Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 02, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
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$0.01 per share | |
Trading Symbol | FOCS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001651052 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A common stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 65,362,389 | |
Class B common stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 12,114,104 |
Unaudited condensed consolidate
Unaudited condensed consolidated balance sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 317,034 | $ 310,684 |
Accounts receivable less allowances of $3,255 at 2021 and $3,696 at 2022 | 209,209 | 198,827 |
Prepaid expenses and other assets | 161,997 | 123,826 |
Fixed assets-net | 46,832 | 47,199 |
Operating lease assets | 256,064 | 249,850 |
Debt financing costs-net | 3,580 | 4,254 |
Deferred tax assets-net | 258,228 | 267,332 |
Goodwill | 1,928,135 | 1,925,315 |
Other intangible assets-net | 1,525,002 | 1,581,719 |
TOTAL ASSETS | 4,706,081 | 4,709,006 |
LIABILITIES | ||
Accounts payable | 14,719 | 11,580 |
Accrued expenses | 75,956 | 72,572 |
Due to affiliates | 28,808 | 105,722 |
Deferred revenue | 12,742 | 10,932 |
Contingent consideration and other liabilities | 415,942 | 468,284 |
Deferred tax liabilities | 36,501 | 31,973 |
Operating lease liabilities | 284,613 | 277,324 |
Borrowings under credit facilities (stated value of $2,407,302 and $2,451,128 at December 31, 2021 and March 31, 2022, respectively) | 2,438,183 | 2,393,669 |
Tax receivable agreements obligations | 215,999 | 219,542 |
TOTAL LIABILITIES | 3,523,463 | 3,591,598 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
EQUITY | ||
Additional paid-in capital | 865,857 | 841,753 |
Retained earnings | 54,097 | 24,995 |
Accumulated other comprehensive income | 20,469 | 3,029 |
Total shareholders' equity | 941,192 | 870,544 |
Non-controlling interest | 241,426 | 246,864 |
Total equity | 1,182,618 | 1,117,408 |
TOTAL LIABILITIES AND EQUITY | 4,706,081 | 4,709,006 |
Class A common stock | ||
EQUITY | ||
Common stock | 653 | 653 |
Class B common stock | ||
EQUITY | ||
Common stock | $ 116 | $ 114 |
Unaudited condensed consolida_2
Unaudited condensed consolidated balance sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Accounts receivable, allowances | $ 3,696 | $ 3,255 |
Borrowings under credit facilities, stated value | $ 2,451,128 | $ 2,407,302 |
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 | 65,362,389 | 65,320,124 |
Common stock, outstanding shares | 65,362,389 | 65,320,124 |
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 | 11,601,814 | 11,439,019 |
Common stock, outstanding shares | 11,601,814 | 11,439,019 |
Unaudited condensed consolida_3
Unaudited condensed consolidated statements of operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
REVENUES: | ||
Total revenues | $ 536,567 | $ 394,175 |
OPERATING EXPENSES: | ||
Compensation and related expenses | 181,800 | 141,043 |
Management fees | 137,839 | 102,072 |
Selling, general and administrative | 88,650 | 63,826 |
Intangible amortization | 60,276 | 42,983 |
Non-cash changes in fair value of estimated contingent consideration | (8,985) | 25,936 |
Depreciation and other amortization | 3,633 | 3,607 |
Total operating expenses | 463,213 | 379,467 |
INCOME FROM OPERATIONS | 73,354 | 14,708 |
OTHER INCOME (EXPENSE): | ||
Interest income | 3 | 47 |
Interest expense | (17,616) | (10,521) |
Amortization of debt financing costs | (1,101) | (852) |
Other income (expense)-net | (36) | 3 |
Income from equity method investments | 95 | 283 |
Total other expense-net | (18,655) | (11,040) |
INCOME BEFORE INCOME TAX | 54,699 | 3,668 |
INCOME TAX EXPENSE | 15,617 | 1,186 |
NET INCOME | 39,082 | 2,482 |
Non-controlling interest | (9,980) | (2,226) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 29,102 | 256 |
Wealth management fees | ||
REVENUES: | ||
Total revenues | 515,179 | 374,845 |
Other | ||
REVENUES: | ||
Total revenues | $ 21,388 | $ 19,330 |
Class A common stock | ||
Income per share of Class A common stock: | ||
Basic (in dollars per share) | $ 0.45 | $ 0 |
Diluted (in dollars per share) | $ 0.44 | $ 0 |
Weighted average shares of Class A common stock outstanding: | ||
Basic (in shares) | 65,331,370 | 52,200,029 |
Diluted (in shares) | 65,767,463 | 52,654,822 |
Unaudited condensed consolida_4
Unaudited condensed consolidated statements of comprehensive income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Unaudited condensed consolidated statements of comprehensive income | ||
Net income | $ 39,082 | $ 2,482 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | 3,750 | (441) |
Unrealized gain on interest rate swaps designated as cash flow hedges | 18,766 | 5,251 |
Comprehensive income | 61,598 | 7,292 |
Less: Comprehensive income attributable to non-controlling interest | (15,056) | (3,952) |
Comprehensive income attributable to common shareholders | $ 46,542 | $ 3,340 |
Unaudited condensed consolida_5
Unaudited condensed consolidated statements of cash flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 39,082 | $ 2,482 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities-net of effect of acquisitions: | ||
Intangible amortization | 60,276 | 42,983 |
Depreciation and other amortization | 3,633 | 3,607 |
Amortization of debt financing costs | 1,101 | 852 |
Non-cash equity compensation expense | 6,707 | 12,356 |
Non-cash changes in fair value of estimated contingent consideration | (8,985) | 25,936 |
Income from equity method investments | (95) | (283) |
Distributions received from equity method investments | 425 | 176 |
Deferred taxes and other non-cash items | 6,424 | 436 |
Changes in cash resulting from changes in operating assets and liabilities: | ||
Accounts receivable | (10,478) | (7,393) |
Prepaid expenses and other assets | (12,827) | (5,098) |
Accounts payable | 3,081 | (1,637) |
Accrued expenses | 4,721 | 2,169 |
Due to affiliates | (76,997) | (39,818) |
Contingent consideration and other liabilities | (22,520) | (3,023) |
Deferred revenue | 1,810 | 383 |
Net cash provided by (used in) operating activities | (4,642) | 34,128 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for acquisitions and contingent consideration-net of cash acquired | (2,603) | (7,925) |
Purchase of fixed assets | (3,232) | (2,835) |
Investment and other, net | (5,232) | (17,500) |
Net cash used in investing activities | (11,067) | (28,260) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under credit facilities | 50,000 | 524,375 |
Repayments of borrowings under credit facilities | (6,174) | (409,173) |
Proceeds from issuance of common stock, net | 12,119 | |
Payments in connection with unit redemption, net | (12,119) | |
Payments in connection with tax receivable agreements | (3,856) | (4,112) |
Contingent consideration paid | (10,443) | (4,172) |
Payments of debt financing costs | (2,700) | |
Proceeds from exercise of stock options | 422 | 2,863 |
Payments on finance lease obligations | (33) | |
Distributions for unitholders | (8,209) | (9,055) |
Net cash provided by financing activities | 21,740 | 97,993 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 319 | (4) |
CHANGE IN CASH AND CASH EQUIVALENTS | 6,350 | 103,857 |
CASH AND CASH EQUIVALENTS: | ||
Beginning of period | 310,684 | 65,858 |
End of period | $ 317,034 | $ 169,715 |
Unaudited condensed consolida_6
Unaudited condensed consolidated statements of changes in equity - USD ($) $ in Thousands | Total Shareholders' Equity | Common StockClass A common stock | Common StockClass B common stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Non-controlling Interest | Total |
Beginning balance at Dec. 31, 2020 | $ 539,799 | $ 512 | $ 207 | $ 526,664 | $ 14,583 | $ (2,167) | $ 319,080 | $ 858,879 |
Beginning balance (in shares) at Dec. 31, 2020 | 51,158,712 | 20,661,595 | ||||||
Increase (Decrease) in shareholders' equity | ||||||||
Net income | 256 | 256 | 2,226 | 2,482 | ||||
Issuance (cancellation) of common stock in connection with offering, net | 121,984 | $ 26 | $ (25) | 121,983 | 121,984 | |||
Issuance (cancellation) of common stock in connection with offering, net (in shares) | 2,640,369 | (2,460,732) | ||||||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights | 54,869 | $ 12 | $ (12) | 54,869 | 54,869 | |||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights (in shares) | 1,181,759 | (1,181,759) | ||||||
Issuance of common stock in connection with exercise of Focus LLC incentive unit exchange rights | 3,272 | $ 1 | 3,271 | 3,272 | ||||
Issuance of common stock in connection with exercise of Focus LLC incentive unit exchange rights (in shares) | 70,465 | |||||||
Exercise of stock options | 2,022 | 2,022 | 2,022 | |||||
