Focus Financial Partners said it was on track for its most successful M&A year yet, after closing two new partner companies — St. ARS Wealth Management, based in Petersburg, Florida, and Badgley Phelps Wealth Managers, based in Seattle, and seven mergers on behalf of partner companies during the third quarter.
Since the start of the year, on November 1, the company has concluded 28 transactions, including eight new partner companies and 20 mergers, including eight for its Connectus business. The company already has three additional contracts pending in the fourth quarter.
“I don’t see next year or any of the years to come a significant change in the pace of M&A opportunities that we see,” said Rudy Adolf, Founder, CEO and Chairman, on a call with analysts Thursday. “Yes, taxation may or may not have implications in the United States, but let’s always keep in mind that the fundamental driver of industry consolidation, the fundamental driver of our acquisition activity is really the aging of the founders. and the founding generation. “
During the call to the analyst, Adolf said the company has also started offering dedicated trust services through Focus Fiduciary Solutions, a division led by Ted Simpson, former senior wealth planning strategist at Wells Fargo. The company currently has a list of around 10 trust companies, both domestic and international, that it works with to provide these services, with plans for expansion.
“These services will create a significant opportunity for our partners, advisors, to expand and retain the assets of multigenerational clients,” said Adolf.
He also highlighted the growth of the company’s cash and credit management solutions, a nationwide network of banking and credit institutions that work with Focus’s partner businesses at competitive price points. Since the inception of this program, Focus has helped close $ 2 billion in transactions.
“We see this as just using the scale – the global scale of our organization, using our purchasing power – to create better solutions than any of our partners or, frankly, anyone. in the industry could provide our end customers and partners, ”Adolf mentioned.
“The key theme of all these value-added programs is ultimately to provide our partners with all the capabilities, all the skills of a high-end private banker, without any background,” he added. “We are really going beyond the private banker in the sense that we have introduced the concept of open architecture on the high end of the credit market.
Overall, Focus reported third-quarter non-GAAP earnings per share of 98 cents, beating analysts’ expectations by 2 cents, according to SeekingAlpha.com. Revenue was $ 454.5 million in the quarter, up 37% year-over-year, beating expectations of $ 9.1 million. Its partner companies recorded organic revenue growth of 28.8% in the quarter, above its expected range of 24% to 27% for the quarter.