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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant   ☒
Filed by a Party other than the Registrant   ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12
Focus Financial Partners Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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PRELIMINARY PROXY MATERIALS — SUBJECT TO COMPLETION
[MISSING IMAGE: lg_focusfinancialpart-4c.jpg]
[  ], 2023
Dear Focus Financial Partners Inc. Stockholder:
You are invited to attend a special meeting (we refer to such meeting, including any adjournment or postponement thereof, as the “Special Meeting”) of the stockholders of Focus Financial Partners Inc., a Delaware corporation (the “Company” or “us”) to be held on [  ], 2023, at [  ] Eastern Time. The Special Meeting will be held at 515 N. Flagler Drive, Suite 550, West Palm Beach, FL 33401.
On February 27, 2023, the Company entered into an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”) by and among Ferdinand FFP Acquisition, LLC, a Delaware limited liability company (“Parent”), Ferdinand FFP Merger Sub 1, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Company Merger Sub”), Ferdinand FFP Merger Sub 2, LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“LLC Merger Sub”, and collectively with Company Merger Sub, “Merger Subs”), Focus Financial Partners, LLC, a Delaware limited liability company and a subsidiary of the Company (“Focus LLC”), pursuant to which, among other things, (a) LLC Merger Sub will merge with and into Focus LLC (the “LLC Merger”), with Focus LLC surviving the LLC Merger and (b) immediately after LLC Merger, Company Merger Sub will merge with and into the Company (the “Company Merger”, and collectively with the LLC Merger, the “Mergers”), with the Company surviving the Company Merger. Parent and Merger Subs are affiliated with Clayton, Dubilier & Rice, LLC (“CD&R”) and Stone Point Capital LLC (“Stone Point”). Investment funds managed by or affiliated with Stone Point owned approximately 20.6% of the issued and outstanding shares of the Company’s common stock (“Company Common Stock”) as of February 27, 2023, consisting of (a) Class A common stock, par value $0.01 per share of the Company (“Class A Common Stock”) and (b) Class B common stock, par value $0.01 per share of the Company (“Class B Common Stock” and with the Class A Common Stock, the “Company Common Stock”).
In connection with the Merger Agreement, certain investment funds managed by or affiliated with CD&R and Stone Point (such funds, the “Guarantors”) have delivered to the Company (a) limited guarantees in favor of the Company and pursuant to which the Guarantors are guaranteeing certain obligations of Parent and Merger Subs in connection with the Merger Agreement and (b) executed commitment letters between Parent and each of the Guarantors pursuant to which the Guarantors have, together, committed to contribute sufficient funds to Parent to finance the Parent’s and Merger Subs’ payment obligations under the Merger Agreement at closing of the Mergers.
If the Mergers are completed, at the effective time of the Company Merger (the “Company Merger Effective Time”), (a) each share of Class A Common Stock issued and outstanding immediately prior to the Company Merger Effective Time, other than Excluded Shares (as defined in the Merger Agreement), will be converted into the right to receive $53.00 per share of Class A Common Stock in cash, without interest (the “Merger Consideration”), and (b) each share of Class B Common Stock issued and outstanding immediately prior to the Company Merger Effective Time will automatically be cancelled and cease to exist and no payment will be made with respect thereto. At the effective time of the LLC Merger (the “LLC Merger Effective Time”), each of the Common Units and Incentive Units (each as defined in the Merger Agreement and together the “Focus LLC Units”) issued and outstanding immediately prior to the LLC Merger Effective Time and after the Vested Units Exchanges (as defined in the Merger Agreement), other than Excluded Units (as defined in the Merger Agreement), will be cancelled and forfeited for no consideration.
The board of directors of the Company (the “Board”) formed a special committee comprised solely of disinterested and independent members of the Board (the “Special Committee”), which, among other things, reviewed, evaluated and negotiated the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers in consultation with its legal and financial advisors and, where appropriate, with Company management and the Company’s legal advisors. The Special Committee unanimously
 

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(1) determined that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and the holders of Company Common Stock, excluding those shares of Company Common Stock held, directly or indirectly, by or on behalf of: (a) CD&R, its investment fund affiliates and its portfolio companies majority owned by such investment fund affiliates with respect to which CD&R has the right to vote or direct the voting of such shares held by such portfolio companies (and excluding any shares of Company Common Stock that constitute Non-Controlled Stock (as defined in the Merger Agreement)); (b) Stone Point, its investment fund affiliates, its portfolio companies majority owned by such investment fund affiliates with respect to which Stone Point has the right to vote or direct the voting of such shares held by such portfolio companies (and excluding any shares of Company Common Stock that constitute Non-Controlled Stock) and those members of the Board who are employees of Stone Point or one of its investment fund affiliates; and (c) any person that the Company has determined to be an “officer” of the Company within the meaning of Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Unaffiliated Stockholders”), (2) recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, and determine that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders, and (3) recommended that, subject to Board approval, the Board submit the Merger Agreement to the stockholders of the Company for their adoption and recommend that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. In addition, the Special Committee believes that the Mergers are fair to Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board, acting upon the recommendation of the Special Committee, unanimously (1) determined that the Merger Agreement and transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and its stockholders, including the Unaffiliated Stockholders, (2) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, (3) approved the execution and delivery of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations contained therein and the consummation of the Mergers and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (4) directed that the adoption of the Merger Agreement be submitted to a vote of the Company’s stockholders at a meeting of the Company’s stockholders, and (5) recommended that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. The approval of the proposal to adopt the Merger Agreement (the “Merger Agreement Proposal”) requires each of (a) the affirmative vote of the holders of a majority in voting power of the outstanding shares of the Company Common Stock, voting together as a single class, and entitled to vote on the Merger Agreement Proposal at the Special Meeting (the “Majority of the Outstanding Shares”) and (b) the affirmative vote of the holders of a majority in voting power of the outstanding shares of Company Common Stock, voting together as a single class, held by the Unaffiliated Stockholders and entitled to vote on the Merger Agreement Proposal at the Special Meeting (the “Majority of the Unaffiliated Shares”), in each case assuming a quorum is present.
In addition to the Merger Agreement Proposal, at the Special Meeting, you will be asked to approve (1) one or more proposals to adjourn the Special Meeting to a later date or dates if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement Proposal (the “Adjournment Proposal”), which require the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the matter, whether or not a quorum is present, and (2) the nonbinding, advisory proposal regarding certain compensation arrangements for the Company’s named executive officers in connection with the Mergers (the “Merger-Related Compensation Proposal”), which requires the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the matter, assuming a quorum is present.
The Merger Agreement and the transactions contemplated thereby, including the Mergers, have been unanimously approved by the Board, based on the recommendation of the Special Committee. The Board recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.
Your vote is very important. The Mergers cannot be completed unless both a Majority of the Outstanding Shares and a Majority of the Unaffiliated Shares approve the Merger Agreement Proposal. A failure to vote your
 