Exercise of stock options (in shares) | 63,537 | |||||||
Change in non-controlling interest allocation | (125,836) | (125,836) | (51,884) | (177,720) | ||||
Non-cash equity compensation expenses | 1,164 | 1,164 | 1,164 | |||||
Currency translation adjustment - net of tax | (312) | (312) | (129) | (441) | ||||
Unrealized gain on interest rate swaps designated as cash flow hedges | 3,396 | 3,396 | 1,855 | 5,251 | ||||
Adjustment of deferred tax assets, net of amounts payable under tax receivable agreements and changes from LLC interest transactions | 5,885 | 5,885 | 5,885 | |||||
Ending balance at Mar. 31, 2021 | 606,499 | $ 551 | $ 170 | 590,022 | 14,839 | 917 | 271,148 | 877,647 |
Ending Balance (in shares) at Mar. 31, 2021 | 55,114,842 | 17,019,104 | ||||||
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 | 29,102 | 29,102 | 9,980 | 39,082 | ||||
Issuance of units in connection with an acquisition and contingent consideration | 2 | $ 2 | 2 | |||||
Issuance of units in connection with an acquisition and contingent consideration (in shares) | 187,795 | |||||||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights | 1,107 | 1,107 | 1,107 | |||||
Issuance (cancellation) of common stock in connection with exercise of Focus LLC common unit exchange rights (in shares) | 25,000 | (25,000) | ||||||
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 | 23,747 | 23,747 | (20,494) | 3,253 | ||||
Non-cash equity compensation expenses | 1,992 | 1,992 | 1,992 | |||||
Currency translation adjustment - net of tax | 2,915 | 2,915 | 835 | 3,750 | ||||
Unrealized gain on interest rate swaps designated as cash flow hedges | 14,525 | 14,525 | 4,241 | 18,766 | ||||
Adjustment of deferred tax assets, net of amounts payable under tax receivable agreements and changes from LLC interest transactions | (3,251) | (3,251) | (3,251) | |||||
Ending balance at Mar. 31, 2022 | $ 941,192 | $ 653 | $ 116 | $ 865,857 | $ 54,097 | $ 20,469 | $ 241,426 | $ 1,182,618 |
Ending Balance (in shares) at Mar. 31, 2022 | 65,362,389 | 11,601,814 |
GENERAL
GENERAL | 3 Months Ended |
Mar. 31, 2022 | |
GENERAL | |
GENERAL | 1. GENERAL Organization and Business Focus LLC is a Delaware limited liability company that was formed in November 2004. Focus LLCâs subsidiaries commenced revenue-generating and acquisition activities in January 2006. Focus LLCâs activities are governed by its Fourth Amended and Restated Operating Agreement (the âOperating Agreementâ). 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 âCompanyâ). |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF ACCOUNTING POLICIES | |
SUMMARY OF ACCOUNTING POLICIES | 2. SUMMARY OF ACCOUNTING POLICIES Basis of Presentation Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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. â â â â â â â â â â â Three Months Ended â â â March 31, â â 2021 2022 â Domestic revenue â $ 370,954 â $ 507,311 â International revenue â 23,221 â 29,256 â Total revenue â $ 394,175 â $ 536,567 â â International revenue consists of revenue generated by partner firm legal entities in Australia, Canada and the United Kingdom. Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (âASUâ) No. 2020-04, â Facilitation of the Effects of Reference Rate Reform on Financial Reporting .â ASU No. 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London InterBank Offered Rate (âLIBORâ) or another rate that is expected to be discontinued. The amendments in ASU No. 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of ASU No. 2020-04 did not have a material impact on the Companyâs consolidated financial statements; however, the Company will continue to evaluate the impacts, if any, of the provisions of ASU No. 2020-04 on the Companyâs debt and hedging arrangements through December 31, 2022. |
NON-CONTROLLING INTEREST AND IN
NON-CONTROLLING INTEREST AND INCOME PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
NON-CONTROLLING INTEREST AND INCOME PER SHARE | |
NON-CONTROLLING INTEREST AND INCOME PER SHARE | 3. NON-CONTROLLING INTEREST AND INCOME PER SHARE The calculation of controlling and non-controlling interest is as follows as of March 31, 2021 and 2022: â â â â â â â â â 2021 â â 2022 â Focus LLC common units 17,019,104 â â 11,601,814 â Focus LLC restricted common units â 71,374 â â 193,625 â Common unit equivalents of outstanding vested and unvested Focus LLC incentive units(1) â 7,006,625 â â 6,998,055 â Total common units, restricted common units and common unit equivalents attributable to non-controlling interest â 24,097,103 â â 18,793,494 â Total common units, restricted common units and common unit equivalents of incentive units outstanding â 79,211,945 â â 84,155,883 â Non-controlling interest allocation â 30.4 % â 22.3 % Companyâs interest in Focus LLC â 69.6 % â 77.7 % (1) Focus LLC common units issuable upon conversion of 16,728,882 and 16,202,274 (see Note 9) vested and unvested Focus LLC incentive units outstanding as of March 31, 2021 and 2022, respectively, was calculated using the common unit equivalent of vested and unvested Focus LLC incentive units based on the closing price of the Companyâs Class A common stock on the last trading day of the periods. â 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: â â â â â â â â â â â â â â â â â Three Months Ended â â March 31, â â â 2021 2022 â Net income attributable to common shareholders â $ 256 â $ 29,102 â â â â â â â â â Weighted average shares of Class A common stock outstanding â 52,200,029 â 65,331,370 â â â â â â â â â Basic income per share â $ 0.00 â $ 0.45 â â Diluted 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 plus the effect, if any, of the potentially dilutive shares of the Companyâs Class A common stock from stock options, restricted stock units and Focus LLC common units, restricted common units and incentive units as calculated using the treasury stock method: â â â â â â â â â â â â â â â Three Months Ended â â â March 31, â 2021 2022 Net income attributable to common shareholders â $ 256 â $ 29,102 â â â â â â â Weighted average shares of Class A common stock outstanding â 52,200,029 â 65,331,370 Effect of dilutive stock options â â 415,041 â â 407,059 Effect of dilutive restricted stock units â â 39,752 â â 29,034 Total â 52,654,822 â 65,767,463 â â â â â â â Diluted income per share â $ 0.00 â $ 0.44 â Diluted income per share for the three months ended March 31, 2021 and 2022 excludes shares related to 155,000 market-based stock options, as modified, that vest on the sixth anniversary of the pricing of the Companyâs initial public offering (âIPOâ) with vesting based on the highest volume weighted average per share price for any ninety-calendar day period (â90-day VWAPâ) 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). Such market-based criteria were not met at March 31, 2021 and 2022. Focus LLC common, restricted common and incentive units may be exchanged for the Companyâs 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 per share, net income 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 months ended March 31, 2021 and 2022, such exchange is not reflected in diluted net income per share as the assumed exchange is not dilutive. â |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 4. ACQUISITIONS Asset Acquisition The Company separately purchases customer relationships and other intangible assets. These purchases are accounted for as asset acquisitions as they do not qualify as business acquisitions pursuant to ASC Topic 805: Business Combinations The weighted-average useful lives of intangible assets acquired during the three months ended March 31, 2022 are as follows: â â â â â â â â Number of years Customer relationships â 5 Other acquired intangibles â 5 Weighted-average useful life of all intangibles acquired â 5 â From April 1, 2022 to May 5, 2022, the Company completed four business acquisitions for cash, including cash due subsequent to closing, and equity, inclusive of the issuance of 512,290 shares of Class B common stock, of $263,188, plus contingent consideration. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
