Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 31, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Entity File Number | 001-38604 | |
Entity Registrant Name | Focus Financial Partners Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-4780811 | |
Entity Address, Address Line One | 875 Third Avenue, 28th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10022 | |
City Area Code | 646 | |
Local Phone Number | 519-2456 | |
Title of 12(b) Security | Class A common stock, par value$0.01 per share | |
Trading Symbol | FOCS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001651052 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A common stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 66,018,464 | |
Class B common stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 12,540,262 |
Unaudited condensed consolidate
Unaudited condensed consolidated balance sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 137,040 | $ 139,973 |
Accounts receivable less allowances of $3,862 at 2022 and $4,349 at 2023 | 236,790 | 217,219 |
Prepaid expenses and other assets | 206,983 | 151,356 |
Fixed assets-net | 56,796 | 54,748 |
Operating lease assets | 269,592 | 258,697 |
Debt financing costs-net | 6,818 | 7,590 |
Deferred tax assets-net | 238,677 | 230,130 |
Goodwill | 2,310,675 | 2,167,917 |
Other intangible assets-net | 1,757,799 | 1,639,124 |
TOTAL ASSETS | 5,221,170 | 4,866,754 |
LIABILITIES | ||
Accounts payable | 13,605 | 12,213 |
Accrued expenses | 97,443 | 80,679 |
Deferred revenue | 9,826 | 10,726 |
Contingent consideration and other liabilities | 523,568 | 335,033 |
Deferred tax liabilities | 46,587 | 29,579 |
Operating lease liabilities | 302,861 | 288,895 |
Borrowings under credit facilities (stated value of $2,563,970 and $2,650,818 at December 31, 2022 and June 30, 2023, respectively) | 2,600,437 | 2,510,749 |
Tax receivable agreements obligations | 215,013 | 224,611 |
TOTAL LIABILITIES | 3,850,339 | 3,563,459 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
EQUITY | ||
Additional paid-in capital | 913,612 | 918,044 |
Retained earnings | 148,324 | 116,779 |
Accumulated other comprehensive income | 18,606 | 18,318 |
Total shareholders' equity | 1,081,327 | 1,053,918 |
Non-controlling interest | 289,504 | 249,377 |
Total equity | 1,370,831 | 1,303,295 |
TOTAL LIABILITIES AND EQUITY | 5,221,170 | 4,866,754 |
Related Party | ||
LIABILITIES | ||
Due to affiliates | 40,999 | 70,974 |
Class A common stock | ||
EQUITY | ||
Common stock | 660 | 659 |
Class B common stock | ||
EQUITY | ||
Common stock | $ 125 | $ 118 |
Unaudited condensed consolida_2
Unaudited condensed consolidated balance sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Accounts receivable, allowances | $ 4,349 | $ 3,862 |
Borrowings under credit facilities, stated value | $ 2,650,818 | $ 2,563,970 |
Class A common stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 500,000,000 | 500,000,000 |
Common stock, issued shares | 66,015,587 | 65,929,644 |
Common stock, outstanding shares | 66,015,587 | 65,929,644 |
Class B common stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 500,000,000 | 500,000,000 |
Common stock, issued shares | 12,540,262 | 11,827,321 |
Common stock, outstanding shares | 12,540,262 | 11,827,321 |
Unaudited condensed consolida_3
Unaudited condensed consolidated statements of operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
REVENUES: | ||||
Total revenues | $ 583,805 | $ 539,211 | $ 1,141,312 | $ 1,075,778 |
OPERATING EXPENSES: | ||||
Compensation and related expenses | 208,532 | 178,131 | 414,948 | 359,931 |
Management fees | 139,035 | 136,802 | 263,629 | 274,641 |
Selling, general and administrative | 114,991 | 94,771 | 227,807 | 183,421 |
Intangible amortization | 74,623 | 64,649 | 146,409 | 124,925 |
Non-cash changes in fair value of estimated contingent consideration | 6,076 | (42,757) | 22,564 | (51,742) |
Depreciation and other amortization | 4,053 | 3,805 | 8,020 | 7,438 |
Total operating expenses | 547,310 | 435,401 | 1,083,377 | 898,614 |
INCOME FROM OPERATIONS | 36,495 | 103,810 | 57,935 | 177,164 |
OTHER INCOME (EXPENSE): | ||||
Interest income | 639 | 17 | 1,103 | 20 |
Interest expense | (48,341) | (19,892) | (92,270) | (37,508) |
Amortization of debt financing costs | (1,115) | (949) | (2,220) | (2,050) |
Other expense-net | (229) | (1,451) | (2,954) | (1,487) |
Income from equity method investments | 354 | 11 | 529 | 106 |
Total other expense-net | (48,692) | (22,264) | (95,812) | (40,919) |
INCOME (LOSS) BEFORE INCOME TAX | (12,197) | 81,546 | (37,877) | 136,245 |
INCOME TAX EXPENSE (BENEFIT) | (41,279) | 32,228 | (59,982) | 47,845 |
NET INCOME | 29,082 | 49,318 | 22,105 | 88,400 |
Non-controlling interest | 3,095 | (16,235) | 9,440 | (26,215) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 32,177 | 33,083 | 31,545 | 62,185 |
Wealth management fees | ||||
REVENUES: | ||||
Total revenues | 555,574 | 517,421 | 1,089,463 | 1,032,600 |
Other | ||||
REVENUES: | ||||
Total revenues | $ 28,231 | $ 21,790 | $ 51,849 | $ 43,178 |
Class A common stock | ||||
Income (loss) per share of Class A common stock: | ||||
Basic (in dollars per share) | $ 0.49 | $ 0.51 | $ 0.48 | $ 0.95 |
Diluted (in dollars per share) | $ (0.10) | $ 0.50 | $ (0.32) | $ 0.95 |
Weighted average shares of Class A common stock outstanding: | ||||
Basic (in shares) | 65,999,323 | 65,389,642 | 65,969,827 | 65,360,667 |
Diluted (in shares) | 85,668,061 | 65,596,377 | 85,144,280 | 65,682,081 |
Unaudited condensed consolida_4
Unaudited condensed consolidated statements of comprehensive income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Unaudited condensed consolidated statements of comprehensive income | ||||
Net income | $ 29,082 | $ 49,318 | $ 22,105 | $ 88,400 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments | 3,729 | (11,175) | 3,290 | (7,425) |
Unrealized gain (loss) on interest rate swaps designated as cash flow hedges | 4,145 | 5,335 | (2,904) | 24,101 |
Comprehensive income | 36,956 | 43,478 | 22,491 | 105,076 |
Less: Comprehensive (income) loss attributable to non-controlling interest | 1,192 | (15,005) | 9,342 | (30,061) |
Comprehensive income attributable to common shareholders | $ 38,148 | $ 28,473 | $ 31,833 | $ 75,015 |
Unaudited condensed consolida_5
Unaudited condensed consolidated statements of cash flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 22,105 | $ 88,400 |
Adjustments to reconcile net income to net cash provided by operating activities-net of effect of acquisitions: | ||
Intangible amortization | 146,409 | 124,925 |
Depreciation and other amortization | 8,020 | 7,438 |
Amortization of debt financing costs | 2,220 | 2,050 |
Non-cash equity compensation expense | 15,599 | 14,210 |
Non-cash changes in fair value of estimated contingent consideration | 22,564 | (51,742) |
Income from equity method investments | (529) | (106) |
Distributions received from equity method investments | 681 | 776 |
Deferred taxes and other non-cash items | (7,249) | 29,576 |
Changes in cash resulting from changes in operating assets and liabilities: | ||
Accounts receivable | (16,985) | (9,398) |
Prepaid expenses and other assets | (60,847) | (9,776) |
Accounts payable | 818 | 4,778 |
Accrued expenses | 17,551 | 21,446 |
Due to affiliates | (30,000) | (51,962) |
Contingent consideration and other liabilities | (11,420) | (40,201) |
Deferred revenue | (2,116) | (1,122) |
Net cash used in operating activities | 106,821 | 129,292 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for acquisitions and contingent consideration-net of cash acquired | (140,265) | (252,056) |
Purchase of fixed assets | (9,468) | (6,429) |
Investment and other | (500) | (5,232) |
Net cash used in investing activities | (150,233) | (263,717) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under credit facilities | 98,500 | 100,000 |
Repayments of borrowings under credit facilities | (13,152) | (12,348) |
Payments in connection with tax receivable agreements | (9,598) | (3,856) |
Contingent consideration paid | (22,186) | (21,397) |
Payments of deferred cash consideration | (12,505) | |
Payments of debt financing costs | (1,111) | |
Proceeds from exercise of stock options | 3,067 | 422 |
Equity awards withholding | (704) | |
Distributions for unitholders | (3,172) | (15,956) |
Other | 375 | |
Net cash provided by financing activities | 40,250 | 46,129 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 229 | (1,339) |
CHANGE IN CASH AND CASH EQUIVALENTS | (2,933) | (89,635) |
CASH AND CASH EQUIVALENTS: | ||
Beginning of period | 139,973 | 310,684 |
End of period | $ 137,040 | $ 221,049 |
Unaudited condensed consolida_6
Unaudited condensed consolidated statements of changes in equity - USD ($) $ in Thousands | Total Shareholders' Equity | Common Stock Class A common stock | Common Stock Class B common stock | Additional Paid-In Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total |
Beginning balance at Dec. 31, 2021 | $ 870,544 | $ 653 | $ 114 | $ 841,753 | $ 24,995 | $ 3,029 | $ 246,864 | $ 1,117,408 |
Beginning balance (in shares) at Dec. 31, 2021 | 65,320,124 | 11,439,019 | ||||||
Increase (Decrease) in shareholders' equity | ||||||||
Net income | 62,185 | 62,185 | 26,215 | 88,400 | ||||
Issuance of common stock in connection with an acquisition and contingent consideration | 7 | $ 7 | 7 | |||||
Issuance of common stock in connection with an acquisition and contingent consideration (in shares) | 700,085 | |||||||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights | 4,123 | $ 1 | $ (1) | 4,123 | 4,123 | |||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights (in shares) | 105,000 | (105,000) | ||||||
Issuance of common stock in connection with exercise of Focus LLC incentive unit exchange rights | 87 | 87 | 87 | |||||
Issuance of common stock in connection with exercise of Focus LLC incentive unit exchange rights (in shares) | 1,956 | |||||||
Exercise of stock options | 422 | 422 | 422 | |||||
Exercise of stock options (in shares) | 15,309 | |||||||
Change in non-controlling interest allocation | 64,609 | 64,609 | (42,104) | 22,505 | ||||
Non-cash equity compensation expenses | 4,097 | 4,097 | 4,097 | |||||
Currency translation adjustment - net of tax | (5,908) | (5,908) | (1,517) | (7,425) | ||||
Unrealized gain (loss) on interest rate swaps designated as cash flow hedges-net of tax | 18,738 | 18,738 | 5,363 | 24,101 | ||||
Adjustments of deferred taxes, net of amounts payable under tax receivable agreements and changes from Focus LLC interest transactions | (4,869) | (4,869) | (4,869) | |||||
Ending balance at Jun. 30, 2022 | 1,014,035 | $ 654 | $ 120 | 910,222 | 87,180 | 15,859 | 234,821 | 1,248,856 |
Ending Balance (in shares) at Jun. 30, 2022 | 65,442,389 | 12,034,104 | ||||||
Beginning balance at Mar. 31, 2022 | 941,192 | $ 653 | $ 116 | 865,857 | 54,097 | 20,469 | 241,426 | 1,182,618 |
Beginning balance (in shares) at Mar. 31, 2022 | 65,362,389 | 11,601,814 | ||||||
Increase (Decrease) in shareholders' equity | ||||||||
Net income | 33,083 | 33,083 | 16,235 | 49,318 | ||||
Issuance of common stock in connection with an acquisition and contingent consideration | 5 | $ 5 | 5 | |||||
Issuance of common stock in connection with an acquisition and contingent consideration (in shares) | 512,290 | |||||||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights | 3,016 | $ 1 | $ (1) | 3,016 | 3,016 | |||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights (in shares) | 80,000 | (80,000) | ||||||
Change in non-controlling interest allocation | 40,862 | 40,862 | (21,610) | 19,252 | ||||
Non-cash equity compensation expenses | 2,105 | 2,105 | 2,105 | |||||
Currency translation adjustment - net of tax | (8,823) | (8,823) | (2,352) | (11,175) | ||||
Unrealized gain (loss) on interest rate swaps designated as cash flow hedges-net of tax | 4,213 | 4,213 | 1,122 | 5,335 | ||||
Adjustments of deferred taxes, net of amounts payable under tax receivable agreements and changes from Focus LLC interest transactions | (1,618) | (1,618) | (1,618) | |||||
Ending balance at Jun. 30, 2022 | 1,014,035 | $ 654 | $ 120 | 910,222 | 87,180 | 15,859 | 234,821 | 1,248,856 |
Ending Balance (in shares) at Jun. 30, 2022 | 65,442,389 | 12,034,104 | ||||||
Beginning balance at Dec. 31, 2022 | 1,053,918 | $ 659 | $ 118 | 918,044 | 116,779 | 18,318 | 249,377 | 1,303,295 |
Beginning balance (in shares) at Dec. 31, 2022 | 65,929,644 | 11,827,321 | ||||||
Increase (Decrease) in shareholders' equity | ||||||||
Net income | 31,545 | 31,545 | (9,440) | 22,105 | ||||
Issuance of common stock in connection with an acquisition and contingent consideration | 7 | $ 7 | 7 | |||||
Issuance of common stock in connection with an acquisition and contingent consideration (in shares) | 712,941 | |||||||
Exercise of stock options | 3,067 | $ 1 | 3,066 | 3,067 | ||||
Exercise of stock options (in shares) | 85,943 | |||||||
Change in non-controlling interest allocation | (6,387) | (6,387) | 49,469 | 43,082 | ||||