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shares of Company Common Stock “FOR” the Merger Agreement Proposal will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.
Therefore, whether or not you expect to attend the Special Meeting, at your earliest convenience, please sign, date and vote on the enclosed proxy card and return it in the enclosed postage-paid reply envelope or submit your proxy using the telephone or Internet procedures that may be provided to you. If you attend the Special Meeting and vote during the Special Meeting, your vote by ballot will revoke any proxy previously submitted. If you hold your shares of Company Common Stock through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee in order to vote.
Completion of the Mergers is subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement.
The accompanying proxy statement provides you with more detailed information about the Special Meeting, the Merger Agreement and the transactions contemplated by it, including the Mergers. A copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement. We encourage you to carefully read the entire proxy statement and its annexes, including the Merger Agreement and the documents referred to or incorporated by reference in this proxy statement. You may also obtain additional information about the Company from other documents we have filed with the U.S. Securities and Exchange Commission (the “SEC”). In particular, you should read the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and other risk factors detailed from time to time in the Company’s reports filed with the SEC and incorporated by reference in this proxy statement, for risks relating to our business and for a discussion of the risks that you should consider in evaluating the proposed transaction and how it may affect you.
If you have any questions or need assistance voting your shares of Company Common Stock, please contact MacKenzie Partners, Inc., the Company’s proxy solicitor in connection with the Special Meeting:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
(800) 322-2885 (toll free)
Email: proxy@mackenziepartners.com
Thank you in advance for your cooperation and continued support.
Sincerely,
Rudy Adolf
Founder, Chief Executive Officer and Chairman
The accompanying proxy statement is dated [  ], 2023, and is first being mailed to the Company’s stockholders on or about [  ], 2023.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY IT, INCLUDING THE MERGERS, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY IT, INCLUDING THE MERGERS, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 

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PRELIMINARY PROXY MATERIALS — SUBJECT TO COMPLETION
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [  ], 2023
Dear Focus Financial Partners Inc. Stockholder:
You are cordially invited to attend a special meeting (we refer to such meeting, including any adjournment or postponement thereof, as the “Special Meeting”) of the stockholders of Focus Financial Partners Inc., a Delaware corporation (the “Company” or “us”) to be held at 515 N. Flagler Drive, Suite 550, West Palm Beach, FL 33401, on [  ], [  ], 2023, at [  ] Eastern Time. The Special Meeting will be held for the following purposes:
1.   to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of February 27, 2023 (as amended from time to time, the “Merger Agreement”), by and among the Company, Ferdinand FFP Acquisition, LLC, a Delaware limited liability company (“Parent”), Ferdinand FFP Merger Sub 1, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Company Merger Sub”), Ferdinand FFP Merger Sub 2, LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“LLC Merger Sub”, and collectively with Company Merger Sub, “Merger Subs”), and Focus Financial Partners, LLC, a Delaware limited liability company and a subsidiary of the Company (“Focus LLC”), a copy of which is attached as Annex A to the accompanying proxy statement, pursuant to which, among other things, (a) LLC Merger Sub shall merge with and into Focus LLC (the “LLC Merger”), with Focus LLC surviving the LLC Merger, pursuant to and in accordance with the provisions of the Delaware Limited Liability Company Act, as may be amended from time to time (the “DLLCA”); and (b) immediately following the LLC Merger, Company Merger Sub shall merge with and into the Company (the “Company Merger”, and collectively with the LLC Merger, the “Mergers”), with the Company surviving the Company Merger, pursuant to and in accordance with the provisions of the General Corporation Law of the State of Delaware, as may be amended from time to time (the “DGCL”) (the “Merger Agreement Proposal”);
2.   to consider and vote on one or more proposals to adjourn the special meeting to a later date or dates if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement Proposal (the “Adjournment Proposal”); and
3.   to approve, by nonbinding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Mergers (the “Merger-Related Compensation Proposal”).
These items of business are more fully described in the proxy statement of which this notice forms a part.
The affirmative vote of each of (1) the holders of a majority in voting power of the outstanding shares of Class A common stock, par value $0.01 per share, of the Company (“Class A Common Stock”) and Class B common stock, par value $0.01 per share, of the Company (“Class B Common Stock” and with the Class A Common Stock, the “Company Common Stock”), voting together as a single class, and entitled to vote on the Merger Agreement Proposal at the Special Meeting (the “majority of the outstanding shares”) and (2) the holders of a majority in voting power of the outstanding shares of Company Common Stock, voting together as a single class, held by the holders of Company Common Stock, excluding those shares of Company Common Stock held, directly or indirectly, by or on behalf of: (a) CD&R, its investment fund affiliates and its portfolio companies majority owned by such investment fund affiliates with respect to which CD&R has the right to vote or direct the voting of such shares held by such portfolio companies (and excluding any shares of Company Common Stock that constitute Non-Controlled Stock (as defined in the Merger Agreement)); (b) Stone Point, its investment fund affiliates, its portfolio companies majority owned by such investment fund affiliates with respect to which Stone Point has the right to vote or direct the voting of such shares held by such portfolio companies (and excluding any shares of Company Common Stock that constitute Non-Controlled
 

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Stock) and those members of the Board who are employees of Stone Point or one of its investment fund affiliates; and (c) any person that the Company has determined to be an “officer” of the Company within the meaning of Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Unaffiliated Stockholders”) and entitled to vote on the Merger Agreement Proposal at the Special Meeting (the “Majority of the Unaffiliated Shares”) is necessary for the approval of the Merger Agreement Proposal. The affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the matter is necessary for the approval of the Adjournment Proposal and the Merger-Related Compensation Proposal.
The record date for the Special Meeting is [  ], 2023 (the “Record Date”). Only stockholders of record as of the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. Any stockholder entitled to attend and vote at the Special Meeting is entitled to appoint a proxy to attend and act on such stockholder’s behalf.
If the Mergers are consummated, stockholders who continuously hold shares of Company Common Stock through the Company Merger Effective Time, who have not voted in favor of the adoption of the Merger Agreement and who properly demanded appraisal of their shares of Company Common Stock in accordance with, and who have otherwise complied with, Section 262 of the DGCL will be entitled to seek appraisal of their shares of Company Common Stock in connection with the Company Merger. Stockholders must comply with all the requirements of Delaware law, which are summarized in the proxy statement accompanying this notice.
The Merger Agreement and the transactions contemplated thereby, including the Mergers, have been unanimously approved by the Board, based on the recommendation of the Special Committee. The Board recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.
Your vote is very important. The Mergers cannot be completed unless both a Majority of the Outstanding Shares and a Majority of the Unaffiliated Shares approve the Merger Agreement Proposal. A failure to vote your shares of Company Common Stock “FOR” the Merger Agreement Proposal will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.
Therefore, whether or not you expect to attend the Special Meeting, at your earliest convenience, please sign, date and vote on the enclosed proxy card and return it in the enclosed postage-paid reply envelope, or submit your proxy using the telephone or Internet procedures that may be provided to you. If you attend the Special Meeting and vote during the Special Meeting, your vote by ballot will revoke any proxy previously submitted. If you hold your shares of Company Common Stock through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee in order to vote.
The proxy statement of which this notice forms a part provides a detailed description of the Merger Agreement and the transactions contemplated thereby, including the Mergers. We encourage you to carefully read the entire proxy statement and its annexes, including the Merger Agreement and the documents referred to or incorporated by reference in this proxy statement. If you have any questions concerning the Mergers or the proxy statement, would like additional copies of the proxy statement or need help voting your shares of Company Common Stock, please contact the Company’s proxy solicitor:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
(800) 322-2885 (toll free)
Email: proxy@mackenziepartners.com
By Order of the Board of Directors,
  
J. RUSSELL MCGRANAHAN
General Counsel
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to Be Held on [  ], 2023
Notice of Special Meeting of Stockholders and our Proxy Statement and proxy card are available at http://www.astproxyportal.com/ast/22304/special.
 