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, 2021 and the three months ended March 31, 2022: â â â â â â â â â December 31, March 31, â â 2021 â 2022 Balance beginning of period: â â â â â â Goodwill â $ 1,278,183 â $ 1,947,939 Cumulative impairment losses â (22,624) â â (22,624) â â â 1,255,559 â â 1,925,315 Goodwill acquired â 677,195 â â â Other â (7,439) â â 2,820 â â 669,756 â â 2,820 Balance end of period: â â â â â â Goodwill â 1,947,939 â â 1,950,759 Cumulative impairment losses â (22,624) â â (22,624) â â $ 1,925,315 â $ 1,928,135 â The following table summarizes the amortizing acquired intangible assets at December 31, 2021: â â â â â â â â â â â â â Gross Carry â Accumulated â Net Book â Amount Amortization Value Customer relationships â $ 2,228,461 â $ (787,016) â $ 1,441,445 Management contracts â 191,578 â (57,153) â 134,425 Other acquired intangibles â 10,911 â (5,062) â 5,849 Total â $ 2,430,950 â $ (849,231) â $ 1,581,719 â The following table summarizes the amortizing acquired intangible assets at March 31, 2022: â â â â â â â â â â â â Gross Carry Accumulated Net Book â â Amount â Amortization â Value Customer relationships â $ 2,232,141 â $ (844,289) â $ 1,387,852 Management contracts â 191,665 â â (60,000) â â 131,665 Other acquired intangibles â 10,988 â â (5,503) â â 5,485 Total â $ 2,434,794 â $ (909,792) â $ 1,525,002 â |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2022 | |
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 Marketable securities At March 31, 2022, the fair value of the Companyâs investment in a mutual fund was $16,724. The fair value was determined using Level 1 inputs. â First Lien Term Loan â The implied fair value of the Companyâs First Lien Term Loan (as defined below) based on Level 2 inputs at December 31, 2021 and March 31, 2022 are as follows: â â â â â â â â â â â â â â â â December 31, 2021 â March 31, 2022 â Stated Fair Stated Fair â â Value â Value â Value â Value First Lien Term Loan - Tranche A â $ 1,610,928 â $ 1,598,846 â $ 1,606,755 â $ 1,580,645 First Lien Term Loan - Tranche B â 796,374 â 792,392 â 794,373 â 783,450 â Derivatives At December 31, 2021 and March 31, 2022, the fair value of the Companyâs $850,000 notional amount interest rate swap agreements was $5,810 and $29,593, respectively, which is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets. 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. The following table represents changes in the fair value of estimated contingent consideration for business acquisitions for the year ended December 31, 2021 and the three months ended March 31, 2022: â â â â â Balance at January 1, 2021 $ 169,670 Additions to estimated contingent consideration â â 212,074 Payments of contingent consideration â â (143,107) Non-cash changes in fair value of estimated contingent consideration â â 112,416 Other â â (1,026) Balance at December 31, 2021 â $ 350,027 Additions to estimated contingent consideration â â â Payments of contingent consideration â â (43,190) Non-cash changes in fair value of estimated contingent consideration â â (8,985) Other â â 735 Balance at March 31, 2022 â $ 298,587 â Estimated contingent consideration is included in contingent consideration and other liabilities in the accompanying unaudited condensed consolidated balance sheets. At December 31, 2021 and March 31, 2022, amounts due to sellers in connection with business acquisitions of $114,156 and $113,987, respectively, are included in contingent consideration and other liabilities in the unaudited condensed consolidated balance sheets. During the year ended December 31, 2021, the Company paid $131,827 in cash and issued $11,280 in Focus LLC common units as contingent consideration associated with business acquisitions. During the three months ended March 31, 2022, the Company paid $33,492 in cash and issued $9,698 in Focus LLC common units as contingent consideration associated with business acquisitions. During the three months ended March 31, 2021 and 2022, the Company paid cash of $591 and $728 , respectively, as contingent consideration associated with asset acquisitions. These amounts are included in cash paid for acquisitions and contingent considerationânet 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 businessâ 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 Companyâs estimated contingent consideration. The significant unobservable inputs used in the fair value measurement of the Companyâs estimated contingent consideration are the forecasted growth rates over the measurement period and discount rates. Significant increases or decreases in the Companyâs 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, 2021 and March 31, 2022 are summarized below: â â â â â â â â â â â â Quantitative Information About Level 3 â â Fair Value Measurements Fair Value at Valuation Unobservable â December 31, 2021 â Techniques â Inputs â Ranges $ 350,027 â Monte Carlo Simulation Model â Forecasted growth rates â 0.7% - 20.1 % â â â â â Discount rates â 9.0% - 15.0 % â â â â â â â â â â â â Quantitative Information About Level 3 â â Fair Value Measurements Fair Value at Valuation Unobservable â March 31, 2022 â Techniques â Inputs â Ranges $ 298,587 â Monte Carlo Simulation Model â Forecasted growth rates â (9.1)% - 32.1 % â â â â â Discount rates â 10.0% - 17.0 % â |
CREDIT FACILITY
CREDIT FACILITY | 3 Months Ended |
Mar. 31, 2022 | |
CREDIT FACILITY. | |
CREDIT FACILITY | 7. CREDIT FACILITY As of March 31, 2022, Focus LLCâs credit facility (the âCredit Facilityâ) consisted of a $2,401,128 first lien term loan (the âFirst Lien Term Loanâ), consisting of a tranche A (âTranche Aâ) and tranche B (âTranche Bâ), and a $650,000 first lien revolving credit facility (the âFirst Lien Revolverâ). Tranche A bears interest (at Focus LLCâs option) at: (i) LIBOR plus a margin of 2.00% or (ii) the lenderâs Base Rate (as defined in the Credit Facility) plus a margin of 1.00%. Tranche A requires quarterly installment repayments of $4,173 and has a maturity date of July 2024. Tranche B bears interest (at Focus LLCâs option) at: (i) LIBOR plus a margin of 2.50% with a 0.50% LIBOR floor or (ii) the lenderâs Base Rate plus a margin of 1.50%. Tranche B requires quarterly installment repayments of $2,001 and has a maturity date of June 2028. In April 2022, Focus LLC amended the First Lien Revolver to extend the maturity date to June 2024 and change the benchmark interest rate from LIBOR to the Secured Overnight Financing Rate (âSOFRâ). As amended, the First Lien Revolver bears interest (at Focus LLCâs option) at SOFR, including a credit adjustment spread, plus a margin of 2.00% with step downs to 1.75%, 1.50% and 1.25% or the lenderâs Base Rate plus a margin of 1.00% with step downs to 0.75%, 0.50% and 0.25%, 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. In connection with the amendment, Focus LLC incurred $975 in estimated debt financing costs. Focus LLCâs obligations under the Credit Facility are collateralized by the majority of Focus LLCâs 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 March 31, 2022, Focus LLCâs First Lien Leverage Ratio was 3.84:1.00, 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 $556,172 at March 31, 2022. 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 2021. Based on the excess cash flow calculation for the year ended December 31, 2021, no contingent principal payments are required to be made in 2022. The Company defers and amortizes its debt financing costs over the respective terms and tranches of the First Lien Term Loan and First Lien Revolver. The debt financing costs related to the First Lien Term Loan are recorded as a reduction of the carrying amount of the First Lien Term Loan 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, 2021 and March 31, 2022: â â â â â â â â â December 31, March 31, â â 2021 â 2022 First Lien Term Loan - Tranche A â $ 1,610,928 â $ 1,606,755 First Lien Term Loan - Tranche B â â 796,374 â â 794,373 First Lien Revolver â â â â â 50,000 Unamortized debt financing costs â (7,523) â (7,096) Unamortized discount â (6,110) â (5,849) Total â $ 2,393,669 â $ 2,438,183 â At December 31, 2021 and March 31, 2022, unamortized debt financing costs associated with the First Lien Revolver of $4,254 and $3,580, respectively, were recorded in debt financing costs-net in the unaudited condensed consolidated balance sheets. Weighted-average interest rates for outstanding borrowings were approximately 3% for the year ended December 31, 2021 and the three months ended March 31, 2022. As of December 31, 2021 and March 31, 2022, the First Lien Revolver available unused commitment line was $642,085 and $590,249, respectively. As of December 31, 2021 and March 31, 2022, Focus LLC was contingently obligated for letters of credit in the amount of $7,915 and $9,751, respectively, each bearing interest at an annual rate of approximately 2%. |
DERIVATIVES
DERIVATIVES | 3 Months Ended |
Mar. 31, 2022 | |
DERIVATIVES | |