Non-cash equity compensation expenses | 4,987 | 4,987 | 4,987 | |||||
Currency translation adjustment - net of tax | 2,528 | 2,528 | 762 | 3,290 | ||||
Unrealized gain (loss) on interest rate swaps designated as cash flow hedges-net of tax | (2,240) | (2,240) | (664) | (2,904) | ||||
Adjustments of deferred taxes, net of amounts payable under tax receivable agreements and changes from Focus LLC interest transactions | (6,098) | (6,098) | (6,098) | |||||
Ending balance at Jun. 30, 2023 | 1,081,327 | $ 660 | $ 125 | 913,612 | 148,324 | 18,606 | 289,504 | 1,370,831 |
Ending Balance (in shares) at Jun. 30, 2023 | 66,015,587 | 12,540,262 | ||||||
Beginning balance at Mar. 31, 2023 | 1,037,158 | $ 660 | $ 125 | 907,591 | 116,147 | 12,635 | 289,612 | 1,326,770 |
Beginning balance (in shares) at Mar. 31, 2023 | 65,960,079 | 12,540,262 | ||||||
Increase (Decrease) in shareholders' equity | ||||||||
Net income | 32,177 | 32,177 | (3,095) | 29,082 | ||||
Exercise of stock options | 2,062 | 2,062 | 2,062 | |||||
Exercise of stock options (in shares) | 55,508 | |||||||
Change in non-controlling interest allocation | 2,551 | 2,551 | 1,084 | 3,635 | ||||
Non-cash equity compensation expenses | 2,442 | 2,442 | 2,442 | |||||
Currency translation adjustment - net of tax | 2,827 | 2,827 | 902 | 3,729 | ||||
Unrealized gain (loss) on interest rate swaps designated as cash flow hedges-net of tax | 3,144 | 3,144 | 1,001 | 4,145 | ||||
Adjustments of deferred taxes, net of amounts payable under tax receivable agreements and changes from Focus LLC interest transactions | (1,034) | (1,034) | (1,034) | |||||
Ending balance at Jun. 30, 2023 | $ 1,081,327 | $ 660 | $ 125 | $ 913,612 | $ 148,324 | $ 18,606 | $ 289,504 | $ 1,370,831 |
Ending Balance (in shares) at Jun. 30, 2023 | 66,015,587 | 12,540,262 |
GENERAL
GENERAL | 6 Months Ended |
Jun. 30, 2023 | |
GENERAL | |
GENERAL | 1. GENERAL Organization and Business Focus LLC is a Delaware limited liability company that was formed in November 2004. Focus LLC’s subsidiaries commenced revenue-generating and acquisition activities in January 2006. Focus LLC’s activities are governed by its Fourth Amended and Restated Operating Agreement (the “Operating Agreement”). Focus LLC is in the business of acquiring and overseeing independent fiduciary wealth management and related businesses. The unaudited condensed consolidated financial statements reflect the results of operations and financial position of Focus Inc. and its subsidiaries (the “Company”). Recent Developments - Agreement and Plan of Merger & Rice, LLC (“CD&R”) and Stone Point Capital LLC (“Stone Point”) and certain other entities affiliated with Parent, pursuant to which Focus Inc. is to be acquired by affiliates of CD&R in an all-cash transaction (the “Merger”). Affiliates of Stone Point will retain a portion of their investment in Focus Inc. and provide new equity financing as part of the Merger. Subject to the terms and conditions of the Merger Agreement, each share of the Company’s Class A common stock will receive in cash per share and each share of the Company’s Class B common stock will be cancelled. If the Merger is consummated, the Company will cease to be publicly-traded. A special committee (the “Special Committee”) of the board of directors of the Company (the “Board”), comprised solely of disinterested and independent members of the Board, unanimously recommended that the Board approve the Merger Agreement and the transactions contemplated thereby and recommend that the shareholders of the Company vote in favor of adoption of the Merger Agreement. The Board, acting on the Special Committee’s recommendation, unanimously approved the Merger Agreement and the transactions contemplated thereby and recommended that the shareholders of the Company vote to adopt and approve the Merger Agreement. At a Special Meeting held on July 14, 2023, the shareholders of the Company, including a majority in voting power of the outstanding shares of common stock held by Unaffiliated Stockholders (as defined in the Merger Agreement), adopted and approved the Merger Agreement. Completion of the Merger is subject to other customary closing conditions. The Merger is expected to close in the third quarter of 2023. However, the Company cannot assure completion of the Merger by any particular date, if at all or that, if completed, it will be completed on the terms set forth in the Merger Agreement. Merger-related expenses, which are included in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations, were $6,733 and $17,484 for the three and six months ended June 30, 2023, respectively. |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF ACCOUNTING POLICIES | |
SUMMARY OF ACCOUNTING POLICIES | 2. SUMMARY OF ACCOUNTING POLICIES Basis of Presentation required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation have been included. The unaudited condensed consolidated financial statements include the accounts of Focus Inc. and its majority and wholly owned subsidiaries. Focus Inc. consolidates Focus LLC and its subsidiaries’ financial statements and records the interests in Focus LLC consisting of common units, restricted common units and the common unit equivalent of incentive units of Focus LLC that Focus Inc. does not own as non-controlling interests (see Note 3). Intercompany transactions and balances have been eliminated in consolidation. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K as filed with the SEC on February 16, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. Use of Estimates Revenue The Company disaggregates revenue by wealth management fees and other. The Company does not allocate revenue by the type of service provided in connection with providing holistic wealth management client services. The Company generally manages its business based on the operating results of the enterprise taken as a whole, not by geographic region. The following table disaggregates the revenues based on the location of the partner firm legal entities that generate the revenues and therefore may not be reflective of the geography in which clients are located. Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Domestic revenue $ 510,374 $ 541,389 $ 1,017,685 $ 1,062,414 International revenue 28,837 42,416 58,093 78,898 Total revenue $ 539,211 $ 583,805 $ 1,075,778 $ 1,141,312 International revenue consists of revenue generated by partner firm legal entities in Australia, Canada, Switzerland, the United Kingdom and in other non-US jurisdictions. Recent Accounting Pronouncements We do not expect that any recently issued accounting pronouncements will have a significant effect on our consolidated financial statements. |
NON-CONTROLLING INTEREST AND IN
NON-CONTROLLING INTEREST AND INCOME (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
NON-CONTROLLING INTEREST AND INCOME (LOSS) PER SHARE | |
NON-CONTROLLING INTERESTS AND INCOME (LOSS) PER SHARE | 3. NON-CONTROLLING INTEREST AND INCOME (LOSS) PER SHARE The calculation of controlling and non-controlling interest is as follows as of June 30, 2022 and 2023: 2022 2023 Focus LLC common units 12,034,104 12,540,262 Focus LLC restricted common units 193,625 294,875 Common unit equivalents of outstanding vested and unvested Focus LLC incentive units(1) 4,347,399 8,172,603 Total common units, restricted common units and common unit equivalents attributable to non-controlling interest 16,575,128 21,007,740 Total common units, restricted common units and common unit equivalents of incentive units outstanding 82,017,517 87,023,327 Non-controlling interest allocation 20.2 % 24.1 % Company’s interest in Focus LLC 79.8 % 75.9 % (1) Focus LLC common units issuable upon conversion of 16,202,274 and 16,559,179 (see Note 9) vested and unvested Focus LLC incentive units outstanding as of June 30, 2022 and 2023, respectively, was calculated using the common unit equivalent of vested and unvested Focus LLC incentive units based on the closing price of the Company’s Class A common stock on the last trading day of the periods. Basic income per share is calculated utilizing net income attributable to common shareholders divided by the weighted average number of shares of Class A common stock outstanding during the same periods. The calculation of basic income per share is as follows: Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Net income attributable to common shareholders $ 33,083 $ 32,177 $ 62,185 $ 31,545 Weighted average shares of Class A common stock outstanding 65,389,642 65,999,323 65,360,667 65,969,827 Basic income per share $ 0.51 $ 0.49 $ 0.95 $ 0.48 Diluted income (loss) per share is calculated utilizing net income (loss) attributable to common shareholders divided by the weighted average number of shares of Class A common stock outstanding during the same periods plus the effect, if any, of the potentially dilutive shares of the Company’s Class A common stock from stock options, restricted stock units and Focus LLC common units, including contingently issuable Focus LLC common units, if any, restricted common units and incentive units as calculated using the treasury stock method: Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Net income attributable to common shareholders $ 33,083 $ 32,177 $ 62,185 $ 31,545 Add: Dilutive effect of non-controlling interests related to Focus LLC common, restricted common and incentive units — (41,080) — (59,195) Total 33,083 (8,903) 62,185 (27,650) Weighted average shares of Class A common stock outstanding 65,389,642 65,999,323 65,360,667 65,969,827 Effect of dilutive stock options 190,235 442,604 298,647 418,072 Effect of dilutive restricted stock units 16,500 73,547 22,767 61,775 Effect of dilutive non-controlling interests related to Focus LLC common, restricted common and incentive units — 19,152,587 — 18,694,606 Total 65,596,377 85,668,061 65,682,081 85,144,280 Diluted income (loss) per share $ 0.50 $ (0.10) $ 0.95 $ (0.32) Diluted income (loss) per share for the three and six months ended June 30, 2022 and 2023 excludes shares related to market-based stock options and Focus LLC incentive units, as modified, that vest on the sixth anniversary of the pricing of the Company’s initial public offering (“IPO”) with vesting based on the highest volume weighted average per share price for any ninety-calendar day period (“90-day VWAP”) prior to the anniversary, with 0% vesting if the highest 90-day VWAP is $80.00 or less and 100% vesting if the highest 90-day VWAP is $110.00 or more, with linear interpolation in between (see Note 9). These market-based stock options and Focus LLC incentive units will also vest upon a change of control linearly based on the share price used in the transaction with 100% vesting if the price used is $110.00 or more, 0% vesting if the price used is equal to or less than $33.00, and linear interpolation in between, except as governed by the employment agreements entered into with the Company’s executive officers. Such market-based criteria and other criteria were not met at June 30, 2022 and 2023. Focus LLC common, restricted common and incentive units may be exchanged for Class A common stock, subject to certain limitations (see Note 9). In computing the dilutive effect, if any, that the exchange would have on net income (loss) per share, net income (loss) attributable to Class A common shareholders would be adjusted due to the elimination of the non-controlling interests (including any associated tax impact). For the three and six months ended June 30, 2022, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jun. 30, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | 4. ACQUISITIONS Business Acquisitions Business acquisitions are accounted for in accordance with FASB Accounting Standards Codification (“ASC”) Topic 805: Business Combinations The Company has incorporated contingent consideration, or earn out provisions, into the structure of its acquisitions. The Company recognizes the fair value of estimated contingent consideration at the acquisition date as part of the consideration transferred in the exchange. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. The purchase price associated with business acquisitions and the allocation thereof during the six months ended June 30, 2023 is as follows: 2023 Number of business acquisitions closed 16 Consideration: Cash due at closing $ 134,601 Cash due subsequent to closing at net present value and working capital adjustment 3,450 Fair market value of Focus LLC common units issued at closing 36,973 Fair market value of estimated contingent consideration 212,624 Total consideration $ 387,648 Allocation of purchase price: Total tangible assets $ 13,801 Total liabilities assumed (24,343) Customer relationships 117,708 Management contracts 10,617 Investment management agreements 121,000 Goodwill 140,042 Other acquired intangibles 8,823 Total allocated consideration $ 387,648 Management believes approximately $133,679 of tax goodwill and intangibles related to business acquisitions completed during the six months ended June 30, 2023 will be deductible for tax purposes over a 15 year period. Additional tax goodwill may be deductible when estimated contingent consideration is earned and paid. The accompanying unaudited condensed consolidated statement of operations for the six months ended June 30, 2023 includes revenue and income from operations for two business acquisitions, that are new subsidiary partner firms from the acquisition dates, of $6,165 and $1,092, respectively. The weighted-average useful lives of intangible assets acquired during the six months ended June 30, 2023 are as follows: Number of years Customer relationships 8 Management contracts 7 Investment management agreements 12 Other acquired intangibles 10 Weighted-average useful life of all intangibles acquired 10 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 5. GOODWILL AND OTHER INTANGIBLE ASSETS The following table summarizes the change in the goodwill balances for the year ended December 31, 2022 and the six months ended June 30, 2023: December 31, June 30, 2022 2023 Balance beginning of period: Goodwill $ 1,947,939 $ 2,190,541 Cumulative impairment losses (22,624) (22,624) 1,925,315 2,167,917 Goodwill acquired 249,677 140,042 Other (7,075) 2,716 242,602 142,758 Balance end of period: Goodwill 2,190,541 2,333,299 Cumulative impairment losses (22,624) (22,624) $ 2,167,917 $ 2,310,675 The following table summarizes the identifiable intangible assets at December 31, 2022: Gross Carry Accumulated Net Book Amount Amortization Value Customer relationships $ 2,530,062 $ (1,029,197) $ 1,500,865 Management contracts 202,479 (70,624) 131,855 Other acquired intangibles 13,416 (7,012) 6,404 Total $ 2,745,957 $ (1,106,833) $ 1,639,124 The following table summarizes the identifiable intangible assets at June 30, 2023: Gross Carry Accumulated Net Book Amount Amortization Value Customer relationships $ 2,654,625 $ (1,163,597) $ 1,491,028 Management contracts 213,320 (78,394) 134,926 Investment management agreements 121,000 (3,405) 117,595 Other acquired intangibles 22,709 (8,459) 14,250 Total $ 3,011,654 $ (1,253,855) $ 1,757,799 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 6. FAIR VALUE MEASUREMENTS ASC Topic 820, Fair Value Measurement The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows: Level 1 Level 2 Level 3 First Lien Term Loans The implied fair value of the Company’s First Lien Term Loans (as defined below) based on Level 2 inputs at December 31, 2022 and June 30, 2023 are as follows: December 31, 2022 June 30, 2023 Stated Fair Stated Fair Value Value Value Value First Lien Term Loan B - Tranche A $ 1,755,600 $ 1,735,850 $ 1,746,800 $ 1,733,699 First Lien Term Loan B - Tranche B 788,370 772,603 784,368 774,564 Derivatives At December 31, 2022 and June 30, 2023, the aggregate fair value of the Company’s $850,000 notional amount Secured Overnight Financing Rate (“SOFR”) Interest Rate Swap Agreements (“SOFR Swaps”) and aggregate fair value of the Company’s $500,000 notional amount SOFR Forward Swaps (“SOFR Forward Swaps”) was $44,219 and $40,072, respectively, which is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets (See Note 8). The fair value was based on Level 2 inputs which included the relevant interest rate forward curves. Business acquisitions For business acquisitions, the Company recognizes the fair value of goodwill and other acquired intangible assets, and estimated contingent consideration at the acquisition date as part of purchase price. This fair value measurement is based on unobservable (Level 3) inputs. At December 31, 2022 and June 30, 2023, deferred cash consideration in connection with business acquisitions of $122,079 and $114,500 , respectively, are included in contingent consideration and other liabilities in the accompanying unaudited condensed consolidated balance sheets at present value. At June 30, 2023, amounts due are as follows: in 2029. The following table represents changes in the fair value of estimated contingent consideration for business acquisitions for the year ended December 31, 2022 and the six months ended June 30, 2023: Balance at January 1, 2022 $ 350,027 Additions to estimated contingent consideration 56,604 Assumed estimated contingent consideration obligation 12,637 Payments of contingent consideration (148,638) Non-cash changes in fair value of estimated contingent consideration (64,747) Other (1,575) Balance at December 31, 2022 $ 204,308 Additions to estimated contingent consideration 212,624 Payments of contingent consideration (35,143) Non-cash changes in fair value of estimated contingent consideration 22,564 Other 2,627 Balance at June 30, 2023 $ 406,980 Estimated contingent consideration is included in contingent consideration and other liabilities in the accompanying unaudited condensed consolidated balance sheets. During the year ended December 31, 2022, the Company paid $138,940 in cash and issued $9,698 in Focus LLC common units as contingent consideration associated with business acquisitions. During the six months ended June 30, 2023, the Company paid $35,143 in cash contingent consideration associated with business acquisitions. During the six months ended June 30, 2022 and 2023, the Company paid cash of $4,827 and $8,963 , respectively, as contingent consideration associated with asset acquisitions. These amounts are included in cash paid for acquisitions and contingent consideration—net of cash acquired in investing activities in the unaudited condensed consolidated statement of cash flows. In determining fair value of the estimated contingent consideration, the acquired business’ future performance is estimated using financial projections for the acquired business. These financial projections, as well as alternative scenarios of financial performance, are measured against the performance targets specified in each respective acquisition agreement. In addition, discount rates are established based on the cost of debt and the cost of equity. The Company uses the Monte Carlo Simulation Model to determine the fair value of the Company’s estimated contingent consideration. The significant unobservable inputs used in the fair value measurement of the Company’s estimated contingent consideration are the forecasted growth rates over the measurement period and discount rates. Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement. Inputs used in the fair value measurement of estimated contingent consideration at December 31, 2022 and June 30, 2023 are summarized below: Quantitative Information About Level 3 Fair Value Measurements Fair Value at Valuation Unobservable December 31, 2022 Techniques Inputs Ranges $ 204,308 Monte Carlo Simulation Model Forecasted growth rates (7.8)% - 32.4 % Discount rates 13.0% - 19.0 % Quantitative Information About Level 3 Fair Value Measurements Fair Value at Valuation Unobservable June 30, 2023 Techniques Inputs Ranges $ 406,980 Monte Carlo Simulation Model Forecasted growth rates (27.7)% - 38.9 % Discount rates 9.3% - 20.0 % |
CREDIT FACILITY
CREDIT FACILITY | 6 Months Ended |
Jun. 30, 2023 | |
CREDIT FACILITY. | |
CREDIT FACILITY | 7. CREDIT FACILITY As of June 30, 2023, Focus LLC’s credit facility (the “Credit Facility”) comprised of a $2,531,168 first lien term loan B (the “First Lien Term Loan B”), consisting of a $1,746,800 tranche A (“First Lien Term Loan B - Tranche A”) and $784,368 tranche B (“First Lien Term Loan B - Tranche B”), a $240,000 delayed draw first lien term loan A (the “First Lien Term Loan A”) and a $650,000 first lien revolving credit facility (the “First Lien Revolver”). The First Lien Term Loan B - Tranche A bears interest (at Focus LLC’s option) at: (i) SOFR plus a margin of 3.25% with a 0.50% SOFR floor or (ii) the lender’s Base Rate (as defined in the Credit Facility) plus a margin of 2.25%. The First Lien Term Loan B - Tranche A requires quarterly installment repayments of $4,400 and has a maturity date of June 2028. The debt was issued at a discount of 1.75% or $30,800 which is being amortized to interest expense over the term of the First Lien Term Loan B - Tranche A. The First Lien Term Loan B - Tranche B bears interest (at Focus LLC’s option) at: (i) SOFR plus a margin of 2.50% with a 0.50% SOFR floor or (ii) the lender’s Base Rate plus a margin of 1.50%. The First Lien Term Loan B - Tranche B requires quarterly installment repayments of $2,001 and has a maturity date of June 2028. The First Lien Term Loan A bears interest (at Focus LLC’s option) at: (i) SOFR plus a margin of 2.50% with a 0.50% SOFR floor or (ii) the lender’s Base Rate plus a margin of 1.50% . The First Lien Term Loan A has a nine month delayed draw feature, which expires on August 28, 2023. The delayed draw feature has a ticking fee with respect to the undrawn commitments with (i) of the interest rate margin for the First Lien Term Loan A after 121 days of the Closing Date. The First Lien Term Loan A, when drawn, will be issued at a discount of which will be amortized to interest expense over the remaining term from the date that it is drawn. When drawn, the First Lien Term Loan A will require quarterly installment repayments equal to 2025 . The First Lien Term Loan A has a maturity date of November 2027. The First Lien Revolver bears interest (at Focus LLC’s option) at SOFR plus a margin of 2.25% with step downs to 2.00% and 1.75% or the lender’s Base Rate plus a margin of 1.25% with step downs to 1.00% and 0.75%, based on achievement of a specified First Lien Leverage Ratio. The First Lien Revolver unused commitment fee is 0.50% with step downs to 0.375% and 0.25% based on achievement of a specified First Lien Leverage Ratio. Up to $30,000 of the First Lien Revolver is available for the issuance of letters of credit, subject to certain limitations. The First Lien Revolver has a maturity date of November 2027. Focus LLC’s obligations under the Credit Facility are collateralized by the majority of Focus LLC’s assets. The Credit Facility contains various customary covenants, including, but not limited to: (i) incurring additional indebtedness or guarantees, (ii) creating liens or other encumbrances on property or granting negative pledges, (iii) entering into a merger or similar transaction, (iv) selling or transferring certain property and (v) declaring dividends or making other restricted payments. Focus LLC is required to maintain a First Lien Leverage Ratio (as defined in the Credit Facility) of not more than 6.25:1.00 as of the last day of each fiscal quarter. At June 30, 2023, Focus LLC’s First Lien Leverage Ratio was 4.36:1.00, which satisfied the maximum ratio of 6.25:1.00. First Lien Leverage Ratio means the ratio of amounts outstanding under the First Lien Term Loan and First Lien Revolver plus other outstanding debt obligations secured by a lien on the assets of Focus LLC (excluding letters of credit other than unpaid drawings thereunder) minus unrestricted cash and cash equivalents to Consolidated EBITDA (as defined in the Credit Facility). Consolidated EBITDA for purposes of the Credit Facility was $576,871 at June 30, 2023. Focus LLC is also subject on an annual basis to contingent principal payments based on an excess cash flow calculation (as defined in the Credit Facility) for any fiscal year if the First Lien Leverage Ratio exceeds 3.75:1.00. No contingent principal payments were required to be made in 2022. Based on the excess cash flow calculation for the year ended December 31, 2022, no contingent principal payments are required to be made in 2023. The Company defers and amortizes its debt financing costs and unamortized discount over the respective terms of the borrowings. The debt financing costs related to the First Lien Term Loan B and First Lien Term Loan A are recorded as a reduction of the carrying amounts of the respective borrowings in the unaudited condensed consolidated balance sheets. The debt financing costs related to the First Lien Revolver are recorded in debt financing costs-net in the unaudited condensed consolidated balance sheets. The following is a reconciliation of principal amounts outstanding under the Credit Facility to borrowings under the Credit Facility recorded in the unaudited condensed consolidated balance sheets at December 31, 2022 and June 30, 2023: December 31, June 30, 2022 2023 First Lien Term Loan B - Tranche A $ 1,755,600 $ 1,746,800 First Lien Term Loan B - Tranche B 788,370 784,368 First Lien Term Loan A 20,000 119,650 First Lien Revolver — — Unamortized debt financing costs (17,750) (16,302) Unamortized discount (35,471) (34,079) Total $ 2,510,749 $ 2,600,437 At December 31, 2022 and June 30, 2023, unamortized debt financing costs associated with the First Lien Revolver of $7,590 and $6,818, respectively, were recorded in debt financing costs-net in the unaudited condensed consolidated balance sheets. Weighted-average interest rates for outstanding borrowings were approximately 4% for the year ended December 31, 2022 and 7% for the six months ended June 30, 2023. As of December 31, 2022 and June 30, 2023, the First Lien Revolver available unused commitment line was $639,997 and $640,306, respectively. As of December 31, 2022 and June 30, 2023, Focus LLC was contingently obligated for letters of credit in the amount of $10,003 and $9,694, respectively, each bearing interest at an annual rate of approximately 2%. |