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SUMMARY TERM SHEET
The following summary highlights selected information in this proxy statement and may not contain all of the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement. Each item in this summary includes a page reference directing you to a more complete description of that topic. See the section of this proxy statement entitled “Where You Can Find More Information.”
Certain Defined Terms
In this proxy statement, we refer to Focus Financial Partners Inc. as the “Company,” “Focus,” “us,” “our,” “we” and, after the Company Merger, the “Surviving Corporation” and Focus Financial Partners, LLC, as “Focus LLC” and, after the LLC Merger, the “Surviving LLC”, and we use the following additional defined terms:

“Acquisition Proposal” refers to any proposal or offer from a third party relating to any transaction or series of related transactions that, if consummated, would result in (1) a direct or indirect purchase or acquisition by such third party of the assets of the Company constituting 15% or more of the consolidated net revenues, net income or total assets (including equity securities of the subsidiaries of the Company) of the Company and its subsidiaries, taken as a whole; (2) any direct or indirect purchase or acquisition by such third party of beneficial ownership of 15% or more of the total voting power of the Company; or (3) a direct or indirect merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or other similar transaction involving the Company pursuant to which such third party (or its equity holders) would hold securities representing 15% or more of the total voting power of the Company (or the surviving or resulting entity) after giving effect to such transaction;

“BD Subsidiary” refers to any Person that is registered with the SEC as a broker-dealer under the Exchange Act that the Company owns, directly or indirectly, twenty-five percent (25%) or more of the (x) assets, business or a line of operations that generates revenues composing twenty-five percent (25%) or more in the aggregate of such person’s earnings on a 36-month rolling basis or (y) equity or partnership capital of such Person;

“Board” refers to the board of directors of the Company;

“CD&R” refers to Clayton, Dubilier & Rice, LLC;

“CD&R Entities” refers to Parent, Merger Subs, Ferdinand FFP Intermediate Holdings, LLC, Ferdinand FFP Ultimate Holdings, LP, Ferdinand FFP GP, LLC, CD&R Guarantor, CD&R, CD&R Associates XII, L.P. and CD&R Investment Associates XII, Ltd. collectively;

“CD&R Guarantor” refers to Clayton, Dubilier & Rice Fund XII, L.P.;

“Class A Common Stock” refers to the shares of Class A common stock, par value $0.01 per share, of the Company;

“Class B Common Stock” refers to the shares of Class B common stock, par value $0.01 per share, of the Company;

“Company Common Stock” refers to the Class A Common Stock and the Class B Common Stock, together;

“Company Merger” refers to the merger of Ferdinand FFP Merger Sub 1, Inc. with and into Focus Financial Partners Inc. pursuant to the Merger Agreement;

“Company Merger Sub” refers to Ferdinand FFP Merger Sub 1, Inc.;

“Cut-Off Time” refers to, with respect to each Excluded Party, the earlier of (a) 11:59 p.m. Eastern Time on April 18, 2023 and (b) the time at which an Excluded Party otherwise ceases to be an Excluded Party in accordance with the definition of Excluded Party;

“DGCL” refers to the General Corporation Law of the State of Delaware, as may be amended from time to time;
 
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“DLLCA” refers to the Delaware Limited Liability Company Act, as may be amended from time to time;

“Employer Entities” refers to Focus LLC, Focus Operating, LLC, Focus Transition Services, LLC and Connectus Group LLC, collectively;

“Equity Commitment Letters” refers to the executed commitment letters, dated as of the date of the Merger Agreement, between Parent and each of the Guarantors;

“Equity Financing” refers to the cash amounts, set forth in the Equity Commitment Letters, that the Guarantors have committed to contribute to Parent in connection with Merger Agreement, subject to, among other things, the consummation of the closing of the Mergers;

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

“Excluded Party” refers to any Third Person (as defined in the Merger Agreement) (a) who submits a written offer or proposal that constitutes a bona fide Acquisition Proposal to the Company or any of its Representatives after the date of the Merger Agreement and prior to the No-Shop Period Start Date and (b) whose Acquisition Proposal is determined by the Board (acting on the recommendation of the Special Committee), or the Special Committee, as applicable, in good faith, after consultation with its financial advisors and outside legal counsel, prior to the start of the No-Shop Period Start Date, to constitute, or is reasonably likely to result in, a Superior Proposal; provided, however, that a Third Person shall immediately cease to be an Excluded Party (and the provisions of the Merger Agreement applicable to Excluded Parties shall cease to apply with respect to such Person) if (i) such Acquisition Proposal is withdrawn by such Third Person or (ii) such Acquisition Proposal, in the good faith determination of the Board (acting on the recommendation of the Special Committee), or the Special Committee, as applicable, (after consultation with its outside counsel and its financial advisor), no longer is, or is no longer reasonably likely to result in, a Superior Proposal;

“Existing Credit Document” refers to that certain First Lien Credit Agreement, dated as of July 3, 2017 (as amended, supplemented, waived or otherwise modified from time to time), by and among Focus Financial Partners, LLC, the lenders party thereto, Bank of America, N.A., as revolver administrative agent for the Lenders (as defined therein), Swing Line Lender (as defined therein) and L/C Issuer (as defined therein) and Royal Bank of Canada, as term administrative agent for the Lender;

“Existing Stockholders” refers to Trident FFP LP, Trident VI, L.P., Trident VI Parallel Fund, L.P. and Trident VI DE Parallel Fund, L.P., each an investment fund or investment vehicle managed by or affiliated with Stone Point;

“Focus LLC Agreement” refers to the Fourth Amended and Restated Limited Liability Company Agreement of Focus LLC dated as of July 30, 2018, as amended;

“Focus LLC Units” refers to the Common Units and Incentive Units of Focus LLC (each, as defined in the Merger Agreement);