DERIVATIVES | 8. DERIVATIVES At March 31, 2022, the Company has (i) a 4 year floating to fixed interest rate swap with a notional amount of $400,000 that was entered into in March 2020, the terms of which provide that the Company pays interest to the counterparty each month at a rate of 0.713% and receives interest from the counterparty each month at the 1 month USD LIBOR rate, subject to a 0% floor and (ii) two 4 year floating to fixed interest rate swap agreements with notional amounts of $250,000 and $200,000, that were entered into in April 2020, the terms of which provide that the Company pays interest to the counterparties each month at a rate of 0.537% and 0.5315%, respectively, and receives interest from the counterparties each month at the 1 month USD LIBOR rate, subject to a 0% floor. The interest rate swaps effectively fix the variable interest rate applicable to At December 31, 2021 and March 31, 2022, the fair value of the interest rate swaps was $5,810 and $29,593, respectively, which is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets. The interest rate 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 $1,194 and $6,211 at December 31, 2021 and March 31, 2022, respectively. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
EQUITY | |
EQUITY | 9. EQUITY Exchange rights Each Focus LLC common unit, together with a corresponding share of Focus Inc.âs 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 unitâs 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.âs Class A common stock, or, if either Focus Inc. or Focus LLC so elects, cash. In March 2022, the Company issued an aggregate of 26,956 shares of Class A common stock and retired 25,000 shares of Class B common stock and 4,250 incentive units in Focus LLC, and acquired 26,956 common units in Focus LLC, in each case as part of the regular quarterly exchanges offered to holders of units in Focus LLC. Other In February 2022, Focus LLC issued 187,795 common units and Focus Inc. issued a corresponding number of shares of Class B common stock in connection with a contingent consideration payment. Stock Options and Restricted Stock Units The following table provides information relating to the changes in the Companyâs stock options during the three months ended March 31, 2022: â â â â â â â â Weighted â â â â Average â â Stock â Exercise â â Options â Price OutstandingâJanuary 1, 2022 1,931,868 â $ 37.47 Granted â 350,048 â â 51.73 Exercised â (15,309) â â 27.60 Forfeited â (36,079) â â 55.71 OutstandingâMarch 31, 2022 â 2,230,528 â â 39.48 VestedâMarch 31, 2022 â 839,770 â â 31.61 â 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.âs Class A common stock, as well as by assumptions regarding a number of complex and subjective variables. These variables include the Companyâs expected unit price volatility over the term of the stock option, expected term, risk-free interest rates and expected dividend yield. The estimated grant-date fair value of the time-based stock option grants during the three months ended March 31, 2022 were calculated based on the following weighted-average assumptions: â â â â â Expected term â 6.3 years Expected stock price volatility â 34 % Risk-free interest rate â 1.85 % Expected dividend yield â â % Weighted average grant date fair value $ 19.09 â â The following table provides information relating to the changes in the Companyâs restricted stock units during the three months ended March 31, 2022: â â â â â â â â â â Weighted â â Restricted â Average â â Stock â Grant Date â Units Fair Value OutstandingâJanuary 1, 2022 187,756 â $ 47.69 Granted â â â â â Forfeited â (11,668) â â 47.15 Vested â â â â â OutstandingâMarch 31, 2022 â 176,088 â â 47.72 â 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. 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 Companyâs 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 $1,164 and $1,992 of non-cash equity compensation expense in relation to the stock options and restricted stock units during the three months ended March 31, 2021 and 2022, respectively. 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 three months ended March 31, 2022: â â â â â â â â Weighted â â Restricted â Average â â Common â Grant Date â â Units â Fair Value OutstandingâJanuary 1, 2022 193,625 â $ 54.70 Granted â â â â Forfeited â â â â Vested â â â â â OutstandingâMarch 31, 2022 193,625 â 54.70 â The following table provides information relating to the changes in Focus LLC incentive units during the three months ended March 31, 2022: â â â â â â â â Weighted â â â â Average â â Incentive â Hurdle â â Units â Price OutstandingâJanuary 1, 2022 16,146,524 â $ 26.44 Granted 60,000 â â 43.07 Exchanged â (4,250) â â 27.00 Forfeited â â â â OutstandingâMarch 31, 2022 16,202,274 â 26.51 VestedâMarch 31, 2022 9,817,878 â 20.47 â 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 Companyâs estimated common unit price, as well as by assumptions regarding a number of complex and subjective variables. These variables include the Companyâs expected unit price volatility over the term of the incentive unit, expected term, risk-free interest rates and expected dividend yield. â The estimated grant-date fair value of the time-based incentive unit grants during the three months ended March 31, 2022 was calculated based on the following weighted-average assumptions: â â â â â â Expected term â 5.0 years Expected stock price volatility â 34 % Risk-free interest rate â 1.71 % Expected dividend yield â â % Weighted average grant date fair value $ 14.16 â â â Incentive units outstanding and vested at March 31, 2022 were as follows: â â â â â â Number Vested Incentive Hurdle Rates â Outstanding â Units $1.42 421 â 421 5.50 798 â 798 6.00 386 â 386 7.00 1,081 â 1,081 9.00 708,107 â 708,107 11.00 813,001 â 813,001 12.00 513,043 â 513,043 13.00 540,000 â 540,000 14.00 10,098 â 10,098 16.00 45,191 â 45,191 17.00 20,000 â 20,000 19.00 527,928 â 527,928 21.00 3,045,236 â 3,045,236 22.00 821,417 â 821,417 23.00 524,828 â 524,828 26.26 â 12,500 â â 27.00 12,484 â 12,484 27.90 â 1,929,424 â 931,758 28.50 â 1,440,230 â 1,051,459 30.48 â 30,000 â 10,000 33.00 3,617,500 â 7,500 36.64 â 30,000 â 20,000 43.07 â 60,000 â â 43.50 â 30,000 â 10,000 44.71 â 806,324 â 203,142 58.50 â 662,277 â â â â 16,202,274 â 9,817,878 â 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. 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 Companyâs 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 The Company recorded $11,192 and $4,715 of non-cash equity compensation expense for incentive units and restricted common units during the three months ended March 31, 2021 and 2022, respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES The estimated annual effective tax rate for the three months ended March 31, 2022 was 28.6% as compared to 45.1% for the year ended December 31, 2021. Income tax expense for the three months ended March 31, 2022 is primarily related to federal, state and local income taxes imposed on the Companyâs allocable portion of taxable income from Focus LLC. 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. During the three months ended March 31, 2022, there were no changes to the Companyâs uncertain tax positions. |
TAX RECEIVABLE AGREEMENTS
TAX RECEIVABLE AGREEMENTS | 3 Months Ended |
Mar. 31, 2022 | |
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 âTax Receivable Agreementsâ) 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 âTRA Holdersâ). 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 March 31, 2022, the Company had recorded a liability of $215,999 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 three months ended March 31, 2022, payments totaling $3,856 were made under the Tax Receivable Agreements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
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 Company is also exposed to credit risk for changes in the benchmark interest rate (LIBOR, SOFR or Base Rate) in connection with its Credit Facility. The counterparties to the Companyâs 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 managementâs review of the financial stability of the institution. At December 31, 2021 and March 31, 2022, a significant portion of cash and cash equivalents were held at a single institution. Contingent Consideration Arrangements Legal and Regulatory Matters From time to time, the Company and its subsidiaries receive requests for information from governmental authorities regarding business activities. The Company has cooperated and plans to continue to cooperate with all governmental authorities. The Company continues to believe that the resolution of any governmental inquiry will not have a material impact on the Companyâs consolidated financial position, results of operations or cash flows. 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 | 3 Months Ended |
Mar. 31, 2022 | |
CASH FLOW INFORMATION | |
CASH FLOW INFORMATION | 13. CASH FLOW INFORMATION â â â â â â â â â â Three Months Ended â â March 31, â 2021 2022 Supplemental disclosures of cash flow informationâcash paid for: â â â â â â Interest â $ 10,267 â $ 16,506 Income taxes â $ 3,739 â $ 10,066 Supplemental non-cash cash flow information: â â Fair market value of estimated contingent consideration in connection with acquisitions â $ 6,187 â $ â â |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2022 | |
