Focus Financial Partners shareholders voted overwhelmingly on Friday to sell the company to Clayton, Dubilier and Rice for more than $7 billion in cash. The deal eliminates everyone except its largest investor, Stone Point Capital, which is paying $53 a share.
The take-private deal has met with some opposition, including a lawsuit, from concerned investors who felt the price was too low, questioned the amount of due diligence carried out and would have preferred to keep their investments.
Ultimately, however, more than 63 million shares voted to go through with the transaction, compared to 95,135 votes against and 73,434 abstentions. Shareholders were less than enthusiastic about Focus executives’ pay related to the deal. Less than 54 million shares voted in favor, while more than 9 million voted against and 408,294 abstained.
Under the terms of the deal, announced early last month, to drop the lawsuit, investors learned that CEO Rudy Adolf will receive more than $16 million and COO Rajini Sundar Kodialam will receive more than $12 million . Four other executives with unvested common and incentive stock will receive compensation ranging from $295,183 to $521,000.
According to Morningstar, just 20 institutions held just over 50 million shares of the company, and some of the largest — like Vanguard and BlackRock — should vote in favor of the deal. Smaller investors were less satisfied.
“We think the price should be significantly higher, but we may have no choice,” said one frustrated investor WealthManagement.com when Focus announced its intentions earlier this year. “We can of course vote against the deal, but it will depend heavily on what other shareholders do.”
“It’s a pretty good deal for buyers,” Macrae Sykes, manager of Gabelli Funds’ Financial Services Opportunities ETF invested in Focus, said on Friday. “We really like the business and now we’ve seen some nice tailwinds in the market so we’re still seeing very strong wealth creation trends and this business should benefit.
“So we’re sorry not to be shareholders,” he said.
After the vote, the merger is expected to proceed at a brisk pace.