“Governmental Authority” refers to any (a) federal, state, local, municipal, foreign or other government; (b) governmental, quasi-governmental, supranational or regulatory authority (including any governmental division, department, agency, commission, instrumentality, organization, unit or body and any court or other tribunal); (c) regulatory or self-regulatory organization (including the SEC, FINRA, Nasdaq and any other Exchange); or (d) arbitral tribunal (public or private);

“Guarantors” refers to the CD&R Guarantor and the Trident Guarantors, collectively;

“Holder TRA Payoff Amount” refers to, with respect to a particular TRA Holder, the portion of the TRA Payoff Amount that would be required to be paid by the Company to such TRA Holder as calculated under the applicable Tax Receivable Agreement;

“Intervening Event” refers to any material change, effect, event, occurrence or development that was not known to the Special Committee or reasonably foreseeable by the Special Committee as of the date of the Merger Agreement (or, if known or reasonably foreseeable, only the portion of such change, effect, event, occurrence or development of which the magnitude or material consequences were not known or reasonably foreseeable by the Special Committee as of the date of the Merger Agreement);
 
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provided, however, that in no event will (1) an Acquisition Proposal (or any proposal or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal); (2) any change, in and of itself, in the price or trading volume of the shares of Class A Common Stock (it being understood that the underlying facts giving rise or contributing to such change may be taken into account in determining whether there has been an Intervening Event, to the extent otherwise permitted by this definition); or (3) the fact, in and of itself, that the Company exceeds (or fails to meet) internal or published projections or guidance or any matter relating thereto or of consequence thereof (it being understood that the underlying facts giving rise or contributing to such change may be taken into account in determining whether there has been an Intervening Event, to the extent otherwise permitted by this definition), constitute or be deemed to contribute to an Intervening Event;

“Limited Guarantees” refers to the limited guarantees from the Guarantors in favor of the Company pursuant to the Merger Agreement;

“LLC Merger” refers to the merger of Ferdinand FFP Merger Sub 2, LLC, with and into Focus Financial Partners, LLC pursuant to the Merger Agreement;

“LLC Merger Sub” refers to Ferdinand FFP Merger Sub 2, LLC;

“Mergers” refers to the Company Merger and LLC Merger, collectively;

“Merger Agreement” refers to the Agreement and Plan of Merger, dated as of February 27, 2023, by and among Ferdinand FFP Acquisition, LLC, Ferdinand FFP Merger Sub 1, Inc., Ferdinand FFP Merger Sub 2, LLC., Focus Financial Partners, LLC and Focus Financial Partners Inc., as it may be amended from time to time;

“Merger Subs” refers to Company Merger Sub and LLC Merger Sub, collectively;

“Nasdaq” refers to the Nasdaq Global Select Market;

“NEO” refers to the named executive officers of the Company;

“No-Shop Period Start Date” refers to 11:59 p.m. Eastern Time on April 8, 2023;

“Parent” refers to Ferdinand FFP Acquisition, LLC;

“Parent Entities” refers to the CD&R Entities and the Trident Entities and their respective affiliates, collectively;

“Person” refers to any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Authority or other entity of any kind or nature;

“Record Date” refers to [  ], 2023, the record date for the Special Meeting;

“Representatives” refers to, with respect to any Person, its directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, and other representatives and advisors;

“SEC” refers to the U.S. Securities and Exchange Commission;

“Securities Act” refers to the Securities Act of 1933, as amended;

“Section 262” refers to Section 262 of the DGCL;

“Special Committee” refers to the special committee of the Board comprised solely of disinterested and independent directors;

“Special Meeting” refers to the Special Meeting of the stockholders of the Company to be held at 515 N. Flagler Drive, Suite 550, West Palm Beach, FL 33401, on [  ], [  ], 2023 at [  ] Eastern Time, including any adjournment or postponement thereof;

“Stone Point” refers to Stone Point Capital LLC;

“Superior Proposal” refers to a bona fide written Acquisition Proposal (with references to 15% being deemed to be replaced with references to 50%) by a person or group (other than the Rollover Stockholders (as defined in Merger Agreement), Parent, Merger Subs or any of their respective
 
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affiliates) that (1) was not the result of breach of Section 6.2 of the Merger Agreement and (2) the Board, acting upon the recommendation of the Special Committee, or the Special Committee determines in good faith, after consultation with its financial advisors and outside legal counsel, would, if consummated, result in a transaction that is more favorable from a financial point of view to the Company’s stockholders (in their capacities as such) than the Mergers and after taking into account (x) any revisions to the Merger Agreement, the Guarantees and the financing committed to by Parent in writing prior to the time of such determination; (y) the availability of financing (to the extent applicable), likelihood of consummation in accordance with the terms of such Acquisition Proposal and regulatory considerations; and (z) those factors and matters deemed relevant by the Board, acting upon the recommendation of the Special Committee, or the Special Committee, including (A) the identity of the person making the proposal; and (B) legal, financial (including financing terms and the form, amount and timing of payment of consideration), regulatory, certainty of closing, timing and other aspects of such Acquisition Proposal;

“Support Agreement” refers to the Support Agreement, dated as of February 27, 2023 by and among the Existing Stockholders, Company, Parent and certain affiliates of Parent;

“Tax Receivable Agreements” refers to (a) the Tax Receivable Agreement, dated as of July 30, 2018, by and among the Company and the parties named therein, (b) the Tax Receivable Agreement, dated as of July 30, 2018, by and among the Company and the parties named therein and (c) the Tax Receivable Agreement, dated as of March 25, 2020, by and among the Company and the parties named therein.

“Topco” refers to Ferdinand FFP Parent, Inc., a Delaware corporation and an entity affiliated with CD&R;

“TRA Holder” refers to a person who holds rights to payment under Company’s existing Tax Receivable Agreements;

“TRA Payoff Amount” refers to the aggregate payment obligations of the Company pursuant to the terms of the Tax Receivable Agreements, including as a result of the transactions contemplated by the Merger Agreement and including any such payments required to be made pursuant to Section 4.2 of each Tax Receivable Agreement;

“Trident Entities” refers to Stone Point, Trident FFP LP, Trident FFP GP LP, Trident VI, L.P., Trident VI Parallel Fund, L.P., Trident VI DE Parallel Fund, L.P., Trident Capital VI, L.P., Trident IX, L.P., Trident IX Parallel Fund, L.P., Trident IX Professionals Fund, L.P., Trident Capital IX, L.P. and Stone Point GP Ltd., collectively;

“Trident Guarantors” refers to Trident IX, L.P., Trident IX Parallel Fund, L.P. and Trident IX Professionals Fund, L.P., collectively, each an investment fund or investment vehicle managed by or affiliated with Stone Point; and