RELATED PARTIES | |
RELATED PARTIES | 14. RELATED PARTIES The Companyâs 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 Companyâs 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 months ended March 31, 2021 and 2022, the Company recognized expenses of $603 and $1,095, respectively, related to these reimbursements. Given the geography of the Companyâs partner firms and prospects, the Company believes that the use of private aircraft creates efficiencies to enhance the productivity of the Companyâs Chief Executive Officer and certain other authorized personnel. At March 31, 2022, affiliates of certain holders of the Companyâs Class A common stock and Class B common stock were lenders under the Credit Facility. â |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. |
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. â â â â â â â â â â â Three Months Ended â â â March 31, â â 2021 2022 â Domestic revenue â $ 370,954 â $ 507,311 â International revenue â 23,221 â 29,256 â Total revenue â $ 394,175 â $ 536,567 â â International revenue consists of revenue generated by partner firm legal entities in Australia, Canada and the United Kingdom. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (âASUâ) No. 2020-04, â Facilitation of the Effects of Reference Rate Reform on Financial Reporting .â ASU No. 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London InterBank Offered Rate (âLIBORâ) or another rate that is expected to be discontinued. The amendments in ASU No. 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of ASU No. 2020-04 did not have a material impact on the Companyâs consolidated financial statements; however, the Company will continue to evaluate the impacts, if any, of the provisions of ASU No. 2020-04 on the Companyâs debt and hedging arrangements through December 31, 2022. |
SUMMARY OF ACCOUNTING POLICIE_2
SUMMARY OF ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF ACCOUNTING POLICIES | |
Schedule of disaggregated revenues based on the location of the partner firm | â â â â â â â â â â â Three Months Ended â â â March 31, â â 2021 2022 â Domestic revenue â $ 370,954 â $ 507,311 â International revenue â 23,221 â 29,256 â Total revenue â $ 394,175 â $ 536,567 â |
NON-CONTROLLING INTEREST AND _2
NON-CONTROLLING INTEREST AND INCOME PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
NON-CONTROLLING INTEREST AND INCOME PER SHARE | |
Schedule of controlling and non-controlling interest | â â â â â â â â â 2021 â â 2022 â Focus LLC common units 17,019,104 â â 11,601,814 â Focus LLC restricted common units â 71,374 â â 193,625 â Common unit equivalents of outstanding vested and unvested Focus LLC incentive units(1) â 7,006,625 â â 6,998,055 â Total common units, restricted common units and common unit equivalents attributable to non-controlling interest â 24,097,103 â â 18,793,494 â Total common units, restricted common units and common unit equivalents of incentive units outstanding â 79,211,945 â â 84,155,883 â Non-controlling interest allocation â 30.4 % â 22.3 % Companyâs interest in Focus LLC â 69.6 % â 77.7 % (1) Focus LLC common units issuable upon conversion of 16,728,882 and 16,202,274 (see Note 9) vested and unvested Focus LLC incentive units outstanding as of March 31, 2021 and 2022, respectively, was calculated using the common unit equivalent of vested and unvested Focus LLC incentive units based on the closing price of the Companyâs Class A common stock on the last trading day of the periods. â |
Schedule of calculation of basic income per share | â â â â â â â â â â â â â â â â â Three Months Ended â â March 31, â â â 2021 2022 â Net income attributable to common shareholders â $ 256 â $ 29,102 â â â â â â â â â Weighted average shares of Class A common stock outstanding â 52,200,029 â 65,331,370 â â â â â â â â â Basic income per share â $ 0.00 â $ 0.45 â |
Schedule of calculation of diluted income per share | â â â â â â â â â â â â â â â Three Months Ended â â â March 31, â 2021 2022 Net income attributable to common shareholders â $ 256 â $ 29,102 â â â â â â â Weighted average shares of Class A common stock outstanding â 52,200,029 â 65,331,370 Effect of dilutive stock options â â 415,041 â â 407,059 Effect of dilutive restricted stock units â â 39,752 â â 29,034 Total â 52,654,822 â 65,767,463 â â â â â â â Diluted income per share â $ 0.00 â $ 0.44 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITIONS | |
Schedule of intangible assets acquired | â â â â â â â Number of years Customer relationships â 5 Other acquired intangibles â 5 Weighted-average useful life of all intangibles acquired â 5 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Summary of changes in the goodwill balances | â â â â â â â â â December 31, March 31, â â 2021 â 2022 Balance beginning of period: â â â â â â Goodwill â $ 1,278,183 â $ 1,947,939 Cumulative impairment losses â (22,624) â â (22,624) â â â 1,255,559 â â 1,925,315 Goodwill acquired â 677,195 â â â Other â (7,439) â â 2,820 â â 669,756 â â 2,820 Balance end of period: â â â â â â Goodwill â 1,947,939 â â 1,950,759 Cumulative impairment losses â (22,624) â â (22,624) â â $ 1,925,315 â $ 1,928,135 â |
Summary of amortizing acquired intangible assets | The following table summarizes the amortizing acquired intangible assets at December 31, 2021: â â â â â â â â â â â â â Gross Carry â Accumulated â Net Book â Amount Amortization Value Customer relationships â $ 2,228,461 â $ (787,016) â $ 1,441,445 Management contracts â 191,578 â (57,153) â 134,425 Other acquired intangibles â 10,911 â (5,062) â 5,849 Total â $ 2,430,950 â $ (849,231) â $ 1,581,719 â The following table summarizes the amortizing acquired intangible assets at March 31, 2022: â â â â â â â â â â â â Gross Carry Accumulated Net Book â â Amount â Amortization â Value Customer relationships â $ 2,232,141 â $ (844,289) â $ 1,387,852 Management contracts â 191,665 â â (60,000) â â 131,665 Other acquired intangibles â 10,988 â â (5,503) â â 5,485 Total â $ 2,434,794 â $ (909,792) â $ 1,525,002 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENTS | |
Schedule of implied fair value of the Company's First Lien Term Loan (as defined below) | â â â â â â â â â â â â â â â December 31, 2021 â March 31, 2022 â Stated Fair Stated Fair â â Value â Value â Value â Value First Lien Term Loan - Tranche A â $ 1,610,928 â $ 1,598,846 â $ 1,606,755 â $ 1,580,645 First Lien Term Loan - Tranche B â 796,374 â 792,392 â 794,373 â 783,450 |
Schedule of changes in the fair value of estimated contingent consideration for business acquisitions | â â â â â Balance at January 1, 2021 $ 169,670 Additions to estimated contingent consideration â â 212,074 Payments of contingent consideration â â (143,107) Non-cash changes in fair value of estimated contingent consideration â â 112,416 Other â â (1,026) Balance at December 31, 2021 â $ 350,027 Additions to estimated contingent consideration â â â Payments of contingent consideration â â (43,190) Non-cash changes in fair value of estimated contingent consideration â â (8,985) Other â â 735 Balance at March 31, 2022 â $ 298,587 â |
Schedule of inputs used in the fair value measurement of estimated contingent consideration | â â â â â â â â â â â â Quantitative Information About Level 3 â â Fair Value Measurements Fair Value at Valuation Unobservable â December 31, 2021 â Techniques â Inputs â Ranges $ 350,027 â Monte Carlo Simulation Model â Forecasted growth rates â 0.7% - 20.1 % â â â â â Discount rates â 9.0% - 15.0 % â â â â â â â â â â â â Quantitative Information About Level 3 â â Fair Value Measurements Fair Value at Valuation Unobservable â March 31, 2022 â Techniques â Inputs â Ranges $ 298,587 â Monte Carlo Simulation Model â Forecasted growth rates â (9.1)% - 32.1 % â â â â â Discount rates â 10.0% - 17.0 % |
CREDIT FACILITY (Tables)
CREDIT FACILITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CREDIT FACILITY. | |
Schedule of reconciliation of principal amounts outstanding under the Credit Facility to borrowings under credit facilities recorded in the consolidated balance sheets | â â â â â â â â â December 31, March 31, â â 2021 â 2022 First Lien Term Loan - Tranche A â $ 1,610,928 â $ 1,606,755 First Lien Term Loan - Tranche B â â 796,374 â â 794,373 First Lien Revolver â â â â â 50,000 Unamortized debt financing costs â (7,523) â (7,096) Unamortized discount â (6,110) â (5,849) Total â $ 2,393,669 â $ 2,438,183 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stock options | |
