms and mergers among existing Focus practices, the firm said in
- Earnings: Focus earned net income of $2.5 million on revenue of $394.2 million in the first quarter. After adjusting for non-cash equity grants, amortization, contingent consideration and earn outs after acquisition deals, the firm generated EBITDA of $100.1 million. The adjusted EBITDA rose 29% year-over-year. Its revenue and non-GAAP earnings per share came out ahead of analysts’ expectations.
- M&A: In the first quarter, Focus acquired Prairie Capital Management, a Kansas City, Missouri-based practice with about $5 billion in client assets, as well as Rollins Financial and Hill Investment Group. It also carried out four mergers on behalf of its partner firms, one of which was Focus partner firm Connectus Wealth Advisers’ fourth deal in Australia since breaking into the market in December, according to Focus CFO Jim Shanahan. The number of Focus partner firms expanded 13% year-over-year to 72 in the quarter. Based on its revolving credit, cash on hand and expected cash flow in 2021, the firm has an estimated $1 billion in deployable capital, according to Shanahan.
- New resources for advisors: This quarter, the firm is rolling out a new portfolio of insurance products from leading carriers in the areas of property, casualty, life disability and executive benefits, as well as health coverage for individuals and businesses, Focus CEO Rudy Adolf said in prepared remarks in an earnings call with analysts. The firm also plans to launch more trust services later this year. In addition, the firm is making more alternative investment products available through SCS Investment Partners, the asset management division of Focus partner practice SCS Financial.
- Remark: “Never has a bank succeeded in this industry, never has a foreign buyer succeeded, no insurance company, and certainly no asset manager, and this is not for a lack of trying,” Adolf told analysts in response to a question about RIA valuations, according to a transcript by
The Motley Fool . “Ultimately you need a business model that you consistently execute where you truly add value to partners, and where ultimately you're compatible with what made this business, this industry so successful. And since we started this thing on my kitchen table and my co-founder's kitchen tables, we have been on one straight line in the way we executed the strategy.”