“Unaffiliated Stockholders” refers to the holders of Company Common Stock, excluding those shares of Company Common Stock held, directly or indirectly, by or on behalf of: (a) CD&R, its investment fund affiliates and its portfolio companies majority owned by such investment fund affiliates with respect to which CD&R has the right to vote or direct the voting of such shares held by such portfolio companies (and excluding any shares of Company Common Stock that constitute Non-Controlled Stock (as defined in the Merger Agreement)); (b) Stone Point, its investment fund affiliates, its portfolio companies majority owned by such investment fund affiliates with respect to which Stone Point has the right to vote or direct the voting of such shares held by such portfolio companies (and excluding any shares of Company Common Stock that constitute Non-Controlled Stock) and those members of the Board who are employees of Stone Point or one of its investment fund affiliates; and (c) any person that the Company has determined to be an “officer” of the Company within the meaning of Rule 16a-1(f) of the Exchange Act.
Treatment of the Class A Common Stock
If the Company Merger is completed, each share of Class A Common Stock issued and outstanding immediately prior to the effective time of the Company Merger (the “Company Merger Effective Time”) (including, for the avoidance of doubt, each such share resulting from the Vested Units Exchanges (as defined
 
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below)), other than shares (A) that are to be cancelled, (B) that are those certain shares of Class A Common Stock that Existing Stockholders will contribute and transfer to Topco in exchange for newly issued shares of Topco as contemplated by the Support Agreement (the “Class A Rollover Shares”) and (C) that are held by stockholders of the Company who have not voted in favor of the adoption of the Merger Agreement (or consented thereto in writing) and who have properly demanded appraisal of such shares of Company Stock in accordance with, and who have otherwise complied with, Section 262 (“Excluded Shares”), will be converted into the right to receive $53.00 per share of Class A Common Stock in cash, without interest (the “Merger Consideration”).
Treatment of the Class B Common Stock
Immediately prior to the effective time of the LLC Merger (the “LLC Merger Effective Time”) and conditioned upon the closing of the LLC Merger, the Company will require each member of Focus LLC (other than the Company and its wholly owned subsidiaries and Parent) to surrender for cancellation any shares of Class B Common Stock held by such member pursuant to the Vested Units Exchanges (as defined and more fully described below). If the Company Merger is completed, any remaining shares of Class B Common Stock issued and outstanding immediately prior to the Company Merger Effective Time will be automatically cancelled and will cease to exist and no payment will be made with respect thereto.
Treatment of the Focus LLC Units
Immediately prior to the LLC Merger Effective Time and conditioned upon the closing of LLC Merger, the Company will require each member of Focus LLC (other than the Company and its wholly owned subsidiaries and Parent) to (A) effect an Exchange (as defined in the Focus LLC Agreement) of all outstanding vested Common Units held by such member (including, with respect to each such member who holds vested Incentive Units, the applicable number of vested Common Units received as a result of the conversion (based on the IU Conversion Ratio (as defined in the Focus LLC Agreement)) of vested Incentive Units held by such member that have a Hurdle Amount (as defined in the Focus LLC Agreement) that is less than the Merger Consideration), other than those certain Focus LLC Units that Existing Stockholders will contribute and transfer to Topco in exchange for newly issued shares of Topco as contemplated by the Support Agreement (the “Rollover Units”), and (B) surrender for cancellation the corresponding number of shares of Class B Common Stock in accordance with the Focus LLC Agreement (the “Vested Units Exchanges”). Also on the date of the closing and prior to the LLC Merger Effective Time, each Incentive Unit, whether a vested Incentive Unit or unvested Incentive Unit, that has a Hurdle Amount that is equal to or greater than the Merger Consideration shall, automatically and without any action on the part of Focus LLC, Parent, the Company, or the holder thereof, be cancelled for no consideration.
At the Company Merger Effective Time, each then outstanding unvested Common Unit held by a member of Focus LLC (other than the Company and its wholly owned Subsidiaries or Parent) (including, with respect to each such member who holds unvested Incentive Units, each unvested Common Unit received as a result of the conversion (based on the IU Conversion Ratio) of unvested Incentive Units held by such member that have a Hurdle Amount that is less than the Merger Consideration) shall automatically be cancelled and converted into a contingent cash payment equal in an amount that would be payable pursuant to the Merger Agreement if such unvested Common Unit were a Company Restricted Share (as defined below), which contingent cash payment will vest and become payable pursuant to the same vesting schedule applicable to the corresponding unvested Common Unit or Incentive Unit, as applicable.
At the LLC Merger Effective Time, except as set forth above with respect to unvested Common Units, each Focus LLC Unit issued and outstanding immediately prior to the LLC Merger Effective Time and after the Vested Units Exchanges, other than (i) the Rollover Units and any other Focus LLC Units owned by Parent and (ii) the Focus LLC Units owned by the Company or any of its wholly owned subsidiaries, will be cancelled for no consideration.
Treatment of Company Equity Awards
At the Company Merger Effective Time: (1) each then outstanding option to purchase shares of Company Common Stock (a “Company Option”) that is vested and has a per share exercise price that is less than the Merger Consideration immediately prior to the Company Merger Effective Time will automatically be
 
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cancelled and converted into the right to receive an amount in cash equal to product of (x) the number of shares of Company Common Stock subject to the Company Option immediately prior to the Company Merger Effective Time and (ii) the excess, if any, of (A) the Merger Consideration over (B) the exercise price per share of Company Common Stock of such Company Option (the “Option Consideration”); (2) each then outstanding Company Option that is unvested and has a per share exercise price that is less than the Merger Consideration immediately prior to the Company Merger Effective Time will automatically be cancelled and converted into a contingent right to receive a cash payment, without interest, from the Surviving Corporation equal to the Option Consideration with respect to such Company Option, and such resulting cash-based award will vest and become payable pursuant to the same vesting schedule applicable to such Company Option from which it was converted immediately prior to the Company Merger Effective Time, subject to the holder’s continued employment with or service to Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates; (3) each Company Option, whether vested or unvested, that has a per share exercise price that is equal to or greater than the Merger Consideration will automatically be cancelled for no consideration; (4) each then outstanding company restricted stock unit (a “Company RSU”) that is unvested immediately prior to the Company Merger Effective Time will automatically be cancelled and converted into a contingent cash payment, without interest, from the Surviving Corporation in an amount equal to the product of (x) the number of shares of Company Common Stock corresponding to such Company RSU immediately prior to the Company Merger Effective Time and (y) the Merger Consideration, and such resulting cash-based award will vest and become payable pursuant to the same vesting schedule applicable to such Company RSU from which it was converted immediately prior to the Company Merger Effective Time, subject to the holder’s continued employment with or service to Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates; and (5) each then outstanding share of Company Common Stock subject to forfeiture, vesting or other lapse conditions (a “Company Restricted Share”) as of immediately prior to the Company Merger Effective Time will automatically be cancelled and converted into a contingent contractual right to receive a cash payment, without interest, from the Surviving Corporation equal to the Merger Consideration and such resulting cash-based award will vest and become payable pursuant to the same vesting schedule applicable to such Company Restricted Share from which it was converted immediately prior to the Company Merger Effective Time, subject to the holder’s continued employment with or service to Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates.
Special Factors (page 25)
Background of the Mergers
A description of the background of the Mergers, including the Special Committee’s discussions with CD&R, is included in the section of this proxy statement entitled “Special Factors — Background of the Mergers.
Reasons for the Mergers; Recommendation of the Board; Fairness of the Mergers
The Board formed the Special Committee to, among other things, (i) review, evaluate and negotiate a potential transaction involving the acquisition by CD&R of all of the outstanding shares of Company Common Stock (including all of the equity of Focus LLC) in a cash merger transaction or any alternative to such potential transaction, and (ii) to recommend to the full Board what action, if any, should be taken by the Board with respect to the foregoing. The Special Committee unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders, (ii) recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, and determine that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders and (iii) recommended that, subject to Board approval, the Board submit the Merger Agreement to the stockholders of the Company for their adoption and recommend that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. The Board, acting upon the recommendation of the Special Committee, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and its stockholders, including the Unaffiliated Stockholders, (2) approved and declared advisable the Merger Agreement and the transactions contemplated
 