DERIVATIVES
DERIVATIVES | 6 Months Ended |
Jun. 30, 2023 | |
DERIVATIVES | |
DERIVATIVES | 8. DERIVATIVES At June 30, 2023, the Company had three floating to fixed SOFR Swaps with notional amounts of $400,000, $250,000 and $200,000, the terms of which provide that the Company pay interest to the counterparty each month at a rate of 0.619%, 0.447% and 0.440%, respectively, and receive interest from each of the counterparties each month at the 1 month USD Term SOFR rate, subject to a 0.50% floor. The SOFR Swaps effectively fix the variable interest rate applicable to the first $850,000 of the Company’s variable interest rate borrowings outstanding. The SOFR Swaps expire in March 2024 and April 2024. At June 30, 2023, the Company also had two forward starting floating to fixed swaps with notional amounts of $250,000 and $250,000 that commence in April 2024, based on the contracts executed in April 2023. The terms of these SOFR Forward Swaps provide that the Company pay interest to the counterparty each month at a rate of of the Company’s variable interest rate borrowings outstanding. The term for the SOFR Forward Swaps is The Company designated its swaps as cash flow hedges of the Company’s exposure to the variability of the payment of interest on this portion of its borrowings. At December 31, 2022 and June 30, 2023, the aggregate fair value of the SOFR Swaps and SOFR Forward Swaps was $44,219 and $40,072, respectively, which is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets. The SOFR Swaps and SOFR Forward Swaps continue to be effective hedges, and as such, the offsetting adjustment to the fair value is recorded in accumulated other comprehensive income, net of tax of $9,458 and $8,215 at December 31, 2022 and June 30, 2023, respectively. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
EQUITY | |
EQUITY | 9. EQUITY Exchange rights Each Focus LLC common unit, together with a corresponding share of Focus Inc.’s Class B common stock, and Focus LLC incentive unit (after conversion into a number of Focus LLC common units taking into account the then-current value of the common units and such incentive unit’s aggregate hurdle amount) is exchangeable, pursuant to the terms and subject to the conditions set forth in the Operating Agreement, for one share of Focus Inc.’s Class A common stock, or, if either Focus Inc. or Focus LLC so elects, cash. Other In March 2023, Focus LLC issued 712,941 common units and Focus Inc. issued a corresponding number of shares of Class B common stock in connection with an acquisition. Stock Options and Restricted Stock Units The following table provides information relating to the changes in the Company’s stock options during the six months ended June 30, 2023: Weighted Average Stock Exercise Options Price Outstanding—January 1, 2023 2,461,317 $ 39.24 Exercised (85,943) 35.69 Forfeited (16,559) 51.20 Outstanding—June 30, 2023 2,358,815 39.28 Vested—June 30, 2023 1,188,758 34.69 The Company uses the Black-Scholes option-pricing model to determine the fair value of time-based stock options. The determination of the fair value using the Black-Scholes option-pricing model is affected by the price of Focus Inc.’s Class A common stock, as well as by assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected unit price volatility over the term of the stock option, expected term, risk-free interest rates and expected dividend yield. The following table provides information relating to the changes in the Company’s restricted stock units during the six months ended June 30, 2023: Weighted Restricted Average Stock Grant Date Units Fair Value Outstanding—January 1, 2023 252,719 $ 43.02 Forfeited (4,747) 43.88 Outstanding—June 30, 2023 247,972 43.00 In connection with the IPO, the Company granted market-based stock options to purchase an aggregate of 155,000 shares of Class A common stock that would have vested on the fifth anniversary of the IPO if the 90-day VWAP within such five year period immediately following the IPO reaches at least $100.00. In March 2022, these stock options were modified whereby the stock options will vest in July 2024, the sixth anniversary of the pricing of the Company’s IPO, with vesting based on the highest 90-day VWAP prior to the anniversary, with 0% vesting if the highest 90-day VWAP is $80.00 or less and 100% vesting if the highest 90-day VWAP is $110.00 or more, with linear interpolation in between. The vested stock options can only be exercised in accordance with the following schedule: (i) a total of The Company recognized $2,105 and $4,097 of non-cash equity compensation expense in relation to stock options and restricted stock units during the three and six months ended June 30, 2022, respectively. The Company recognized Focus LLC Restricted Common Units and Focus LLC Incentive Units The following table provides information relating to the changes in Focus LLC restricted common units during the six months ended June 30, 2023: Weighted Restricted Average Common Grant Date Units Fair Value Outstanding—January 1, 2023 296,548 $ 45.78 Forfeited (1,673) 49.20 Outstanding—June 30, 2023 294,875 45.76 The following table provides information relating to the changes in Focus LLC incentive units during the six months ended June 30, 2023: Weighted Average Incentive Hurdle Units Price Outstanding—January 1, 2023 16,602,886 $ 26.86 Forfeited (43,707) 35.64 Outstanding—June 30, 2023 16,559,179 26.83 Vested—June 30, 2023 11,041,925 22.19 The Company uses the Black-Scholes option-pricing model to determine the fair value of time-based incentive units. The determination of the fair value using the Black-Scholes option-pricing model is affected by the Company’s estimated common unit price, as well as by assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected unit price volatility over the term of the incentive unit, expected term, risk-free interest rates and expected dividend yield. Incentive units outstanding and vested at June 30, 2023 were as follows: Number Vested Incentive Hurdle Rates Outstanding Units $1.42 421 421 5.50 798 798 6.00 386 386 7.00 1,081 1,081 9.00 708,107 708,107 11.00 813,001 813,001 12.00 513,043 513,043 13.00 540,000 540,000 14.00 10,098 10,098 16.00 45,191 45,191 17.00 20,000 20,000 19.00 527,928 527,928 21.00 3,017,692 3,017,692 22.00 796,417 796,417 23.00 524,828 524,828 26.26 12,500 6,250 27.00 12,484 12,484 27.90 1,885,166 1,395,592 28.50 1,424,225 1,424,225 30.48 30,000 20,000 33.00 3,587,500 7,500 36.64 30,000 30,000 37.59 506,745 — 43.07 60,000 20,000 43.50 30,000 30,000 44.71 803,165 406,279 58.50 658,403 170,604 16,559,179 11,041,925 In connection with the IPO, Focus LLC granted 3,845,000 market-based incentive units with a hurdle rate of $33.00 that would have vested on the fifth anniversary of the IPO if the 90-day VWAP within such five year period immediately following the IPO reaches at least $100.00. In March 2022, these incentive units were modified whereby the incentive units will vest in July 2024, the sixth anniversary of the pricing of the Company’s IPO, with vesting based on the highest 90-day VWAP prior to the anniversary, with 0% vesting if the highest 90-day VWAP is $80.00 or less and 100% vesting if the highest 90-day VWAP is $110.00 or more, with linear interpolation in between. The vested incentive units can only be exchanged for Class A common stock in accordance with the following schedule: (i) a total of from the modification date through July 2024, the sixth anniversary of the IPO. These market-based incentive units will also vest upon a change of control linearly based on the share price used in the transaction with interpolation in between, except as governed by the employment agreements entered into with the Company’s executive officers. The Company recorded $5,398 and $10,113 in total non-cash equity compensation expense for incentive units and restricted common units during the three and six months ended June 30, 2022, respectively. The Company recorded $5,247 and $10,612 in total non-cash equity compensation expense for incentive units and restricted common units during the three and six months ended June 30, 2023, respectively. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES The effective tax rate for the six months ended June 30, 2023 was 158.4% as compared to 29.8% for the year ended December 31, 2022. Income tax benefit for the six months ended June 30, 2023 includes a discrete tax benefit of approximately $3,598 attributable to certain significant unusual or infrequent items excluded from the computation of the estimated annual effective tax rate. Income tax benefit for the six months ended June 30, 2023 is primarily related to federal, state and local income taxes imposed on the Company’s allocable portion of taxable income from Focus LLC and reflects an estimated valuation allowance for deferred tax assets relating to business interest carryforwards. The allocable portion of taxable income primarily differs from the net income attributable to the Company due to permanent differences such as non-deductible equity-based compensation expense of Focus LLC. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Due to the uncertainty regarding the Company’s ability to utilize certain deferred tax assets in the future, the Company included a valuation allowance in its estimated annual effective tax rate at June 30, 2023 against certain of its deferred tax assets, which more than likely will not be realized. During the six months ended June 30, 2023, there were no changes to the Company’s uncertain tax positions. |
TAX RECEIVABLE AGREEMENTS
TAX RECEIVABLE AGREEMENTS | 6 Months Ended |
Jun. 30, 2023 | |
TAX RECEIVABLE AGREEMENTS | |
TAX RECEIVABLE AGREEMENTS | 11. TAX RECEIVABLE AGREEMENTS In connection with the IPO and the reorganization transactions that occurred in connection with the IPO, Focus Inc. entered into two tax receivable agreements: one with certain entities affiliated with the private equity investors of Focus LLC and the other with certain other continuing and former owners of Focus LLC. In March 2020, Focus Inc. entered into an additional tax receivable agreement (the three agreements, collectively, the “Tax Receivable Agreements”) for tax receivable agreement holders that join Focus LLC as members after the closing of the IPO (the parties to the Tax Receivable Agreements, collectively, the “TRA Holders”). New Focus LLC owners in the future may also become party to this additional Tax Receivable Agreement. The Tax Receivable Agreements generally provide for the payment by Focus Inc. to each TRA holder of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax that Focus Inc. actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in connection with the reorganization transactions that occurred in connection with the IPO and in periods after the IPO or after entering into the Tax Receivable Agreements, as applicable, as a result of certain increases in tax bases and certain tax benefits attributable to imputed interest. Focus Inc. will retain the benefit of the remaining 15% of these cash savings. As of June 30, 2023, the Company had recorded a liability of $215,013 relating to the TRA obligations. Future payments under the Tax Receivable Agreements in respect of future exchanges of Focus LLC units for shares of Class A common stock will be in addition to the amount recorded. During the six months ended June 30, 2023, payments totaling $9,598 were made under the Tax Receivable Agreements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Credit Risk In addition, the Company has the right to pursue collection or performance from the counterparties who do not perform under their contractual obligations. The Company monitors the credit standing of the clearing brokers and counterparties with which they conduct business. The Company is exposed to credit risk for accounts receivable from clients. Such credit risk is limited to the amount of accounts receivable. The counterparties to the Company’s derivative financial instruments are major international financial institutions. The Company is exposed to credit risk for the net exchanges under these agreements, but not for the notional amounts. The Company does not anticipate non-performance by any of its counterparties. The Company maintains its cash in bank depository accounts, which, at times, may exceed federally insured limits. The Company selects depository institutions based, in part, upon management’s review of the financial stability of the institution. At December 31, 2022 and June 30, 2023, a significant portion of cash and cash equivalents were held at a single institution. Contingent