Schedule of stock options granted | â â â â â â â â Weighted â â â â Average â â Stock â Exercise â â Options â Price OutstandingâJanuary 1, 2022 1,931,868 â $ 37.47 Granted â 350,048 â â 51.73 Exercised â (15,309) â â 27.60 Forfeited â (36,079) â â 55.71 OutstandingâMarch 31, 2022 â 2,230,528 â â 39.48 VestedâMarch 31, 2022 â 839,770 â â 31.61 |
Time-based stock option awards | |
Schedule of fair value of stock options grants determined with assumptions | â â â â Expected term â 6.3 years Expected stock price volatility â 34 % Risk-free interest rate â 1.85 % Expected dividend yield â â % Weighted average grant date fair value $ 19.09 â |
Restricted Stock Units (RSUs) | |
Schedule of changes in restricted stock units | â â â â â â â â â â Weighted â â Restricted â Average â â Stock â Grant Date â Units Fair Value OutstandingâJanuary 1, 2022 187,756 â $ 47.69 Granted â â â â â Forfeited â (11,668) â â 47.15 Vested â â â â â OutstandingâMarch 31, 2022 â 176,088 â â 47.72 |
Focus LLC Restricted Common Units | |
Schedule of changes in restricted stock units | â â â â â â â â Weighted â â Restricted â Average â â Common â Grant Date â â Units â Fair Value OutstandingâJanuary 1, 2022 193,625 â $ 54.70 Granted â â â â Forfeited â â â â Vested â â â â â OutstandingâMarch 31, 2022 193,625 â 54.70 |
Incentive Units | |
Schedule of incentive units granted | â â â â â â â â Weighted â â â â Average â â Incentive â Hurdle â â Units â Price OutstandingâJanuary 1, 2022 16,146,524 â $ 26.44 Granted 60,000 â â 43.07 Exchanged â (4,250) â â 27.00 Forfeited â â â â OutstandingâMarch 31, 2022 16,202,274 â 26.51 VestedâMarch 31, 2022 9,817,878 â 20.47 |
Schedule of incentive units outstanding and vested by hurdle rates | â â â â â â Number Vested Incentive Hurdle Rates â Outstanding â Units $1.42 421 â 421 5.50 798 â 798 6.00 386 â 386 7.00 1,081 â 1,081 9.00 708,107 â 708,107 11.00 813,001 â 813,001 12.00 513,043 â 513,043 13.00 540,000 â 540,000 14.00 10,098 â 10,098 16.00 45,191 â 45,191 17.00 20,000 â 20,000 19.00 527,928 â 527,928 21.00 3,045,236 â 3,045,236 22.00 821,417 â 821,417 23.00 524,828 â 524,828 26.26 â 12,500 â â 27.00 12,484 â 12,484 27.90 â 1,929,424 â 931,758 28.50 â 1,440,230 â 1,051,459 30.48 â 30,000 â 10,000 33.00 3,617,500 â 7,500 36.64 â 30,000 â 20,000 43.07 â 60,000 â â 43.50 â 30,000 â 10,000 44.71 â 806,324 â 203,142 58.50 â 662,277 â â â â 16,202,274 â 9,817,878 |
Time based incentive units | |
Schedule of fair value of stock options grants determined with assumptions | â â â â Expected term â 5.0 years Expected stock price volatility â 34 % Risk-free interest rate â 1.71 % Expected dividend yield â â % Weighted average grant date fair value $ 14.16 â |
CASH FLOW INFORMATION (Tables)
CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CASH FLOW INFORMATION | |
Schedule of supplemental cash flow information | â â â â â â â â â â Three Months Ended â â March 31, â 2021 2022 Supplemental disclosures of cash flow informationâcash paid for: â â â â â â Interest â $ 10,267 â $ 16,506 Income taxes â $ 3,739 â $ 10,066 Supplemental non-cash cash flow information: â â Fair market value of estimated contingent consideration in connection with acquisitions â $ 6,187 â $ â |
SUMMARY OF ACCOUNTING POLICIE_3
SUMMARY OF ACCOUNTING POLICIES - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue Recognition | ||
Total revenues | $ 536,567 | $ 394,175 |
Domestic | ||
Revenue Recognition | ||
Total revenues | 507,311 | 370,954 |
International | ||
Revenue Recognition | ||
Total revenues | $ 29,256 | $ 23,221 |
NON-CONTROLLING INTEREST AND _3
NON-CONTROLLING INTEREST AND INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Basic income per share: | ||
Net income attributable to common shareholders | $ 29,102 | $ 256 |
Diluted income per share: | ||
Net income attributable to common shareholders | 29,102 | 256 |
Class A common stock | ||
Basic income per share: | ||
Net income attributable to common shareholders | $ 29,102 | $ 256 |
Weighted average shares of Class A common stock outstanding | 65,331,370 | 52,200,029 |
Basic income per share | $ 0.45 | $ 0 |
Diluted income per share: | ||
Net income attributable to common shareholders | $ 29,102 | $ 256 |
Weighted average shares of Class A common stock outstanding | 65,331,370 | 52,200,029 |
Effect of dilutive stock options | 407,059 | 415,041 |
Effect of dilutive restricted stock units | 29,034 | 39,752 |
Total | 65,767,463 | 52,654,822 |
Diluted income per share | $ 0.44 | $ 0 |
Market based stock options | ||
Diluted income per share: | ||
Antidilutive shares | 155,000 | 155,000 |
Market based stock options | IPO | ||
Diluted income per share: | ||
Threshold period | 90 days | 90 days |
Highest 90-day VWAP is $80.00 or less | Market based stock options | IPO | ||
Diluted income per share: | ||
Threshold period | 90 days | 90 days |
Threshold volume weighted average per share price trigger | $ 80 | $ 80 |
Vesting percentage | 0.00% | 0.00% |
Highest 90-day VWAP is $110.00 or more | Market based stock options | IPO | ||
Diluted income per share: | ||
Threshold period | 90 days | 90 days |
Threshold volume weighted average per share price trigger | $ 110 | $ 110 |
Vesting percentage | 100.00% | 100.00% |
Focus LLC | ||
NON-CONTROLLING INTEREST AND INCOME PER SHARE | ||
Focus LLC common units | 11,601,814 | 17,019,104 |
Focus LLC restricted common units | 193,625 | 71,374 |
Common unit equivalents of outstanding vested and unvested Focus LLC incentive units | 6,998,055 | 7,006,625 |
Total common units, restricted common units and common unit equivalents attributable to non-controlling interest | 18,793,494 | 24,097,103 |
Total common units, restricted common units and common unit equivalents of incentive units outstanding | 84,155,883 | 79,211,945 |
Non-controlling interest allocation | 22.30% | 30.40% |
Company's interest in Focus LLC | 77.70% | 69.60% |
Convertible incentive units | 16,202,274 | 16,728,882 |
ACQUISITIONS - Asset Acquisitio
ACQUISITIONS - Asset Acquisitions (Details) - Asset acquisitions $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Asset Acquisitions | |
Total purchase consideration in cash | $ 875 |
Weighted-average useful life of all intangibles acquired | 5 years |
Customer relationships | |
Asset Acquisitions | |
Weighted-average useful life of all intangibles acquired | 5 years |
Other acquired intangibles | |
Asset Acquisitions | |
Weighted-average useful life of all intangibles acquired | 5 years |
ACQUISITIONS - Business Acquisi
ACQUISITIONS - Business Acquisitions (Details) - Business acquisitions - Subsequent Events $ in Thousands | 1 Months Ended |
May 05, 2022USD ($)itemshares | |
ACQUISITIONS | |
Number of business acquisitions closed | item | 4 |
Purchase consideration for asset acquisitions | $ | $ 263,188 |
Class B common stock | |
ACQUISITIONS | |
Number of shares issued | shares | 512,290 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Change in goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Change in the goodwill | ||
Goodwill, gross, beginning of period | $ 1,947,939 | $ 1,278,183 |
Cumulative impairment losses beginning of period | (22,624) | (22,624) |
Goodwill, net, beginning of period | 1,925,315 | 1,255,559 |
Goodwill acquired | 677,195 | |
Other | 2,820 | (7,439) |
Goodwill period increase | 2,820 | 669,756 |
Goodwill, gross, end of period | 1,950,759 | 1,947,939 |
Cumulative impairment losses, end of period | (22,624) | (22,624) |
Goodwill, net, end of period | $ 1,928,135 | $ 1,925,315 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Amortizing acquired intangible assets | ||
Gross Carry Amount | $ 2,434,794 | $ 2,430,950 |
Accumulated Amortization | (909,792) | (849,231) |
Net Book Value | 1,525,002 | 1,581,719 |
Customer relationships | ||
Amortizing acquired intangible assets | ||
Gross Carry Amount | 2,232,141 | 2,228,461 |
Accumulated Amortization | (844,289) | (787,016) |
Net Book Value | 1,387,852 | 1,441,445 |
Management contracts | ||
Amortizing acquired intangible assets | ||
Gross Carry Amount | 191,665 | 191,578 |
Accumulated Amortization | (60,000) | (57,153) |
Net Book Value | 131,665 | 134,425 |
Other acquired intangibles | ||
Amortizing acquired intangible assets | ||
Gross Carry Amount | 10,988 | 10,911 |
Accumulated Amortization | (5,503) | (5,062) |
Net Book Value | $ 5,485 | $ 5,849 |
FAIR VALUE MEASUREMENTS - Marke
FAIR VALUE MEASUREMENTS - Marketable securities (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Level 1 | |
Marketable securities | |
Investments in mutual fund | $ 16,724 |
FAIR VALUE MEASUREMENTS - First
FAIR VALUE MEASUREMENTS - First Lien Term Loan (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Implied fair value based on level 2 inputs | ||
Stated Value | $ 2,438,183 | $ 2,393,669 |
First Lien Term Loan Tranche A | ||
Implied fair value based on level 2 inputs | ||
Stated Value | 1,606,755 | 1,610,928 |
First Lien Term Loan Tranche A | Level 2 | ||