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thereby, including the Mergers, (3) approved the execution and delivery of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations contained therein and the consummation of the Mergers and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (4) directed that the adoption of the Merger Agreement be submitted to a vote of Company’s stockholders at a meeting of the Company’s stockholders and (5) recommended that the stockholders of the Company vote in favor of the adoption of the Merger Agreement.
The Merger Agreement and the transactions contemplated thereby, including the Mergers, have been unanimously approved by the Board, based on the recommendation of the Special Committee. The Board, by a unanimous vote of the Company’s directors, recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal, and “FOR” the Merger-Related Compensation Proposal.
For a description of the material factors considered by the Special Committee and by the Board in deciding to recommend approval of the proposal to adopt the Merger Agreement, see the section of this proxy statement entitled “Special Factors — Reasons for the Mergers; Recommendation of the Board; Fairness of the Mergers.”
Position of the CD&R Entities as to the Fairness of the Company Merger; Purpose and Reasons of the CD&R Entities for the Company Merger
Under a possible interpretation of the SEC rules governing “going private” transactions, each of the CD&R Entities may be deemed to be an affiliate of the Company and, therefore, required to express its purposes and reasons for the Company Merger and its beliefs as to the fairness of the Company Merger to the Unaffiliated Stockholders. For a description of the CD&R Entities’ purposes and reasons for the Company Merger, and their beliefs as to the fairness of the Company Merger to the Unaffiliated Stockholders, please see the section of this proxy statement entitled “Special Factors — Position of the Parent Entities as to the Fairness of the Mergers — Position of the CD&R Entities as to the Fairness of the Company Merger” and “Special Factors — Purpose and Reasons of the Parent Entities for the Mergers — Purpose and Reasons of the CD&R Entities for the Company Merger.
Position of the Trident Entities as to the Fairness of the Company Merger; Purpose and Reasons of the Trident Entities for the Company Merger
Under the SEC rules governing “going private” transactions, each of the Trident Entities may be an affiliate of the Company and, therefore, required to express its purposes and reasons for the Company Merger and its beliefs as to the fairness of the Company Merger to the Unaffiliated Stockholders. For a description of the Trident Entities’ purposes and reasons for the Company Merger, and their beliefs as to the fairness of the Company Merger to the Unaffiliated Stockholders, please see the section of this proxy statement entitled “Special Factors — Position of the Parent Entities as to the Fairness of the Mergers — Position of the Trident Entities as to the Fairness of the Company Merger” and “Special Factors — Purpose and Reasons of the Parent Entities for the Mergers — Purpose and Reasons of the Trident Entities for the Company Merger.
Opinions of the Special Committee Financial Advisors
On February 26, 2023, Goldman Sachs & Co. LLC (“Goldman Sachs”) rendered to the Special Committee its oral opinion, which was subsequently confirmed by delivery of a written opinion dated February 27, 2023, that as of the date of such opinion and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement was fair from a financial point of view to such holders. On February 26, 2023, Jefferies LLC (“Jefferies” and together with Goldman Sachs, the “Special Committee Financial Advisors”) rendered to the Special Committee its oral opinion, which was subsequently confirmed by delivery of a written opinion dated February 26, 2023 that, as of the date of such opinion and based on and subject to the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of Class A Common Stock that are Unaffiliated Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
 
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The full text of the written opinion of Goldman Sachs, dated February 27, 2023, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. The Company encourages you to read the opinion carefully and in its entirety. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Special Committee in connection with its consideration of the transactions contemplated by the Merger Agreement. Goldman Sachs’ opinion is not a recommendation as to how any holder of Class A Common Stock should vote with respect to the Company Merger or any other matter. For more information, please see the section of this proxy statement entitled “Special Factors — Goldman Sachs & Co. LLC.
The full text of Jefferies’ written opinion, which describes the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex C. The Company encourages you to read the opinion carefully and in its entirety. Jefferies’ opinion was provided for the use and benefit of the Special Committee (in its capacity as such) in its evaluation of the Merger Consideration from a financial point of view and did not address any other aspect of the Mergers or any other matter. Jefferies’ opinion did not address the relative merits of the Mergers or other transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to the Company, nor did it address the underlying business decision by the Company to engage in the Mergers or any term, aspect or implication of any other agreement (or amendment thereto or related arrangements) entered into in connection with, or contemplated by or resulting from, the Mergers or otherwise. Jefferies’ opinion did not constitute a recommendation as to how the Board or any securityholder should vote or act with respect to the Mergers or any other matter. For more information, please see the section of this proxy statement entitled “Special Factors — Opinion of Jefferies LLC.
The full text of Goldman Sachs’ and Jefferies’ written opinions should be read carefully in their entirety for a description of the assumptions made, procedures followed, matters considered, and limitations on the review undertaken by Goldman Sachs and Jefferies, as applicable, in preparing their respective opinions.
Certain Effects of the Mergers
At the Company Merger Effective Time, each share of Class A Common Stock issued and outstanding immediately prior to the Company Merger Effective Time (including each such share resulting from the Vested Units Exchanges), other than the Excluded Shares, will be converted into the right to receive $53.00 per share of Class A Common Stock in cash, without interest. At the Company Merger Effective Time, each share of Class B Common Stock issued and outstanding immediately prior to the Company Merger Effective Time will automatically be cancelled and will cease to exist and no payment will be made with respect thereto. At the Company Merger Effective Time, each share of Company Common Stock held by the Company as treasury stock and not held on behalf of third parties, each share of Company Common Stock owned by Parent or Merger Subs and any shares of Company Common Stock owned by any direct or indirect wholly owned subsidiary of Parent or Merger Subs, that are issued and outstanding immediately prior to the Company Merger Effective Time will automatically be cancelled without payment of any consideration therefor or any conversion thereof and will cease to exist. Each share of a class or a series of capital stock of Company Merger Sub issued and outstanding immediately prior to the Company Merger Effective Time will be converted into one share of the same class or series of capital stock of the Surviving Corporation.
At the LLC Merger Effective Time, each Focus LLC Unit issued and outstanding immediately prior to the LLC Merger Effective Time and after the Vested Units Exchanges, other than (i) the Rollover Units and any other Focus LLC Units owned by Parent, (ii) the Focus LLC Units owned by the Company or any of its wholly owned subsidiaries, will automatically be cancelled and forfeited for no consideration, and (iii) certain unvested Common Units (including unvested Incentive Units that have a Hurdle Amount less than the Merger Consideration) that will be converted into a contingent cash payment. For a further discussion of the effects of the Mergers, see the section of this proxy statement entitled “Special Factors — Certain Effects of the Mergers.
Interests of Executive Officers and Directors of the Company in the Mergers
In considering the recommendation of the Board that the stockholders of the Company vote in favor of the adoption of the Merger Agreement, the Company’s stockholders should be aware that the executive officers and directors of the Company have certain interests in the Mergers that may be different from, or in
 
