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Focus Closes on Sale to CD&R in Take-Private Deal

Focus Financial Partners said Thursday it has closed on the sale of the company to private equity firms Clayton, Dubilier and Rice and Stone Point Capital for more than $7 billion in cash. The deal takes Focus private, and its common stock has ceased trading on the NASDAQ.

Focus went public in 2018 but earlier this year agreed to be sold to CD&R for $53 a share. Stone Point Capital, which took a majority stake in Focus in 2017 before taking it public along with PE firm KKR in the summer of 2018, will retain a stake in the firm. KKR has exited its position in Focus.

“Our partnership with CD&R and Stone Point opens doors to new opportunities, enhanced resources and increased value for our partner firms and their clients. We look forward to this next chapter of growth and evolution,” said Rudy Adolf, founder and CEO of Focus, in a statement.

Stone Point will now own 25% of the company. In a recent interview, Fayez Muhtadie, managing director and co-head of private equity at Stone Point, said there are things they can do with the business that would be much more difficult if it stayed under the glare of the public markets.

“We look forward to continuing to work with the Focus team as they take advantage of the enhanced financial and operating flexibility they will have as a private company,” he said, in a statement.

The take-private deal received some pushback, including a lawsuit, from concerned investors who felt the price was too low, questioned the amount of due diligence that was done and who would have preferred to retain their investments.

In early August, reported that Focus co-founders Rajini Kodialam and Lenny Chang would step down from their positions and into roles as senior advisors at the firm after the sale.

Private equity often steps in to make management changes following an acquisition and Focus appears to be no different. Adolf is remaining with the firm for the present, a source said, but it’s unclear for how long.

Both Adolf and Kodialam are receiving millions of dollars as a result of the transaction, which didn’t sit well with all stakeholders due to the price at which the firm was sold and the fact that only one existing investor was able to retain their shares.

Focus is one of the most aggressive acquirers in the still highly fractured RIA space, picking up some 85 partner firms and funding many of those firms’ own acquisitions. It completed 38 deals in 2021 and 24 last year, including sub-acquisitions. The firm now oversees some $350 billion in AUM. 

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