Consideration Arrangements Legal and Regulatory Matters Litigation Relating to the Merger On March 28, 2023, Mark “Mickey” Segal and KSFB Management, LLC (“KSFB”), the management company for certain Focus LLC subsidiaries (the “NKSFB Subsidiaries”), brought an action against Focus LLC and Goldman Sachs in the Superior Court of the State of California. The complaint alleged, among other things, that Focus LLC and Goldman Sachs’ efforts in respect of a potential sale of the Company to CD&R violated certain duties and obligations owed to Mr. Segal and KSFB in connection with a separate potential transaction involving the sale of the NKSFB Subsidiaries and KSFB. Mr. Segal voluntarily dismissed certain claims in June 2023 and, on August 2, 2023, the court dismissed the remainder of the case based on the applicable New York forum selection clause. Additionally, on June 7, 2023, KSFB brought an additional action against Focus LLC in the Superior Court of the State of California seeking declaratory and injunctive relief with respect to the enforceability of a restrictive covenant contained in a management agreement among Focus LLC, the NKSFB Subsidiaries, KSFB and the principals party thereto. On June 19, 2023, a purported stockholder of the Company brought an action against the individual members of the board, certain members of Company management, Focus Inc., CD&R, and Stone Point in New York state court. The complaint alleged that the proxy statement filed in connection with the Merger negligently misrepresented or omitted certain information. In order to moot what the Company considered to be unmeritorious disclosure claims, alleviate the costs, risks and uncertainties inherent in litigation and provide additional information to its stockholders, the Company determined to voluntarily supplement the proxy statement with certain information as described in the Current Report on Form 8-K filed on July 6, 2023. As a result of such supplemental disclosure, the named plaintiff decided that the claims in the lawsuit were mooted and dismissed the action with prejudice on July 7, 2023. In July 2023, four purported stockholders of the Company brought actions against the Company in the Delaware Court of Chancery seeking the Company’s books and records relating to the Mergers. The Company intends to defend all of the above lawsuits that remain active vigorously but cannot predict the ultimate outcome of these lawsuits or the amount of time and expense that will be required to resolve them. Indemnifications Management believes that the likelihood of any material liability arising under these indemnification provisions is remote. Management cannot estimate any potential maximum exposure due to both the remoteness of any potential claims and the fact that items that would be included within any such calculated claim would be beyond the control of the Company. Consequently, no liability has been recorded in the unaudited condensed consolidated balance sheets. |
CASH FLOW INFORMATION
CASH FLOW INFORMATION | 6 Months Ended |
Jun. 30, 2023 | |
CASH FLOW INFORMATION | |
CASH FLOW INFORMATION | 13. CASH FLOW INFORMATION Six Months Ended June 30, 2022 2023 Supplemental disclosures of cash flow information—cash paid for: Interest $ 34,952 $ 87,932 Income taxes $ 22,571 $ 11,047 Supplemental non-cash cash flow information: Fair market value of estimated contingent consideration in connection with acquisitions $ 18,474 $ 212,624 |
RELATED PARTIES
RELATED PARTIES | 6 Months Ended |
Jun. 30, 2023 | |
RELATED PARTIES | |
RELATED PARTIES | 14. RELATED PARTIES The Company’s Chief Executive Officer, through an entity owned and controlled by him, owns a personal aircraft that was acquired without Company resources that he uses for business travel. The Company reimburses the Company’s Chief Executive Officer for certain costs and third party payments associated with the use of his personal aircraft for Company-related business travel. The Company also pays pilot fees for such business travel flights. During the three and six months ended June 30, 2022, the Company recognized expenses of $1,335 and $2,430, respectively, related to these reimbursements. During the three and six months ended June 30, 2023, the Company recognized expenses of $1,035 and $2,113, respectively, related to these reimbursements. Given the geography of the Company’s partner firms and prospects, the Company believes that the use of private aircraft creates efficiencies to enhance the productivity of the Company’s Chief Executive Officer and certain other authorized personnel. Certain Company employees perform outsourced accounting services to an affiliated entity. In connection with these services, the Company recognized revenues of $2,857 and $6,125 during the three and six months ended June 30, 2022, respectively. In connection with these services, the Company recognized revenues of $3,215 and $6,539 during the three and six months ended June 30, 2023, respectively. At June 30, 2023, affiliates of certain holders of the Company’s Class A common stock and Class B common stock were lenders under the Credit Facility. |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation have been included. The unaudited condensed consolidated financial statements include the accounts of Focus Inc. and its majority and wholly owned subsidiaries. Focus Inc. consolidates Focus LLC and its subsidiaries’ financial statements and records the interests in Focus LLC consisting of common units, restricted common units and the common unit equivalent of incentive units of Focus LLC that Focus Inc. does not own as non-controlling interests (see Note 3). Intercompany transactions and balances have been eliminated in consolidation. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K as filed with the SEC on February 16, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. |
Use of Estimates | Use of Estimates |
Revenue | Revenue The Company disaggregates revenue by wealth management fees and other. The Company does not allocate revenue by the type of service provided in connection with providing holistic wealth management client services. The Company generally manages its business based on the operating results of the enterprise taken as a whole, not by geographic region. The following table disaggregates the revenues based on the location of the partner firm legal entities that generate the revenues and therefore may not be reflective of the geography in which clients are located. Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Domestic revenue $ 510,374 $ 541,389 $ 1,017,685 $ 1,062,414 International revenue 28,837 42,416 58,093 78,898 Total revenue $ 539,211 $ 583,805 $ 1,075,778 $ 1,141,312 International revenue consists of revenue generated by partner firm legal entities in Australia, Canada, Switzerland, the United Kingdom and in other non-US jurisdictions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements We do not expect that any recently issued accounting pronouncements will have a significant effect on our consolidated financial statements. |
SUMMARY OF ACCOUNTING POLICIE_2
SUMMARY OF ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF ACCOUNTING POLICIES | |
Schedule of disaggregated revenues based on the location of the partner firm | Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Domestic revenue $ 510,374 $ 541,389 $ 1,017,685 $ 1,062,414 International revenue 28,837 42,416 58,093 78,898 Total revenue $ 539,211 $ 583,805 $ 1,075,778 $ 1,141,312 |
NON-CONTROLLING INTEREST AND _2
NON-CONTROLLING INTEREST AND INCOME (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
NON-CONTROLLING INTEREST AND INCOME (LOSS) PER SHARE | |
Schedule of controlling and non-controlling interest | 2022 2023 Focus LLC common units 12,034,104 12,540,262 Focus LLC restricted common units 193,625 294,875 Common unit equivalents of outstanding vested and unvested Focus LLC incentive units(1) 4,347,399 8,172,603 Total common units, restricted common units and common unit equivalents attributable to non-controlling interest 16,575,128 21,007,740 Total common units, restricted common units and common unit equivalents of incentive units outstanding 82,017,517 87,023,327 Non-controlling interest allocation 20.2 % 24.1 % Company’s interest in Focus LLC 79.8 % 75.9 % (1) Focus LLC common units issuable upon conversion of 16,202,274 and 16,559,179 (see Note 9) vested and unvested Focus LLC incentive units outstanding as of June 30, 2022 and 2023, respectively, was calculated using the common unit equivalent of vested and unvested Focus LLC incentive units based on the closing price of the Company’s Class A common stock on the last trading day of the periods. |
Schedule of calculation of basic income per share | Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Net income attributable to common shareholders $ 33,083 $ 32,177 $ 62,185 $ 31,545 Weighted average shares of Class A common stock outstanding 65,389,642 65,999,323 65,360,667 65,969,827 Basic income per share $ 0.51 $ 0.49 $ 0.95 $ 0.48 |
Schedule of calculation of diluted income per share | Three Months Ended Six Months Ended June 30, June 30, 2022 2023 2022 2023 Net income attributable to common shareholders $ 33,083 $ 32,177 $ 62,185 $ 31,545 Add: Dilutive effect of non-controlling interests related to Focus LLC common, restricted common and incentive units — (41,080) — (59,195) Total 33,083 (8,903) 62,185 (27,650) Weighted average shares of Class A common stock outstanding 65,389,642 65,999,323 65,360,667 65,969,827 Effect of dilutive stock options 190,235 442,604 298,647 418,072 Effect of dilutive restricted stock units 16,500 73,547 22,767 61,775 Effect of dilutive non-controlling interests related to Focus LLC common, restricted common and incentive units — 19,152,587 — 18,694,606 Total 65,596,377 85,668,061 65,682,081 85,144,280 Diluted income (loss) per share $ 0.50 $ (0.10) $ 0.95 $ (0.32) |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
ACQUISITIONS | |
Schedule of purchase price associated with business acquisitions and the allocation thereof | 2023 Number of business acquisitions closed 16 Consideration: Cash due at closing $ 134,601 Cash due subsequent to closing at net present value and working capital adjustment 3,450 Fair market value of Focus LLC common units issued at closing 36,973 Fair market value of estimated contingent consideration 212,624 Total consideration $ 387,648 Allocation of purchase price: Total tangible assets $ 13,801 Total liabilities assumed (24,343) Customer relationships 117,708 Management contracts 10,617 Investment management agreements 121,000 Goodwill 140,042 Other acquired intangibles 8,823 Total allocated consideration $ 387,648 |
Schedule of intangible assets acquired | Number of years Customer relationships 8 Management contracts 7 Investment management agreements 12 Other acquired intangibles 10 Weighted-average useful life of all intangibles acquired 10 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Summary of changes in the goodwill balances | December 31, June 30, 2022 2023 Balance beginning of period: Goodwill $ 1,947,939 $ 2,190,541 Cumulative impairment losses (22,624) (22,624) 1,925,315 2,167,917 Goodwill acquired 249,677 140,042 Other (7,075) 2,716 242,602 142,758 Balance end of period: Goodwill 2,190,541 2,333,299 Cumulative impairment losses (22,624) (22,624) $ 2,167,917 $ 2,310,675 |
Summary of amortizing acquired intangible assets | The following table summarizes the identifiable intangible assets at December 31, 2022: Gross Carry Accumulated Net Book Amount Amortization Value Customer relationships $ 2,530,062 $ (1,029,197) $ 1,500,865 Management contracts 202,479 (70,624) 131,855 Other acquired intangibles 13,416 (7,012) 6,404 Total $ 2,745,957 $ (1,106,833) $ 1,639,124 The following table summarizes the identifiable intangible assets at June 30, 2023: Gross Carry Accumulated Net Book Amount Amortization Value Customer relationships $ 2,654,625 $ (1,163,597) $ 1,491,028 Management contracts 213,320 (78,394) 134,926 Investment management agreements 121,000 (3,405) 117,595 Other acquired intangibles 22,709 (8,459) 14,250 Total $ 3,011,654 $ (1,253,855) $ 1,757,799 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
Schedule of implied fair value of the Company's First Lien Term Loan (as defined below) | December 31, 2022 June 30, 2023 Stated Fair Stated Fair Value Value Value Value First Lien Term Loan B - Tranche A $ 1,755,600 $ 1,735,850 $ 1,746,800 $ 1,733,699 First Lien Term Loan B - Tranche B 788,370 772,603 784,368 774,564 |
Schedule of changes in the fair value of estimated contingent consideration for business acquisitions | Balance at January 1, 2022 $ 350,027 Additions to estimated contingent consideration 56,604 Assumed estimated contingent consideration obligation 12,637 Payments of contingent consideration (148,638) Non-cash changes in fair value of estimated contingent consideration (64,747) Other (1,575) Balance at December 31, 2022 $ 204,308 Additions to estimated contingent consideration 212,624 Payments of contingent consideration (35,143) Non-cash changes in fair value of estimated contingent consideration 22,564 Other 2,627 Balance at June 30, 2023 $ 406,980 |