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addition to, the interests of the Company’s stockholders generally. The Special Committee and the Board were aware of these interests and considered them, among other matters, in determining that the Merger Agreement and transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and its Unaffiliated Stockholders, and in making their related recommendations, including the Board’s recommendation that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. These interests include, among others, (i) the contribution of certain Company Common Stock and Focus LLC Units held by the Existing Stockholders, who are affiliated with certain directors of the Company, to an affiliate of Parent prior to closing of the Company Merger to represent equity interests in the Surviving Corporation post-closing as contemplated by the Support Agreement, (ii) the treatment of Focus LLC Units under the Merger Agreement that are held by the executive officers and directors of the Company, (iii) the vesting, and in some cases forfeiture, of certain Focus LLC Units held by the executive officers and directors of the Company, (iv) certain payments and the issuance of promissory notes to certain executive officers and directors of the Company, including those affiliated with Stone Point, under the TRA Waiver and Exchange Agreements (as defined below), (v) the provision of indemnification and insurance arrangements in favor of executive officers and directors of the Company under the Merger Agreement and (vi) payments and benefits that certain of the Company’s executive officers would receive in connection with the Mergers, including as a result of a termination of such executive officers’ employment following the Mergers. These interests are discussed in more detail in the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Mergers.
Material U.S. Federal Income Tax Consequences of the Vested Units Exchange and the Company Merger
Each of (i) the exchange by U.S. holders (as discussed in more detail in the section of this proxy statement entitled “Special Factors — Material U.S. Federal Income Tax Consequences of the Mergers”) of Focus LLC Units for shares of Class A Common Stock in the Vested Units Exchange and (ii) the exchange by U.S. holders of shares of Class A Common Stock (including shares of Class A Common Stock received in the Vested Units Exchange) for cash in the Company Merger is expected to be treated as a taxable transaction for U.S. federal income tax purposes. In addition, in connection with the Company Merger, current or former holders of Focus LLC Units may receive a Holder TRA Payoff Amount, all or a portion of which may relate to Focus LLC Units a U.S. holder exchanges in the Vested Units Exchange, and such portion is expected to be treated as additional consideration for the Focus LLC Units exchanged by such U.S. holder in the Vested Units Exchange.
All holders of Focus LLC Units and shares of Class B Common Stock and holders of shares of Class A Common Stock are strongly encouraged to consult with their own tax advisors as to the specific tax consequences of the Vested Units Exchange, the Company Merger and any related transactions to them in their particular circumstances, including the applicability and effect of any U.S. federal, state or local, non-U.S. or other tax laws. In addition, each person who may receive a Holder TRA Payoff Amount is strongly encouraged to consult with its own tax advisors regarding the U.S. federal income and other tax consequences to it of the receipt of a Holder TRA Payoff Amount. See the section of this proxy statement entitled “Special Factors — Material U.S. Federal Income Tax Consequences of the Mergers.
Financing of the Mergers
The Mergers are not subject to any financing condition. Parent estimates that the total funds necessary to complete the Mergers will be approximately $4,350,000,000, including estimated transaction fees and expenses. Parent expects these amounts to be funded via equity investment by the Guarantors.
Parent and Merger Subs have delivered to the Company the Equity Commitment Letters, dated as of February 27, 2023, by and between Parent and the CD&R Guarantor pursuant to which the CD&R Guarantor has committed to provide equity financing in an aggregate amount of $3,200,000,000 to Parent or, if proceeds from debt financing being funded to Parent concurrently are less than $500,000,000, such equity financing commitment would make up the shortfall, up to a maximum equity commitment of $4,350,000,000, subject to and in accordance with the terms and conditions of the Equity Commitment Letters and the Merger Agreement, in connection with the funding of the transaction.
Parent and Merger Subs have also delivered to the Company the Equity Commitment Letter, dated as of February 27, 2023, by and between Parent and the Trident Guarantors, pursuant to which the Trident
 
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Guarantors have committed to provide equity financing in an aggregate amount of $650,000,000 to Parent, subject to and in accordance with the terms and conditions of the Equity Commitment Letter and the Merger Agreement.
In addition, in connection with the Mergers, Parent and Merger Subs have also delivered to the Company the Limited Guarantees from the Guarantors, in favor of the Company, pursuant to which the Guarantors have agreed to guarantee certain payment obligations of Parent and Merger Subs under the Merger Agreement, including reimbursement and indemnification by Parent and Merger Subs for certain expenses and losses incurred by the Company, if and when payable, and the obligations under the Equity Commitment Letters.
In connection with its entry into the Merger Agreement, Parent entered into a debt commitment letter, dated as of February 27, 2023 (as amended or supplemented from time to time prior to the date hereof, the “Debt Commitment Letter”), by and among Royal Bank of Canada, RBC Capital Markets, Truist Bank, Truist Securities, Inc., Citizens Bank, N.A., MUFG Bank, Ltd., MUFG Union Bank, N.A., MUFG Securities Americas Inc., Fifth Third Bank, National Association, Bank of Montreal, BMO Capital Markets Corp., Capital One, National Association and SPC Financing Company LLC (collectively, the “Debt Commitment Parties”). Pursuant to the Debt Commitment Letter, the Debt Commitment Parties have committed to provide debt financing in connection with the consummation of the Mergers, the other transactions contemplated by the Merger Agreement, and related transactions, in the amounts and on the terms and subject to the conditions set forth in the Debt Commitment Letter. The Debt Commitment Letter provides for, among other things, (i) incremental commitments to Focus LLC’s existing credit facilities, comprised of a senior secured incremental term loan facility in an aggregate principal amount of up to the lesser of (x) $500.0 million and (y) the maximum aggregate amount permitted to be incurred under clauses (b)(I) and (b)(II)(A) of the definition of “Maximum Incremental Facilities Amount” set forth in the Existing Credit Document (the “Incremental Term Loan Credit Facility”) and (ii) an agreement to make certain amendments to the terms of Focus LLC’s existing term loan A and revolving credit facilities. The obligations of the Debt Commitment Parties to provide the debt financing under the Debt Commitment Letter are subject to certain customary conditions, including the substantially concurrent consummation of the Mergers in accordance with the Merger Agreement in all material respects and the consummation of the Equity Contribution (as defined in the Debt Commitment Letter) in an aggregate amount not less than $4,200.0 million (as such amount may be reduced in accordance with the Debt Commitment Letter).
The Merger Agreement (page 120)
A summary of the material provisions of the Merger Agreement, which is attached as Annex A to this proxy statement and which is incorporated by reference in this proxy statement, is described in the section of this proxy statement entitled “The Merger Agreement.” Among other things, the Merger Agreement includes the following terms:

