updated 6:36 PM CET, Mar 18, 2023

Private equity company to take it private, Focus Financial announces

Focus Financial Partners, the NASDAQ-listed, New York-based partnership of independent, fiduciary wealth management firms that had been growing rapidly in recent years, especially in the wake of its 2018 initial public offering, today announced that it would accept a bid by a major U.S. private equity firm to take it private.

rudy croppedFocus Financial was founded in 2004 by Rudy Adolf (pictured left), a veteran of McKinsey & Company and American Express, who remains the firm’s chief executive and chairman. Among its member financial advisory firms are businesses located in the UK, Canada and Australia.

In a statement issued today, Focus Financial said it had entered into a "definitive agreement" with New York-based Clayton, Dubilier & Rice, LLC and Greenwich, Connecticut-based Stone Point Capital LLC  for it "to be acquired by affiliates of CD&R in an all-cash transaction valued at [more than] US$7 billion, or US$53 a share."

According to the statement, funds managed by Stone Point Capital have agreed to retain a portion of their investment in Focus Fiancial,  and provide new equity financing as part of the deal.

 The statement also notes that the proposed transaction was approved by a so-called Special Committee that had been formed, of "independent and disinterested directors" on Nov. 1 last year, "to evaluate a non-binding offer received from CD&R and to explore alternative transactions."

The proposed deal would represent Clayton, Dubilier's first significant acquisition in the wealth management industry, U.S. media reports noted today.  

Adolf is quoted in the company's statement as saying that transaction "represents an important evolution in the resources we will have to invest, enabling us to increase the value we deliver to our partners and their clients.

“Our diverse and growing partnership creates enduring advantages.

"We are uniquely positioned to capitalize on industry trends while offering the expertise and resources that help our partners provide differentiated service to their clients.”

Shares in doldrums 

Like many businesses that have had to deal with unexpected market challenges caused by the global pandemic, Russia's 2022 invasion of Ukraine, and soaring inflation and energy costs, Focus Financial had seen its share price struggle in recent months. In October it fell to only slightly above US$30, or around US$8 less than on its first day of trading in July, 2018.

As reported, the company's shares hit US$37.55 that day, after starting out at US$33 a share, slightly lower than had originally been expected.

Today the shares closed at a 12-month high of US$51.75, according to NASDAQ

Focus Financial first revealed on Feb. 2 that it was in negotiations to go private.

Focus Financial firms in UK,
Canada and Australia

Among the non-U.S. firms that are part of the Focus Financial network are Toronto-based wealth planning and investment manager Nexus Investment Management, and multi-family office Prime Quandrant, also based in Toronto; London-based Skeet Kaye Hopkins, which merged in 2019 into Gelfand, Rennert & Feldman, a multi-family and business office manager (and Focus Financial partner firm) in Los Angeles, California; and Altrincham,England-based Greystone Financial Services Ltd.