Schedule of inputs used in the fair value measurement of estimated contingent consideration | Quantitative Information About Level 3 Fair Value Measurements Fair Value at Valuation Unobservable December 31, 2022 Techniques Inputs Ranges $ 204,308 Monte Carlo Simulation Model Forecasted growth rates (7.8)% - 32.4 % Discount rates 13.0% - 19.0 % Quantitative Information About Level 3 Fair Value Measurements Fair Value at Valuation Unobservable June 30, 2023 Techniques Inputs Ranges $ 406,980 Monte Carlo Simulation Model Forecasted growth rates (27.7)% - 38.9 % Discount rates 9.3% - 20.0 % |
CREDIT FACILITY (Tables)
CREDIT FACILITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
CREDIT FACILITY. | |
Schedule of reconciliation of principal amounts outstanding under the Credit Facility to borrowings under credit facilities recorded in the consolidated balance sheets | December 31, June 30, 2022 2023 First Lien Term Loan B - Tranche A $ 1,755,600 $ 1,746,800 First Lien Term Loan B - Tranche B 788,370 784,368 First Lien Term Loan A 20,000 119,650 First Lien Revolver — — Unamortized debt financing costs (17,750) (16,302) Unamortized discount (35,471) (34,079) Total $ 2,510,749 $ 2,600,437 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Employee Stock Option [Member] | |
Schedule of stock options granted | Weighted Average Stock Exercise Options Price Outstanding—January 1, 2023 2,461,317 $ 39.24 Exercised (85,943) 35.69 Forfeited (16,559) 51.20 Outstanding—June 30, 2023 2,358,815 39.28 Vested—June 30, 2023 1,188,758 34.69 |
Restricted Stock Units (RSUs) | |
Schedule of changes in restricted stock units | Weighted Restricted Average Stock Grant Date Units Fair Value Outstanding—January 1, 2023 252,719 $ 43.02 Forfeited (4,747) 43.88 Outstanding—June 30, 2023 247,972 43.00 |
Focus LLC Restricted Common Units | |
Schedule of changes in restricted stock units | Weighted Restricted Average Common Grant Date Units Fair Value Outstanding—January 1, 2023 296,548 $ 45.78 Forfeited (1,673) 49.20 Outstanding—June 30, 2023 294,875 45.76 |
Incentive Units | |
Schedule of incentive units granted | Weighted Average Incentive Hurdle Units Price Outstanding—January 1, 2023 16,602,886 $ 26.86 Forfeited (43,707) 35.64 Outstanding—June 30, 2023 16,559,179 26.83 Vested—June 30, 2023 11,041,925 22.19 |
Schedule of incentive units outstanding and vested by hurdle rates | Number Vested Incentive Hurdle Rates Outstanding Units $1.42 421 421 5.50 798 798 6.00 386 386 7.00 1,081 1,081 9.00 708,107 708,107 11.00 813,001 813,001 12.00 513,043 513,043 13.00 540,000 540,000 14.00 10,098 10,098 16.00 45,191 45,191 17.00 20,000 20,000 19.00 527,928 527,928 21.00 3,017,692 3,017,692 22.00 796,417 796,417 23.00 524,828 524,828 26.26 12,500 6,250 27.00 12,484 12,484 27.90 1,885,166 1,395,592 28.50 1,424,225 1,424,225 30.48 30,000 20,000 33.00 3,587,500 7,500 36.64 30,000 30,000 37.59 506,745 — 43.07 60,000 20,000 43.50 30,000 30,000 44.71 803,165 406,279 58.50 658,403 170,604 16,559,179 11,041,925 |
CASH FLOW INFORMATION (Tables)
CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
CASH FLOW INFORMATION | |
Schedule of supplemental cash flow information | Six Months Ended June 30, 2022 2023 Supplemental disclosures of cash flow information—cash paid for: Interest $ 34,952 $ 87,932 Income taxes $ 22,571 $ 11,047 Supplemental non-cash cash flow information: Fair market value of estimated contingent consideration in connection with acquisitions $ 18,474 $ 212,624 |
GENERAL (Details)
GENERAL (Details) - Merger Agreement With Ferdinand FFP Acquisition, LLC, Dubilier & Rice, LLC And and Stone Point Capital LLC. - Focus Inc. - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Feb. 27, 2023 | |
GENERAL | |||
Share price (in dollar per share) | $ 53 | ||
Selling, general and administrative expenses | |||
GENERAL | |||
Merger related expense | $ 6,733 | $ 17,484 |
SUMMARY OF ACCOUNTING POLICIE_3
SUMMARY OF ACCOUNTING POLICIES - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue Recognition | ||||
Total revenues | $ 583,805 | $ 539,211 | $ 1,141,312 | $ 1,075,778 |
Domestic | ||||
Revenue Recognition | ||||
Total revenues | 541,389 | 510,374 | 1,062,414 | 1,017,685 |
International | ||||
Revenue Recognition | ||||
Total revenues | $ 42,416 | $ 28,837 | $ 78,898 | $ 58,093 |
NON-CONTROLLING INTEREST AND _3
NON-CONTROLLING INTEREST AND INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Basic income per share: | ||||
Net income (loss) attributable to common shareholders | $ 32,177 | $ 33,083 | $ 31,545 | $ 62,185 |
Diluted income per share: | ||||
Net income (loss) attributable to common shareholders | 32,177 | 33,083 | 31,545 | 62,185 |
Class A common stock | ||||
Basic income per share: | ||||
Net income (loss) attributable to common shareholders | $ 32,177 | $ 33,083 | $ 31,545 | $ 62,185 |
Weighted average shares of Class A common stock outstanding | 65,999,323 | 65,389,642 | 65,969,827 | 65,360,667 |
Basic income (loss) per share | $ 0.49 | $ 0.51 | $ 0.48 | $ 0.95 |
Diluted income per share: | ||||
Net income (loss) attributable to common shareholders | $ 32,177 | $ 33,083 | $ 31,545 | $ 62,185 |
Add: Dilutive effect of non-controlling interests related to Focus LLC common and incentive units | (41,080) | (59,195) | ||
Total | $ (8,903) | $ 33,083 | $ (27,650) | $ 62,185 |
Weighted average shares of Class A common stock outstanding | 65,999,323 | 65,389,642 | 65,969,827 | 65,360,667 |
Effect of dilutive stock options | 442,604 | 190,235 | 418,072 | 298,647 |
Effect of dilutive restricted stock units | 73,547 | 16,500 | 61,775 | 22,767 |
Effect of dilutive non-controlling interests related to Focus LLC common, restricted common and incentive units | 19,152,587 | 18,694,606 | ||
Total | 85,668,061 | 65,596,377 | 85,144,280 | 65,682,081 |
Diluted income per share | $ (0.10) | $ 0.50 | $ (0.32) | $ 0.95 |
Highest 90-day VWAP is $80.00 or less | Market based stock options | IPO | ||||
Diluted income per share: | ||||
Threshold period | 90 days | |||
Threshold volume weighted average per share price trigger | $ 80 | |||
Vesting percentage | 0% | |||
Highest 90-day VWAP is $110.00 or more | Market based stock options | IPO | ||||
Diluted income per share: | ||||
Threshold volume weighted average per share price trigger | $ 110 | |||
Vesting percentage | 100% | |||
Share price used in change of control transaction is $110 | Market based stock options | ||||
Diluted income per share: | ||||
Share price used in change of control transaction | $ 110 | |||
Vesting percentage | 100% | |||
Share price used in change of control transaction is equal to or less than $33.00 | Market based stock options | ||||
Diluted income per share: | ||||
Share price used in change of control transaction | $ 33 | |||
Vesting percentage | 0% | |||
Focus LLC | ||||
NON-CONTROLLING INTEREST AND INCOME PER SHARE | ||||
Focus LLC common units | 12,540,262 | 12,034,104 | 12,540,262 | 12,034,104 |
Focus LLC restricted common units | 294,875 | 193,625 | 294,875 | 193,625 |
Common unit equivalents of outstanding vested and unvested Focus LLC incentive units | 8,172,603 | 4,347,399 | 8,172,603 | 4,347,399 |
Total common units, restricted common units and common unit equivalents attributable to non-controlling interest | 21,007,740 | 16,575,128 | 21,007,740 | 16,575,128 |
Total common units, restricted common units and common unit equivalents of incentive units outstanding | 87,023,327 | 82,017,517 | 87,023,327 | 82,017,517 |
Non-controlling interest allocation | 24.10% | 20.20% | 24.10% | 20.20% |
Company's interest in Focus LLC | 75.90% | 79.80% | 75.90% | 79.80% |
Convertible incentive units | 16,559,179 | 16,202,274 | 16,559,179 | 16,202,274 |
ACQUISITIONS - Business Acquisi
ACQUISITIONS - Business Acquisitions (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Allocation of purchase price: | |||
Goodwill | $ 2,310,675 | $ 2,167,917 | $ 1,925,315 |
Business acquisitions | |||
ACQUISITIONS | |||
Number of business acquisitions closed | 16 | ||
Consideration: | |||
Cash due at closing | $ 134,601 | ||
Cash due subsequent to closing at net present value | 3,450 | ||
Fair market value of estimated contingent consideration | 212,624 | ||
Total consideration | 387,648 | ||
Allocation of purchase price: | |||
Total tangible assets | 13,801 | ||
Total liabilities assumed | (24,343) | ||
Goodwill | 140,042 | ||
Total allocated consideration | 387,648 | ||
Amount of goodwill and intangibles expected to be deductible for tax purposes | $ 133,679 | ||
Deductibility period for goodwill and intangible assets acquired in a business acquisition (in years) | 15 years | ||
Number of business acquisitions closed during the period which are new subsidiary partner firms | item | 2 | ||
Revenue from acquired entity in business acquisitions | $ 6,165 | ||
Income from acquired entity in business acquisitions | 1,092 | ||
Business acquisitions | Focus LLC | |||
Consideration: | |||
Fair market value of Focus LLC common units issued at closing | 36,973 | ||
Business acquisitions | Customer relationships | |||
Allocation of purchase price: | |||
Finite-lived intangible assets | 117,708 | ||
Business acquisitions | Investment Management Agreements Intangible Assets | |||
Allocation of purchase price: | |||
Finite-lived intangible assets | 121,000 | ||
Business acquisitions | Management contracts | |||
Allocation of purchase price: | |||
Finite-lived intangible assets | 10,617 | ||
Business acquisitions | Other acquired intangibles | |||
Allocation of purchase price: | |||
Finite-lived intangible assets | $ 8,823 |
ACQUISITIONS - Intangible asset
ACQUISITIONS - Intangible assets (Details) - Business acquisitions | 6 Months Ended |
Jun. 30, 2023 | |
Intangible assets | |
Weighted-average useful life of all intangibles acquired | 10 years |
Customer relationships | |
Intangible assets | |
Weighted-average useful life of all intangibles acquired | 8 years |
Investment Management Agreements Intangible Assets | |
Intangible assets | |
Weighted-average useful life of all intangibles acquired | 12 years |
Management contracts | |
Intangible assets | |
Weighted-average useful life of all intangibles acquired | 7 years |
Other acquired intangibles | |
Intangible assets | |
Weighted-average useful life of all intangibles acquired | 10 years |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Change in goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Change in the goodwill | ||
Goodwill, gross, beginning of period | $ 2,190,541 | $ 1,947,939 |
Cumulative impairment losses beginning of period | (22,624) | (22,624) |
Goodwill, net, beginning of period | 2,167,917 | 1,925,315 |
Goodwill acquired | 140,042 | 249,677 |
Other | 2,716 | (7,075) |
Goodwill period increase | 142,758 | 242,602 |
Goodwill, gross, end of period | 2,333,299 | 2,190,541 |
Cumulative impairment losses, end of period | (22,624) | (22,624) |
Goodwill, net, end of period | $ 2,310,675 | $ 2,167,917 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Intangible assets | ||
Gross Carry Amount | $ 3,011,654 | $ 2,745,957 |
Accumulated Amortization | (1,253,855) | (1,106,833) |
Net Book Value | 1,757,799 | 1,639,124 |
Customer relationships | ||
Intangible assets | ||
Gross Carry Amount | 2,654,625 | 2,530,062 |
Accumulated Amortization | (1,163,597) | (1,029,197) |
Net Book Value | 1,491,028 | 1,500,865 |
Investment Management Agreements Intangible Assets | ||
Intangible assets | ||
Gross Carry Amount | 121,000 | |
Accumulated Amortization | (3,405) | |
Net Book Value | 117,595 | |
Management contracts | ||
Intangible assets | ||
Gross Carry Amount | 213,320 | 202,479 |
Accumulated Amortization | (78,394) | (70,624) |
Net Book Value | 134,926 | 131,855 |
Other acquired intangibles | ||
Intangible assets | ||
Gross Carry Amount | 22,709 | 13,416 |
Accumulated Amortization | (8,459) | (7,012) |
Net Book Value | $ 14,250 | $ 6,404 |
FAIR VALUE MEASUREMENTS - First
FAIR VALUE MEASUREMENTS - First Lien Term Loan (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Implied fair value based on level 2 inputs | ||
Stated Value | $ 2,600,437 | $ 2,510,749 |
First Lien Term Loan Tranche A | ||
Implied fair value based on level 2 inputs | ||
Stated Value | 1,746,800 | 1,755,600 |
First Lien Term Loan Tranche A | Level 2 | ||
Implied fair value based on level 2 inputs | ||
Fair Value | 1,733,699 | 1,735,850 |
First Lien Term Loan Tranche B | ||
Implied fair value based on level 2 inputs | ||
Stated Value | 784,368 | 788,370 |
First Lien Term Loan Tranche B | Level 2 | ||
Implied fair value based on level 2 inputs | ||
Fair Value | $ 774,564 | $ 772,603 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in the fair value (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Changes in the fair value of estimated contingent consideration for business acquisitions | ||||