Implied fair value based on level 2 inputs | ||
Fair Value | 1,580,645 | 1,598,846 |
First Lien Term Loan Tranche B | ||
Implied fair value based on level 2 inputs | ||
Stated Value | 794,373 | 796,374 |
First Lien Term Loan Tranche B | Level 2 | ||
Implied fair value based on level 2 inputs | ||
Fair Value | $ 783,450 | $ 792,392 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in the fair value (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Changes in the fair value of estimated contingent consideration for business acquisitions | |||
Balance at beginning of period | $ 350,027 | $ 169,670 | $ 169,670 |
Additions to estimated contingent consideration | 212,074 | ||
Payments of contingent consideration | (43,190) | (143,107) | |
Non-cash changes in fair value of estimated contingent consideration | (8,985) | 112,416 | |
Other | 735 | (1,026) | |
Balance at end of period | 298,587 | 350,027 | |
Interest rate swap | |||
Changes in the fair value of estimated contingent consideration for business acquisitions | |||
Notional amount | 400,000 | ||
Asset acquisitions | |||
Changes in the fair value of estimated contingent consideration for business acquisitions | |||
Contingent consideration paid in cash | 728 | $ 591 | |
Business acquisitions | |||
Changes in the fair value of estimated contingent consideration for business acquisitions | |||
Contingent consideration paid in cash | 33,492 | 131,827 | |
Contingent consideration issued of restricted common units | 9,698 | 11,280 | |
Contingent consideration and other liabilities | |||
Changes in the fair value of estimated contingent consideration for business acquisitions | |||
Amounts due to sellers | 113,987 | 114,156 | |
Prepaid expenses and other assets | Interest rate swap | |||
Changes in the fair value of estimated contingent consideration for business acquisitions | |||
Notional amount | 850,000 | 850,000 | |
Fair value of interest rate swap | $ 29,593 | $ 5,810 |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent consideration fair value inputs (Details) - Level 3 $ in Thousands | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) |
Inputs used in the fair value measurement of estimated contingent consideration | ||
Estimated contingent consideration | $ 298,587 | $ 350,027 |
Valuation Technique, Forecasted Growth Rates | Minimum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | (9.1) | 0.7 |
Valuation Technique, Forecasted Growth Rates | Maximum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | 32.1 | 20.1 |
Valuation Technique, Discount Rates | Minimum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | 10 | 9 |
Valuation Technique, Discount Rates | Maximum | ||
Inputs used in the fair value measurement of estimated contingent consideration | ||
Measurement input | 17 | 15 |
CREDIT FACILITY - Old and New C
CREDIT FACILITY - Old and New Credit Facility (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Credit Facility | ||||
Face amount of debt | $ 2,451,128 | $ 2,407,302 | ||
Debt issuance costs | $ 2,700 | |||
Contingent Principal Payments | $ 0 | |||
Contingent principal payments due in current year | $ 0 | |||
Credit Facility | ||||
Credit Facility | ||||
Actual total secured leverage ratio | 3.84 | |||
Consolidated EBITDA | $ 556,172 | |||
Secured leverage ratio threshold for contingent principal payments | 3.75 | |||
Credit Facility | Maximum | ||||
Credit Facility | ||||
Actual total secured leverage ratio | 6.25 | |||
First Lien Term Loan | ||||
Credit Facility | ||||
Face amount of debt | $ 2,401,128 | |||
First Lien Term Loan Tranche A | ||||
Credit Facility | ||||
Repayments installments | $ 4,173 | |||
First Lien Term Loan Tranche A | LIBOR | ||||
Credit Facility | ||||
Margin (as a percent) | 2.00% | |||
First Lien Term Loan Tranche A | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1.00% | |||
First Lien Term Loan Tranche B | ||||
Credit Facility | ||||
Repayments installments | $ 2,001 | |||
First Lien Term Loan Tranche B | LIBOR | ||||
Credit Facility | ||||
Margin (as a percent) | 2.50% | |||
First Lien Term Loan Tranche B | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1.50% | |||
First Lien Term Loan Tranche B | LIBOR Floor | ||||
Credit Facility | ||||
Margin (as a percent) | 0.50% | |||
First Lien Revolver | ||||
Credit Facility | ||||
Accordion feature | $ 650,000 | |||
Debt issuance costs | $ 975 | |||
Maximum borrowing capacity | $ 30,000 | |||
Unused commitment fee (as a percent) | 0.50% | |||
First Lien Revolver | LIBOR | ||||
Credit Facility | ||||
Margin (as a percent) | 2.00% | |||
First Lien Revolver | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 1.00% | |||
First Lien Revolver Step Down One | ||||
Credit Facility | ||||
Unused commitment fee (as a percent) | 0.375% | |||
First Lien Revolver Step Down One | LIBOR | ||||
Credit Facility | ||||
Margin (as a percent) | 1.75% | |||
First Lien Revolver Step Down One | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 0.75% | |||
First Lien Revolver Step Down Two | ||||
Credit Facility | ||||
Unused commitment fee (as a percent) | 0.25% | |||
First Lien Revolver Step Down Two | LIBOR | ||||
Credit Facility | ||||
Margin (as a percent) | 1.50% | |||
First Lien Revolver Step Down Two | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 0.50% | |||
First Lien Revolver Step Down Three | LIBOR | ||||
Credit Facility | ||||
Margin (as a percent) | 1.25% | |||
First Lien Revolver Step Down Three | Base rate | ||||
Credit Facility | ||||
Margin (as a percent) | 0.25% |
CREDIT FACILITY - Reconciliatio
CREDIT FACILITY - Reconciliation of Principal Amounts Outstanding (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Credit Facility | ||
Unamortized debt financing costs | $ (7,096) | $ (7,523) |
Unamortized discount | (5,849) | (6,110) |
Amount outstanding under credit facility | 2,438,183 | 2,393,669 |
First Lien Term Loan Tranche A | ||
Credit Facility | ||
Amount outstanding under credit facility | 1,606,755 | 1,610,928 |
First Lien Term Loan Tranche B | ||
Credit Facility | ||
Amount outstanding under credit facility | 794,373 | $ 796,374 |
First Lien Revolver | ||
Credit Facility | ||
Amount outstanding under credit facility | $ 50,000 |
CREDIT FACILITY - First Lien Re
CREDIT FACILITY - First Lien Revolver and Letters of Credit (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Credit Facility | ||
Weighted average interest rate | 3.00% | 3.00% |
Deferred financing costs | $ 3,580 | $ 4,254 |
First Lien Revolver | ||
Credit Facility | ||
Deferred financing costs | 3,580 | 4,254 |
Unused commitment line | 590,249 | 642,085 |
Standby Letters of Credit | ||
Credit Facility | ||
Letter of credit outstanding | $ 9,751 | $ 7,915 |
Annual interest rate | 2.00% | 2.00% |
DERIVATIVES (Details)
DERIVATIVES (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Apr. 30, 2020USD ($)agreement | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | |
Interest rate swap | |||
Derivatives | |||
Number of interest rate swap agreements | agreement | 2 | ||
Term of contract | 4 years | 4 years | |
Notional amount | $ 400,000 | ||
Interest payable to counterparty (as a percent) | 0.713% | ||
Floating to fixed interest rate swap one | |||
Derivatives | |||
Notional amount | $ 250,000 | ||
Interest payable to counterparty (as a percent) | 0.537% | ||
Floating to fixed interest rate swap two | |||
Derivatives | |||
Notional amount | $ 200,000 | ||
Interest payable to counterparty (as a percent) | 0.5315% | ||
Prepaid expenses and other assets | Interest rate swap | |||
Derivatives | |||
Notional amount | $ 850,000 | $ 850,000 | |
Fair value of interest rate swap | 29,593 | 5,810 | |
Offsetting adjustment to fair value in accumulated other comprehensive income (loss), net of tax | $ 6,211 | $ 1,194 | |
LIBOR | Interest rate swap | |||
Derivatives | |||
Interest received from counterparty (as a percent) | 0.00% | ||
Interest rate floor (as a percent) | 0.00% | ||
First Lien Term Loan | Interest rate swap | |||
Derivatives | |||
Outstanding debt | $ 850,000 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2022 | Feb. 28, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | |
EQUITY | ||||
Net proceeds of deducting underwriting discounts | $ 12,119 | |||
Class A common stock | ||||
EQUITY | ||||
Issuance of common stock (in shares) | 26,956 | |||
Class B common stock | ||||
EQUITY | ||||
Common stock retired (in shares) | 25,000 | |||
Issuance of units in connection with an acquisition and contingent consideration (in shares) | 187,795 | |||
Incentive Units | ||||
Changes in unvested common stock, Grant Date Fair Value | ||||
Non-cash equity compensation expense | $ 4,715 | 11,192 | ||
Focus LLC | ||||
EQUITY | ||||
Incentive units retired (in shares) | 4,250 | |||
Common units acquired (in shares) | 26,956 | |||
