Moody’s views Focus Financial negatively

Moody’s Ratings said it revised its outlook for Focus Financial Partners LLC to negative from stable and affirmed the B1 ratings on the company and its senior secured bank credit facility.

Focus’ debt to EBITDA at Dec. 31 rose to 6.1x from 5.1x the year before.

“The negative outlook reflects Focus' high leverage due to its acquisitive strategy including recent initiatives to establish controlled wealth management firms,” Moody’s said in a press release.

The agency added, “As of May 2024, Focus has completed seven management agreement buyout deals out of its approximately 90 partner firms. Because the transactions are expensed according to GAAP and the timing of synergies is uncertain, Moody's does not expect meaningful improvement to Focus's profitability, as measured by Moody's, over the outlook period. That said, adjusted EBITDA margins, under the new business model, are expected to expand over the next several quarters.”

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