Balance at beginning of period | $ 204,308 | $ 350,027 | ||
Additions to estimated contingent consideration | 212,624 | 56,604 | ||
Assumed estimated contingent consideration obligation | 12,637 | |||
Payments of contingent consideration | (35,143) | (148,638) | ||
Non-cash changes in fair value of estimated contingent consideration | 22,564 | (64,747) | ||
Other | 2,627 | (1,575) | ||
Balance at end of period | $ 406,980 | 406,980 | 204,308 | |
Amount due to sellers in 2023 | 6,582 | 6,582 | ||
Amount due to sellers in 2024 | 23,189 | 23,189 | ||
Amount due to sellers in 2025 | 9,079 | 9,079 | ||
Amount due to sellers in 2026 | 945 | 945 | ||
Amount due to sellers in 2027 | 5,530 | 5,530 | ||
Amount due to sellers in 2028 | 204 | 204 | ||
Amount due to sellers in 2029 | 68,971 | 68,971 | ||
Asset acquisitions | ||||
Changes in the fair value of estimated contingent consideration for business acquisitions | ||||
Contingent consideration paid in cash | 8,963 | $ 4,827 | ||
Business acquisitions | ||||
Changes in the fair value of estimated contingent consideration for business acquisitions | ||||
Contingent consideration paid in cash | 35,143 | 138,940 | ||
Contingent consideration issued of restricted common units | 9,698 | |||
Contingent consideration and other liabilities | ||||
Changes in the fair value of estimated contingent consideration for business acquisitions | ||||
Deferred cash consideration | 114,500 | 114,500 | 122,079 | |
Prepaid expenses and other assets. | SOFR Swaps | ||||
Changes in the fair value of estimated contingent consideration for business acquisitions | ||||
Notional amount | 850,000 | |||
Fair value of interest rate swap | $ 44,219 | |||
Prepaid expenses and other assets. | SOFR Forward Swaps | ||||
Changes in the fair value of estimated contingent consideration for business acquisitions | ||||
Notional amount | 500,000 | 500,000 | ||
Fair value of interest rate swap | $ 40,072 | $ 40,072 |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent consideration fair value inputs (Details) - Level 3 $ in Thousands | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Inputs used in the fair value measurement of estimated contingent consideration | ||
Estimated contingent consideration | $ 406,980 | $ 204,308 |
Valuation Technique, Forecasted Growth Rates | Minimum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | (27.7) | (7.8) |
Valuation Technique, Forecasted Growth Rates | Maximum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | 38.9 | 32.4 |
Valuation Technique, Discount Rates | Minimum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | 9.3 | 13 |
Valuation Technique, Discount Rates | Maximum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | 20 | 19 |
CREDIT FACILITY - Old and New C
CREDIT FACILITY - Old and New Credit Facility (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Credit Facility | ||||
Face amount of debt | $ 2,563,970 | $ 2,650,818 | $ 2,563,970 | |
Amount outstanding under credit facility | 2,510,749 | 2,600,437 | 2,510,749 | |
Debt issuance costs | $ 1,111 | |||
Borrowings under credit facilities | $ 98,500 | $ 100,000 | ||
Credit Facility | ||||
Credit Facility | ||||
Actual total secured leverage ratio | 4.36 | |||
Consolidated EBITDA | $ 576,871 | |||
Secured leverage ratio threshold for contingent principal payments | 3.75 | |||
Contingent principal payments due in current year | $ 0 | |||
Contingent Principal Payments | 0 | |||
Credit Facility | Maximum | ||||
Credit Facility | ||||
First lien leverage ratio as defined in the Credit Facility | 6.25% | |||
First Lien Term Loan | ||||
Credit Facility | ||||
Face amount of debt | $ 240,000 | |||
Debt discount (as a percent) | 1.50% | |||
Percentage of quarterly amortization of debt discount in 2023 | 0.25% | |||
Percentage of quarterly amortization of debt discount in 2024 | 0.50% | |||
Percentage of quarterly amortization of debt discount in 2025 | 0.50% | |||
Percentage of quarterly amortization of debt discount in 2026 | 1.25% | |||
Percentage of quarterly amortization of debt discount in 2027 | 1.875% | |||
Borrowings under credit facilities | 20,000 | $ 100,000 | ||
Debt discount amount | 300 | 1,500 | 300 | |
Repayments installments | $ 300 | |||
First Lien Term Loan | 0 - 60 days from the closing date | ||||
Credit Facility | ||||
Percentage of Delayed Draw Ticking Fee on Undrawn Commitments | 0% | |||
First Lien Term Loan | 61-120 days of the closing date | ||||
Credit Facility | ||||
Percentage of Delayed Draw Ticking Fee on Undrawn Commitments | 50% | |||
First Lien Term Loan | After 121 days of the closing date | ||||
Credit Facility | ||||
Percentage of Delayed Draw Ticking Fee on Undrawn Commitments | 100% | |||
First Lien Term Loan | SOFR | ||||
Credit Facility | ||||
Margin (as a percent) | 2.50% | |||
Floor rate | 0.50% | |||
First Lien Term Loan | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1.50% | |||
First Lien Term Loan Tranche A | ||||
Credit Facility | ||||
Amount outstanding under credit facility | 1,755,600 | $ 1,746,800 | 1,755,600 | |
First Lien Term Loan Tranche B | ||||
Credit Facility | ||||
Face amount of debt | 1,746,800 | |||
Amount outstanding under credit facility | 788,370 | 784,368 | 788,370 | |
Quarterly installment repayments | $ 2,001 | |||
First Lien Term Loan Tranche B | SOFR | ||||
Credit Facility | ||||
Margin (as a percent) | 2.50% | |||
Floor rate | 0.50% | |||
First Lien Term Loan B | ||||
Credit Facility | ||||
Face amount of debt | $ 2,531,168 | |||
First Lien Term Loan B - Tranche A | ||||
Credit Facility | ||||
Quarterly installment repayments | 4,400 | |||
Amortization of discount | $ 30,800 | |||
Debt discount (as a percent) | 1.75% | |||
First Lien Term Loan B - Tranche A | SOFR | ||||
Credit Facility | ||||
Margin (as a percent) | 3.25% | |||
Floor rate | 0.50% | |||
First Lien Term Loan B - Tranche A | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 2.25% | |||
First Lien Term Loan B - Tranche B | ||||
Credit Facility | ||||
Face amount of debt | $ 784,368 | |||
First Lien Term Loan B - Tranche B | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1.50% | |||
First Lien Term Loan A | ||||
Credit Facility | ||||
Amount outstanding under credit facility | $ 20,000 | $ 119,650 | $ 20,000 | |
First Lien Revolver | ||||
Credit Facility | ||||
Face amount of debt | 650,000 | |||
Maximum borrowing capacity | $ 30,000 | |||
Unused commitment fee on achievement of first lien leverage ratio (as a percent) | 0.50% | |||
First Lien Revolver | SOFR | ||||
Credit Facility | ||||
Margin (as a percent) | 2.25% | |||
First Lien Revolver | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1.25% | |||
First Lien Revolver Step Down One | ||||
Credit Facility | ||||
Unused commitment fee on achievement of first lien leverage ratio (as a percent) | 0.375% | |||
First Lien Revolver Step Down One | SOFR | ||||
Credit Facility | ||||
Margin (as a percent) | 2% | |||
First Lien Revolver Step Down One | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1% | |||
First Lien Revolver Step Down Two | ||||
Credit Facility | ||||
Unused commitment fee on achievement of first lien leverage ratio (as a percent) | 0.25% | |||
First Lien Revolver Step Down Two | SOFR | ||||
Credit Facility | ||||
Margin (as a percent) | 1.75% | |||
First Lien Revolver Step Down Two | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 0.75% |
CREDIT FACILITY - Reconciliatio
CREDIT FACILITY - Reconciliation of Principal Amounts Outstanding (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Credit Facility | ||
Unamortized debt financing costs | $ (16,302) | $ (17,750) |
Unamortized discount | (34,079) | (35,471) |
Amount outstanding under credit facility | 2,600,437 | 2,510,749 |
First Lien Term Loan A | ||
Credit Facility | ||
Amount outstanding under credit facility | 119,650 | 20,000 |
First Lien Term Loan Tranche A | ||
Credit Facility | ||
Amount outstanding under credit facility | 1,746,800 | 1,755,600 |
First Lien Term Loan Tranche B | ||
Credit Facility | ||
Amount outstanding under credit facility | $ 784,368 | $ 788,370 |
CREDIT FACILITY - First Lien Re
CREDIT FACILITY - First Lien Revolver and Letters of Credit (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Credit Facility | ||
Weighted average interest rate | 7% | 4% |
Deferred financing costs | $ 6,818 | $ 7,590 |
First Lien Revolver | ||
Credit Facility | ||
Deferred financing costs | 6,818 | 7,590 |
Unused commitment line | 640,306 | 639,997 |
Standby Letters of Credit | ||
Credit Facility | ||
Letter of credit outstanding | $ 9,694 | $ 10,003 |
Annual interest rate | 2% | 2% |
DERIVATIVES (Details)
DERIVATIVES (Details) $ in Thousands | 1 Months Ended | |||
Apr. 30, 2023 USD ($) item | Apr. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) item | Dec. 31, 2022 USD ($) | |
SOFR | ||||
Derivatives | ||||
Fixed interest rate per month | 0.50% | |||
Interest rate swaps | ||||
Derivatives | ||||
Number of swaps | item | 3 | |||
Variable interest rate borrowings outstanding | $ 850,000 | |||
Interest rate swaps | Prepaid expenses and other assets | ||||
Derivatives | ||||
Offsetting adjustment to fair value in accumulated other comprehensive income (loss), net of tax | 8,215 | $ 9,458 | ||
Interest rate swaps | SOFR | ||||
Derivatives | ||||
Fair value | 40,072 | $ 44,219 | ||
Interest rate swap, one | ||||
Derivatives | ||||
Notional amount | $ 400,000 | |||
Variable interest rate per month | 0.619% | |||
Interest rate swap, two | ||||
Derivatives | ||||
Notional amount | $ 250,000 | |||
Variable interest rate per month | 0.447% | |||
Interest rate swap, three | ||||
Derivatives | ||||
Notional amount | $ 200,000 | |||
Variable interest rate per month | 0.44% | |||
Forward swap | ||||
Derivatives | ||||
Number of swaps | item | 2 | |||
Term of contract | 4 years | |||
Forward swap | Forecast | ||||
Derivatives | ||||
Amount of debt the swap will fix the interest rate on | $ 500,000 | |||
Forward swap | SOFR | ||||
Derivatives | ||||
Fixed interest rate per month | 0.50% | |||
Forward swap , one | ||||
Derivatives | ||||
Notional amount | $ 250,000 | |||
Variable interest rate per month | 3.157% | |||
Forward swap , two | ||||
Derivatives | ||||
Notional amount | $ 250,000 | |||
Variable interest rate per month | 3.176% |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Jul. 31, 2018 | Jun. 30, 2023 | Jun. 30, 2022 | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Class B common stock | ||||||||
EQUITY | ||||||||
Issuance of common stock in connection with an acquisition and contingent consideration (in shares) | 712,941 | |||||||
Incentive Units | ||||||||
Changes in unvested common stock, Grant Date Fair Value | ||||||||
Non-cash equity compensation expense | $ 5,247 | $ 5,398 | $ 10,612 | $ 10,113 | ||||
Stock Options and Restricted Stock Units | ||||||||
Changes in unvested common stock, Grant Date Fair Value | ||||||||
Non-cash equity compensation expense | $ 2,441 | $ 2,105 | $ 4,987 | $ 4,097 | ||||
Market condition-based awards | ||||||||
EQUITY | ||||||||
Vesting period | 5 years | |||||||
Threshold period | 90 days | |||||||
Threshold volume weighted average per share price trigger | $ 100 | |||||||
Market condition-based awards | Exercised on and following the first anniversary of the date of vesting in July 2025 | ||||||||
EQUITY | ||||||||
Vested stock options exercised (in percent) | 25% | |||||||
Cumulative vested stock options exercised (in percent) | 50% | |||||||
Market condition-based awards | IPO | ||||||||
EQUITY | ||||||||
Threshold period | 90 days | |||||||
Incremental Non-cash equity compensation expense recognized | $ 518 | |||||||
Market condition-based awards | IPO | Share price used is $110.00 | ||||||||
EQUITY | ||||||||
Share price (in dollars per share) | $ 110 | |||||||
Vesting percentage | 100% | |||||||
Market condition-based awards | IPO | Share price used is equal to or less than $33.00 | ||||||||
EQUITY | ||||||||
Share price (in dollar per share) | $ 33 | |||||||
Vesting percentage | 0% | |||||||
Market condition-based awards | IPO | Highest 90-day VWAP is $80.00 or less | ||||||||
EQUITY | ||||||||
Vesting percentage | 0% | |||||||
Threshold period | 90 days | |||||||
Threshold volume weighted average per share price trigger | $ 80 | |||||||
Market condition-based awards | IPO | Highest 90-day VWAP is $110.00 or more | ||||||||
EQUITY | ||||||||
Vesting percentage | 100% | |||||||
Threshold period | 90 days | |||||||
Threshold volume weighted average per share price trigger | $ 110 | |||||||
Market condition-based awards | IPO | Exercised on and following the date of vesting | ||||||||
EQUITY | ||||||||
Vested stock options exercised (in percent) | 25% | |||||||
Market condition-based awards | IPO | Exercised on and following the second anniversary of the date of vesting in July 2026 | ||||||||
EQUITY | ||||||||
Vested stock options exercised (in percent) | 50% | |||||||
Cumulative vested stock options exercised (in percent) | 100% | |||||||
