The RIA Focus Financial Partners aggregator published first quarter revenue of $536.6 million on Thursday, a 36% year-over-year increase, beating analysts’ expectations and paving the way for another active year in mergers and acquisitions despite geopolitical and market concerns.
“Our first quarter 2022 results were excellent, reflecting our strong fundamentals and the resilience of our business despite the challenging macroeconomic environment,” said Rudy Adolf, Founder and CEO of Focus, from Austria. “We continued to invest in leading wealth management companies that complement our partnership while strengthening our presence in strategically important wealth markets.”
Since the start of the year, Focus said it had completed four mergers and the acquisition of a partner company. The company also has an agreement with a partner company and an additional pending merger. Adolf and Chief Financial Officer Jim Shanahan acknowledged that growth would likely remain slightly slower in 2022, compared to 2021, but said they were confident they would continue to meet growth targets and would likely add partners at a faster rate throughout the period. year.
“We just came out of a year where we closed 38 deals,” Adolf said. “So we needed to breathe a little, but you will see one announcement after another of very interesting transactions.”
In December, Adolf set ambitious growth targets for the next three years, saying he expects to reach 125 partner companies, $4 billion in revenue, $1.1 billion in EBITDA and 28% growth. margins by 2025.
During the May 5 quarterly earnings call, both Adolf and Shanahan expressed confidence in the strength of their M&A pipeline and touted further expansion into the Swiss market with the signing of Octogone Group, a “elite” company with $500 million in client assets.
Once the transaction is finalized in the second or third quarter of this year, Octogone will become Focus’ 86and partner company — and its first in Switzerland, characterized by the two men as a particularly sought-after market region.
Expressing personal concerns for those affected by the unstable situation in Ukraine, Adolf and Shanahan said geopolitical and market uncertainties would not have significant adverse effects on the company’s continued growth.
“We have successfully weathered market upheavals in our 16-year history, and the lessons of those experiences are embedded in our business model,” Adolf said.
“While the dynamics driving the current environment are different than what we experienced at the start of the pandemic in 2020, our partner companies are also well-equipped to weather this storm and are delivering strong results,” said Shanahan said. “As in 2020, we are positioning ourselves to take advantage of the opportunities that will arise after the crisis. I am confident that we will overcome the current challenges and that our business will emerge even stronger and better positioned for growth.
Both executives cited diversity, discipline and their decentralized business model as reasons for Focus’s resilience and continued success.
“Our momentum remains strong,” Adolf said. “I am confident that 2022 will be a great year for our business and that we will continue to benefit from substantial industry growth and consolidation.”