Focus Financial Enters Exclusivity Arrangement with PE Firm CD&R in Anticipation of Sale

Focus Financial Partners, a publicly traded partnership of registered investment advisors, announced Thursday it has entered into a limited exclusivity agreement with private equity firm Clayton, Dubilier & Rice to engage in negotiations regarding the terms under which CD&R may acquire Focus for $53 per share, or $4.1 billion in cash.

If the transaction is completed, Focus will no longer be a publicly traded company.

Related: Focus Expects to Grow to $4B in Revenue by 2025

In November, Focus’ board of directors formed a committee to evaluate an offer from CD&R and explore other opportunities. Following “a series of negotiation and meetings with other potential bidders,” CD&R agreed to the price of $53 a share and the board approved the exclusivity agreement, according to the announcement.

CD&R has indicated that $53 is its “best and final” offer and expects no further price negotiations. The transaction would be subject to approval by a majority of disinterested shareholders. The price represents a 36% premium to Focus’ 60-day volume weighted average price as of close on Wednesday.

Related: Focus: RIA M&A Market Moving Away From ‘Amateur Hour’

Private equity firm 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, is considering retaining a portion of its ownership of the firm and providing new equity financing as part of the proposed transaction, subject to negotiation with CD&R. KKR has exited its position in Focus.

Negotiations are ongoing and any transaction would be subject to due diligence, board and stockholder approval, regulatory approvals and other considerations.

Focus and the board’s committee declined comment, “unless and until a specific transaction is recommended by the Special Committee to, and approved by, the Board.”

“Rest assured, that if and when definitive terms are reached and a definitive agreement is signed, I will schedule a town hall and eagerly answer all of the questions that I can,” CEO Rudy Adolf said in a note to Focus partners and colleagues that was filed with the SEC.

Jeffries LLC and Goldman Sachs are advising Focus on the potential deal.