Market condition-based awards | Class A common stock | ||||||||
EQUITY | ||||||||
Granted | 155,000 | |||||||
Changes in unvested common stock | ||||||||
Granted | 155,000 | |||||||
Restricted Stock Units (RSUs) | ||||||||
Changes in unvested common stock | ||||||||
Outstanding at the beginning of the period | 252,719 | |||||||
Forfeited | (4,747) | |||||||
Outstanding at the end of the period | 247,972 | 247,972 | ||||||
Changes in unvested common stock, Grant Date Fair Value | ||||||||
Outstanding at the beginning of the period | $ 43.02 | |||||||
Forfeited | 43.88 | |||||||
Outstanding at the end of the period | $ 43 | $ 43 | ||||||
Common Stock | Class B common stock | ||||||||
EQUITY | ||||||||
Issuance of common stock in connection with an acquisition and contingent consideration (in shares) | 512,290 | 712,941 | 700,085 | |||||
Common Stock | Employee Stock Option [Member] | ||||||||
Changes in stock options | ||||||||
Outstanding at the beginning of the period | 2,461,317 | |||||||
Exercised | (85,943) | |||||||
Forfeited | (16,559) | |||||||
Outstanding at the end of the period | 2,358,815 | 2,358,815 | ||||||
Vested | 1,188,758 | |||||||
Changes in stock option, Weighted Average Exercise Price | ||||||||
Outstanding at the beginning of the period | $ 39.24 | |||||||
Exercised | 35.69 | |||||||
Forfeited | 51.20 | |||||||
Outstanding at the end of the period | $ 39.28 | 39.28 | ||||||
Vested | $ 34.69 | |||||||
Changes in unvested common stock | ||||||||
Vested | (1,188,758) | |||||||
Changes in unvested common stock, Grant Date Fair Value | ||||||||
Vested | $ 34.69 |
EQUITY - Focus LLC Restricted C
EQUITY - Focus LLC Restricted Common Units and Focus LLC Incentive Units - Hurdle Rates (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2022 | Jul. 31, 2018 | Jun. 30, 2023 | Jun. 30, 2022 | Sep. 30, 2023 | Jun. 30, 2023 | |
Focus LLC Restricted Common Units | ||||||
Restricted Common Units | ||||||
Outstanding at the beginning of the period | 296,548 | |||||
Forfeited | (1,673) | |||||
Outstanding at the end of the period | 294,875 | 294,875 | ||||
Weighted Average Grant Date Fair Value | ||||||
Outstanding at the beginning of the period | $ 45.78 | |||||
Forfeited | 49.20 | |||||
Outstanding at the end of the period | $ 45.76 | $ 45.76 | ||||
Focus LLC Incentive Units | ||||||
Incentive Units | ||||||
Outstanding at the beginning of the period | 16,602,886 | |||||
Forfeited | (43,707) | |||||
Outstanding at the end of the period | 16,559,179 | 16,559,179 | ||||
Vested at the end of the period | 11,041,925 | |||||
Weighted Average Hurdle Price | ||||||
Outstanding at the beginning of the period | $ 26.86 | |||||
Forfeited | 35.64 | |||||
Outstanding at the end of the period | $ 26.83 | 26.83 | ||||
Vested at the end of the period | $ 22.19 | $ 22.19 | ||||
Restricted Stock Units (RSUs) | ||||||
Restricted Common Units | ||||||
Outstanding at the beginning of the period | 252,719 | |||||
Forfeited | (4,747) | |||||
Outstanding at the end of the period | 247,972 | 247,972 | ||||
Weighted Average Grant Date Fair Value | ||||||
Outstanding at the beginning of the period | $ 43.02 | |||||
Forfeited | 43.88 | |||||
Outstanding at the end of the period | $ 43 | $ 43 | ||||
Market-Based Incentive Units | ||||||
Incentive Units | ||||||
Granted | 3,845,000 | |||||
Fair value of the stock option grants determined with assumptions | ||||||
Vesting period | 5 years | |||||
Threshold period | 90 days | |||||
Threshold volume weighted average per share price trigger | $ 100 | |||||
Hurdle Rate | $ 33 | |||||
Incentive Units | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 16,559,179 | 16,559,179 | ||||
Vested at the end of the period | 11,041,925 | |||||
Fair value of the stock option grants determined with assumptions | ||||||
Non-cash equity compensation expense | $ 5,247 | $ 5,398 | $ 10,612 | $ 10,113 | ||
Incentive Units | Hurdle Rate $1.42 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 421 | 421 | ||||
Vested at the end of the period | 421 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 1.42 | |||||
Incentive Units | Hurdle Rate 5.50 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 798 | 798 | ||||
Vested at the end of the period | 798 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 5.50 | |||||
Incentive Units | Hurdle Rate 6.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 386 | 386 | ||||
Vested at the end of the period | 386 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 6 | |||||
Incentive Units | Hurdle Rate 7.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 1,081 | 1,081 | ||||
Vested at the end of the period | 1,081 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 7 | |||||
Incentive Units | Hurdle Rate 9.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 708,107 | 708,107 | ||||
Vested at the end of the period | 708,107 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 9 | |||||
Incentive Units | Hurdle Rate 11.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 813,001 | 813,001 | ||||
Vested at the end of the period | 813,001 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 11 | |||||
Incentive Units | Hurdle Rate 12.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 513,043 | 513,043 | ||||
Vested at the end of the period | 513,043 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 12 | |||||
Incentive Units | Hurdle Rate 13.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 540,000 | 540,000 | ||||
Vested at the end of the period | 540,000 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 13 | |||||
Incentive Units | Hurdle Rate 14.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 10,098 | 10,098 | ||||
Vested at the end of the period | 10,098 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 14 | |||||
Incentive Units | Hurdle Rate 16.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 45,191 | 45,191 | ||||
Vested at the end of the period | 45,191 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 16 | |||||
Incentive Units | Hurdle Rate 17.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 20,000 | 20,000 | ||||
Vested at the end of the period | 20,000 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 17 | |||||
Incentive Units | Hurdle Rate 19.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 527,928 | 527,928 | ||||
Vested at the end of the period | 527,928 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 19 | |||||
Incentive Units | Hurdle Rate 21.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 3,017,692 | 3,017,692 | ||||
Vested at the end of the period | 3,017,692 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 21 | |||||
Incentive Units | Hurdle Rate 22.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 796,417 | 796,417 | ||||
Vested at the end of the period | 796,417 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 22 | |||||
Incentive Units | Hurdle Rate 23.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 524,828 | 524,828 | ||||
Vested at the end of the period | 524,828 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 23 | |||||
Incentive Units | Hurdle Rate 26.26 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 12,500 | 12,500 | ||||
Vested at the end of the period | 6,250 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 26.26 | |||||
Incentive Units | Hurdle Rate 27.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 12,484 | 12,484 | ||||
Vested at the end of the period | 12,484 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 27 | |||||
Incentive Units | Hurdle Rate 27.90 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 1,885,166 | 1,885,166 | ||||
Vested at the end of the period | 1,395,592 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 27.90 | |||||
Incentive Units | Hurdle Rate 28.50 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 1,424,225 | 1,424,225 | ||||
Vested at the end of the period | 1,424,225 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 28.50 | |||||
Incentive Units | Hurdle Rate 30.48 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 30,000 | 30,000 | ||||
Vested at the end of the period | 20,000 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 30.48 | |||||
Incentive Units | Hurdle Rate 33.00 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 3,587,500 | 3,587,500 | ||||
Vested at the end of the period | 7,500 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 33 | |||||
Incentive Units | Hurdle Rate 36.64 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 30,000 | 30,000 | ||||
Vested at the end of the period | 30,000 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 36.64 | |||||
Incentive Units | Hurdle Rate 37.59 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 506,745 | 506,745 | ||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 37.59 | |||||
Incentive Units | Hurdle Rate 43.07 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 60,000 | 60,000 | ||||
Vested at the end of the period | 20,000 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 43.07 | |||||
Incentive Units | Hurdle Rate 43.50 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 30,000 | 30,000 | ||||
Vested at the end of the period | 30,000 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 43.50 | |||||
Incentive Units | Hurdle Rate 44.71 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 803,165 | 803,165 | ||||
Vested at the end of the period | 406,279 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 44.71 | |||||
Incentive Units | Hurdle Rate 58.50 | ||||||
Incentive Units | ||||||
Outstanding at the end of the period | 658,403 | 658,403 | ||||
Vested at the end of the period | 170,604 | |||||
Weighted Average Hurdle Price | ||||||
Hurdle Rates | $ 58.50 | |||||
IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Incremental Non-cash equity compensation expense recognized | $ 10,144 | |||||
Threshold period | 90 days | |||||
Highest 90-day VWAP is $80.00 or less | IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Vesting percentage | 0% | |||||
Threshold period | 90 days | |||||
Threshold volume weighted average per share price trigger | $ 80 | |||||
Highest 90-day VWAP is $110.00 or more | IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Vesting percentage | 100% | |||||
Threshold period | 90 days | |||||
Threshold volume weighted average per share price trigger | $ 110 | |||||
Share price (in dollar per share) | $ 110 | |||||
Exercised on and following the date of vesting | IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Vested stock options exercised (in percent) | 25% | |||||
Exercised on and following the first anniversary of the date of vesting in July 2025 | IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Vested stock options exercised (in percent) | 25% | |||||
Cumulative vested stock options exercised (in percent) | 50% | |||||
Exercised on and following the second anniversary of the date of vesting in July 2026 | IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Vested stock options exercised (in percent) | 50% | |||||
Cumulative vested stock options exercised (in percent) | 100% | |||||
Share price used is equal to or less than $33.00 | IPO | Market-Based Incentive Units | ||||||
Fair value of the stock option grants determined with assumptions | ||||||
Vesting percentage | 0% | |||||
Share price (in dollar per share) | $ 33 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
INCOME TAXES | ||
Discrete tax benefit | $ 3,598 | |
Effective income tax rate (as a percent) | 158.40% | 29.80% |
Uncertain tax positions reserve | $ 0 |
TAX RECEIVABLE AGREEMENTS (Deta
TAX RECEIVABLE AGREEMENTS (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 USD ($) | Mar. 31, 2020 agreement | Jul. 31, 2018 agreement | |
TAX RECEIVABLE AGREEMENTS | |||
Number of tax receivable agreements | agreement | 3 | 2 | |
Payment to TRA holder on net cash savings (as a percent) | 85% | ||
Retained benefit on net cash savings (as a percent) | 15% | ||
Tax Receivable Agreement obligations | $ 215,013 | ||
Payments made under Tax Receivable Agreements | $ 9,598 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | ||
Liabilities, clearing brokers | $ 0 | $ 0 |
CASH FLOW INFORMATION (Details)
CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Supplemental disclosures of cash flow information-cash paid for: | ||
Interest | $ 87,932 | $ 34,952 |
Income taxes | 11,047 | 22,571 |
Supplemental non-cash cash flow information: | ||
Fair market value of estimated contingent consideration in connection with acquisitions | $ 212,624 | $ 18,474 |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - Related Party - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue from affiliated entity | $ 3,215 | $ 2,857 | $ 6,539 | $ 6,125 |
Chief Executive Officer | ||||
Expenses recognized | $ 1,035 | $ 1,335 | $ 2,113 | $ 2,430 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 32,177 | $ 33,083 | $ 31,545 | $ 62,185 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |