Focus Financial sees brisk activity in the M&A market for RIAs

Focus Financial sees brisk activity in the M&A market for RIAs
The aggregator reported 24 transactions either pending or closed so far this year.
MAY 09, 2019

Focus Financial Partners continues to see plenty of deal activity in the RIA space, reporting Thursday that it had 24 transactions that either closed or were pending so far in 2019. Focus, which became a publicly traded company last year, narrrowed its first quarter loss to $2.8 million, down from $12.1 million in the year-earlier quarter. Revenue was $260 million, 33%higher than the first quarter of last year. Shares fell 9%, closing at $34.08. Focus splits registered investment adviser transactions into two categories: "partner firm transactions" and "mergers." While Focus refers to most of its deals as mergers, they are technically acquisitions, and usually all-cash deals in which Focus acquires 100% of the RIA. Becoming a partner firm at Focus, which provides lots of technical and back-office support in addition to financing help on sub-acquisitions, means giving up between 40% and 60% of earnings before partner compensation. In its earnings release, Focus said it completed three partner-firm acquisitions during the first quarter of 2019 and two more on April 1. It completed nine mergers in the first quarter, seven so far in the second quarter, and has three pending, according to its earnings supplement. "Pipeline suggests robust M&A activity in first half of 2019; seeing an increasing number of attractive partner acquisitions and merger opportunities for partner firms," the company said. "We had a record first quarter of M&A activity, further increasing our presence in the ultra-high-net-worth and high-net-worth markets and expanding our international footprint," Rudy Adolf, CEO and chairman, said in a statement.

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