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Focus Financial CEO Rudy Adolf
Focus Financial CEO Rudy Adolf

Focus Shareholders OK Sale to Clayton, Dubilier and Rice

Focus Financial shareholders voted overwhelmingly to approve a take-private sale to private equity firm CD&R but were less enthusiastic about executive compensation.

Focus Financial Partners shareholders voted overwhelming on Friday to approve the sale of the company to Clayton, Dubilier and Rice for more than $7 billion in cash. The deal ejects all but its largest investor, Stone Point Capital, at $53 a share.

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.

But ultimately more than 63 million shares were counted in favor of the transaction moving forward, compared with 95,135 against and 73,434 abstentions. Shareholders were less enthusiastic about the compensation of Focus executives in connection with the deal. Fewer than 54 million shares were voted in favor, while more than 9 million voted against and 408,294 abstained.

Under terms of the deal disclosed early last month in a move to get the lawsuit dropped, investors learned that CEO Rudy Adolf will be taking home more than $16 million and COO Rajini Sundar Kodialam will receive more than $12 million. Four other executives with unvested common and incentive shares will be paid between $295,183 and $521,000.

Just 20 institutions held a little more 50 million shares in the company, according to Morningstar, and some its largest—like Vanguard and BlackRock—were expected to vote in favor of the deal. Smaller investors were less happy.

“We feel like the price should be considerably higher, but we may have no choice,” one frustrated investor told when Focus announced its intentions earlier this year. “We can vote against the deal, of course, but it'll depend a lot on what other shareholders do.”

“It's a pretty good deal for the buyers,” Macrae Sykes, the manager of Gabelli Funds' Financial Services Opportunities ETF, which has been invested in Focus, said on Friday. “We really like the business, and now we've had some nice tailwinds in the market, so we still see very strong trends for wealth assets gathering and this business should benefit from that.

“So, we're sorry not to be shareholders,” he said.

Following the vote, the merger is expected to move forward quickly.

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