Company: Focus Financial Partners Inc.
Symbol: FOCS
Description: They are a leading partnership of independent, fiduciary wealth management firms operating in the highly fragmented registered investment advisor industry, with a footprint of over 50 partner firms across the country.
Trade Date: 7/26
Shares: 16.2 million
Price Range: $35.00-$39.00
Underwriter(s): Goldman Sachs, BofA Merrill Lynch, KKR, BMO Capital, RBC Capital, SunTrust Robinson Humphrey
Co-Manager(s): Fifth Third Securities, Keefe Bruyette & Woods, MUFG, Raymond James, Regions Securities, William Blair
Terms Added: 7-16-18
Business: They have achieved this market leadership by positioning ourselves as the partner of choice for many firms in an industry where a number of secular trends are driving RIA consolidation. Their partner firms primarily service high net worth individuals and families by providing highly differentiated and comprehensive wealth management services. Their partner firms benefit from their intellectual and financial resources, operating in a scaled business model with aligned interests, while retaining their entrepreneurial culture and independence.
Their partnership is built on the following principles, which enable them to attract and retain high-quality wealth management firms and accelerate their growth:
- Entrepreneurship: Emphasis on the entrepreneurial spirit, independence and unique culture of each partner firm.
- Fiduciary Standard: Partnership with wealth management firms that are held to the fiduciary standard in serving their clients.
- Alignment of Interests: Alignment of principals’ interests with the interests of Focus through their differentiated partnership and economic model.
- Value-Add Program: Empowerment of their partner firms through collaboration on strategy, growth and acquisition opportunities, marketing, technology and operational expertise, best practices and access to world-class intellectual resources and capital to fund expansion and acquisitions.
Financials: Their revenues were $268.9 million, $325.6 million, $382.3 million, $485.4 million, and $622.9 million and their net income (loss) was $8.7 million, $12.0 million, $9.3 million, $15.7 million and ($48.4 million) in 2013, 2014, 2015, 2016, and 2017, respectively. The loss in 2017 reflects large increases in expenses related to acquisitions in 2016 and 2017. Non-cash changes in fair value of estimated contingent consideration increased $23.4 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. The increase was the result of the increase in the probability that certain contingent consideration payments would be achieved, resulting in an increase in the fair value of the contingent consideration liability during the year ended December 31, 2017. They expect their growth to continue as a result of the growth of their partner firms, attractive market and industry tailwinds and ongoing acquisition opportunities within the fragmented wealth management industry.
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