Stock options | Class A common stock | ||||
Changes in unvested common stock, Grant Date Fair Value | ||||
Non-cash equity compensation expense | $ 1,992 | $ 1,164 | ||
Time-based stock option awards | ||||
Changes in unvested common stock, Grant Date Fair Value | ||||
Granted | $ 19.09 | |||
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) | 25.00% | |||
Cumulative vested stock options exercised (in percent) | 50.00% | |||
Market condition-based awards | IPO | ||||
EQUITY | ||||
Threshold period | 90 days | |||
Incremental Non-cash equity compensation expense recognized | $ 518 | $ 518 | ||
Market condition-based awards | IPO | Highest 90-day VWAP is $80.00 or less | ||||
EQUITY | ||||
Vesting percentage | 0.00% | |||
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 | 100.00% | |||
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) | 25.00% | |||
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) | 50.00% | |||
Cumulative vested stock options exercised (in percent) | 100.00% | |||
Market condition-based awards | Class A common stock | ||||
EQUITY | ||||
Granted | 155,000 | |||
Changes in stock options | ||||
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 | 187,756 | |||
Forfeited | (11,668) | |||
Outstanding at the end of the period | 176,088 | 176,088 | ||
Changes in unvested common stock, Grant Date Fair Value | ||||
Outstanding at the beginning of the period | $ 47.69 | |||
Forfeited | 47.15 | |||
Outstanding at the end of the period | $ 47.72 | $ 47.72 | ||
Common Stock | Class B common stock | ||||
EQUITY | ||||
Issuance of units in connection with an acquisition and contingent consideration (in shares) | 187,795 | |||
Common Stock | Stock options | ||||
EQUITY | ||||
Granted | 350,048 | |||
Changes in stock options | ||||
Outstanding at the beginning of the period | 1,931,868 | |||
Granted | 350,048 | |||
Exercised | (15,309) | |||
Forfeited | (36,079) | |||
Vested | 839,770 | |||
Outstanding at the end of the period | 2,230,528 | 2,230,528 | ||
Changes in stock option, Weighted Average Exercise Price | ||||
Outstanding at the beginning of the period | $ 37.47 | |||
Granted | 51.73 | |||
Exercised | 27.60 | |||
Forfeited | 55.71 | |||
Outstanding at the end of the period | $ 39.48 | 39.48 | ||
Vested | $ 31.61 | |||
Changes in unvested common stock | ||||
Granted | 350,048 | |||
Vested | (839,770) | |||
Changes in unvested common stock, Grant Date Fair Value | ||||
Vested | $ 31.61 |
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 | |
Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | |
Focus LLC Restricted Common Units | |||
Restricted Common Units | |||
Outstanding at the beginning of the period | 193,625 | ||
Outstanding at the end of the period | 193,625 | 193,625 | |
Weighted Average Grant Date Fair Value | |||
Outstanding at the beginning of the period | $ 54.70 | ||
Outstanding at the end of the period | $ 54.70 | $ 54.70 | |
Focus LLC Incentive Units | |||
Incentive Units | |||
Outstanding at the beginning of the period | 16,146,524 | ||
Granted | 60,000 | ||
Exchanged | (4,250) | ||
Outstanding at the end of the period | 16,202,274 | 16,202,274 | |
Vested at the end of the period | 9,817,878 | ||
Weighted Average Hurdle Price | |||
Outstanding at the beginning of the period | $ 26.44 | ||
Granted | 43.07 | ||
Exchanged | 27 | ||
Outstanding at the end of the period | $ 26.51 | 26.51 | |
Vested at the end of the period | $ 20.47 | $ 20.47 | |
Restricted Stock Units (RSUs) | |||
Restricted Common Units | |||
Outstanding at the beginning of the period | 187,756 | ||
Forfeited | (11,668) | ||
Outstanding at the end of the period | 176,088 | 176,088 | |
Weighted Average Grant Date Fair Value | |||
Outstanding at the beginning of the period | $ 47.69 | ||
Forfeited | 47.15 | ||
Outstanding at the end of the period | $ 47.72 | $ 47.72 | |
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 | 16,202,274 | 16,202,274 | |
Vested at the end of the period | 9,817,878 | ||
Fair value of the stock option grants determined with assumptions | |||
Non-cash equity compensation expense | $ 4,715 | $ 11,192 | |
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 | 3,045,236 | 3,045,236 | |
Vested at the end of the period | 3,045,236 | ||
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 21 | ||
Incentive Units | Hurdle Rate 22.00 | |||
Incentive Units | |||
Outstanding at the end of the period | 821,417 | 821,417 | |
Vested at the end of the period | 821,417 | ||
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 | |
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 | 1,929,424 | 1,929,424 | |
Vested at the end of the period | 931,758 | ||
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 27.90 | ||
Incentive Units | Hurdle Rate 28.50 | |||
Incentive Units | |||
Outstanding at the end of the period | 1,440,230 | 1,440,230 | |
Vested at the end of the period | 1,051,459 | ||
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 | 10,000 | ||
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 30.48 | ||
Incentive Units | Hurdle Rate 33.00 | |||
Incentive Units | |||
Outstanding at the end of the period | 3,617,500 | 3,617,500 | |
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 | 20,000 | ||
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 36.64 | ||
Incentive Units | Hurdle Rate 43.07 | |||
Incentive Units | |||
Outstanding at the end of the period | 60,000 | 60,000 | |
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 | 10,000 | ||
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 43.50 | ||
Incentive Units | Hurdle Rate 44.71 | |||
Incentive Units | |||
Outstanding at the end of the period | 806,324 | 806,324 | |
Vested at the end of the period | 203,142 | ||
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 44.71 | ||
Incentive Units | Hurdle Rate 58.50 | |||
Incentive Units | |||
Outstanding at the end of the period | 662,277 | 662,277 | |
Weighted Average Hurdle Price | |||
Hurdle Rates | $ 58.50 | ||
Time based incentive units | |||
Weighted Average Grant Date Fair Value | |||
Granted | $ 14.16 | ||
Fair value of the stock option grants determined with assumptions | |||
Expected term (in years) | 5 years | ||
Expected stock price volatility (in percent) | 34.00% | ||
Risk-free interest rate (in percent) | 1.71% | ||
Weighted average grant date fair value | $ 14.16 | ||
Time-based stock option awards | |||
Weighted Average Grant Date Fair Value | |||
Granted | $ 19.09 | ||
Fair value of the stock option grants determined with assumptions | |||
Expected term (in years) | 6 years 3 months 18 days | ||
Expected stock price volatility (in percent) | 34.00% | ||
Risk-free interest rate (in percent) | 1.85% | ||
Weighted average grant date fair value | $ 19.09 | ||
IPO | Market-Based Incentive Units | |||
Fair value of the stock option grants determined with assumptions | |||
Incremental Non-cash equity compensation expense recognized | $ 10,144 | $ 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 | 0.00% | ||
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 | 100.00% | ||
Threshold period | 90 days | ||
Threshold volume weighted average per share price trigger | $ 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) | 25.00% | ||
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) | 25.00% | ||
Cumulative vested stock options exercised (in percent) | 50.00% | ||
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) | 50.00% | ||
Cumulative vested stock options exercised (in percent) | 100.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Effective income tax rate (as a percent) | 28.60% | 45.10% |
Uncertain tax positions reserve | $ 0 |
TAX RECEIVABLE AGREEMENTS (Deta
TAX RECEIVABLE AGREEMENTS (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022USD ($) | Mar. 31, 2020agreement | Jul. 31, 2018agreement | |
TAX RECEIVABLE AGREEMENTS | |||
Number of tax receivable agreements | agreement | 3 | 2 | |
Payment to TRA holder on net cash savings (as a percent) | 85.00% | ||
Retained benefit on net cash savings (as a percent) | 15.00% | ||
Tax Receivable Agreement obligations | $ 215,999 | ||
Payments made under Tax Receivable Agreements | $ 3,856 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||
Liabilities, clearing brokers | $ 0 | $ 0 |
Client assets in a private fund | $ 27,000 |
CASH FLOW INFORMATION (Details)
CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Supplemental disclosures of cash flow information-cash paid for: | ||
Interest | $ 16,506 | $ 10,267 |
Income taxes | $ 10,066 | 3,739 |
Supplemental non-cash cash flow information: | ||
Fair market value of estimated contingent consideration in connection with acquisitions | $ 6,187 |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Chief Executive Officer | ||
Expenses recognized | $ 1,095 | $ 603 |