Closing and Effective Times of Mergers.   Assuming timely satisfaction of necessary closing conditions set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at closing but subject to the satisfaction or waiver of such conditions), including the adoption of the Merger Agreement by the stockholders, we anticipate that the Mergers will be completed in the third quarter of 2023. The Company, however, cannot assure completion of the Mergers by any particular date, if at all.

Conditions to the Mergers.   The closing of the Mergers depends on a number of conditions being satisfied or waived (other than the condition set forth in the first bullet below, which cannot be waived). These conditions, which are described more fully in “The Merger Agreement — Conditions to the Mergers,” include:

the adoption of the Merger Agreement by each of (i) the affirmative vote of the holders of a majority in voting power of the outstanding shares of Company Common Stock, voting together as a single class, and entitled to vote on the Merger Agreement Proposal at the Special Meeting (the “Majority of the Outstanding Shares”) and (ii) the affirmative vote of the holders of a majority in voting power of the outstanding shares of Company Common Stock, voting together as a single class, held by the Unaffiliated Stockholders and entitled to vote on the Merger
 
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Agreement Proposal at the Special Meeting (the “Majority of the Unaffiliated Shares”), in each case assuming a quorum is present (we refer to the affirmative votes of the Majority of the Outstanding Shares and the Majority of the Unaffiliated Shares, together, as the “Requisite Company Stockholder Approvals”);

any notification and waiting period requirements applicable to the consummation of the Mergers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) has expired or been terminated and the approvals, clearances or expirations of waiting periods under certain other antitrust laws, foreign direct investment and other laws have been obtained or deemed obtained as a result of the expiry of applicable waiting periods;

other regulatory approvals clearances or expirations of waiting periods have been obtained;

the absence of any law or order of any governmental authority restraining, enjoining, rendering illegal or otherwise prohibiting consummation of the Mergers;

the accuracy of each party’s representations and warranties in the Merger Agreement (generally subject to materiality qualifications);

the performance, in all material respects, by each party of all obligations required to be performed by it under the Merger Agreement;

the absence of a Material Adverse Effect for the Company;

the occurrence of the Vested Units Exchanges;

the receipt of FINRA’s approval; and

the delivery of an officers’ certificate by each party with respect to the accuracy of the representations and warranties and performance of obligations of such party under the Merger Agreement.

Go-Shop Period.   The Merger Agreement provided that we were permitted, beginning on the date of the Merger Agreement and continuing until 11:59 p.m. Eastern Time (A) on April 8, 2023 for any person or “group” that is not an Excluded Party, or (B) in respect of any Excluded Party, on April 18, 2023, to, directly or indirectly through our Representatives, solicit, initiate, propose, induce, encourage or facilitate the making, submission or announcement of, or knowingly encourage, facilitate or assist, any discussion, proposal or inquiry that constitutes, could constitute or is reasonably expected to lead to, an Acquisition Proposal, subject to a customary confidentiality agreement, furnish to any third person or its Representatives any non-public information relating to the Company or any of its subsidiaries or afford any access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company and its subsidiaries, in any such case with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, an Acquisition Proposal.

No Solicitation of Acquisition Proposals.   The Merger Agreement provides that we are not permitted to, from the No-Shop Period Start Date (or the Cut-Off Time with respect to Excluded Parties) through the earlier of the termination of the Merger Agreement pursuant to its terms and the Company Merger Effective Time, among other things, directly or indirectly through our Representatives, initiate, solicit, propose or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, any Acquisition Proposal.

Board Recommendation Changes.   Notwithstanding the restrictions described above, under certain circumstances, we may, prior to the time the Merger Agreement is adopted by our stockholders, (x) provide information in response to a bona fide written Acquisition Proposal received after the date of the Merger Agreement that did not result from a breach of the non-solicitation provisions of the Merger Agreement (including a bona fide written Acquisition Proposal from a third person that the Company engaged during the go-shop period), subject to certain conditions, and (y) engage or participate in any discussions or negotiations with certain third parties who have made such a bona fide written Acquisition Proposal, if and only if the Board (acting on the recommendation of the Special Committee) or the Special Committee has determined in good faith based on the information then available and after consultation with its financial advisors and outside legal counsel that such
 
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Acquisition Proposal either constitutes a Superior Proposal or is reasonably likely to result in a Superior Proposal and that the failure to take action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law.

The Merger Agreement also provides that, at any time before the stockholders of the Company adopt the Merger Agreement, the Board (acting on the recommendation of the Special Committee) or the Special Committee may effect a Change of Recommendation (as defined in the section of this proxy statement entitled “The Merger Agreement — No Solicitation of Acquisition Proposals; Board Recommendation Changes — No Change of Recommendation.”) (or terminate the Merger Agreement) with respect to a bona fide written Acquisition Proposal that did not arise from a breach of the obligations in non-solicitation provisions in the Merger Agreement if prior to taking such actions (A) the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith, after consultation with its financial advisors and outside legal counsel, that such Acquisition Proposal is a Superior Proposal, and (B) the Company, the Board and/or the Special Committee, as applicable, complies with certain procedures. The non-solicitation provisions are described in more detail in the section of this proxy statement entitled “The Merger Agreement — No Solicitation of Acquisition Proposals; Board Recommendation Changes — No Change of Recommendation — No Change of Recommendation of Exceptions — Change of Recommendation and Termination Procedures.”

Intervening Events.   The Merger Agreement provides that prior to the time the stockholders of the Company adopt the Merger Agreement, in response to an Intervening Event, the Board (acting on the recommendation of the Special Committee) or the Special Committee may effect a Change of Recommendation if, prior to taking such action, (1) the Board (acting on the recommendation of the Special Committee) or the Special Committee, as applicable, determines in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary obligations under applicable law and (2) the Company, the Board and/or the Special Committee, as applicable, complies with certain procedures.

TRA Payoff Amount.   The Merger Agreement provides for a process and timeline pursuant to which the Company and Parent will agree to the TRA Payoff Amount, subject to the provisions and procedures set forth in the Tax Receivable Agreements.

Termination and Termination Fees.   The Merger Agreement contains certain termination rights, including, among other things, the right of either party to terminate the Merger Agreement (provided, in the case of the Company, it is also approved by the Special Committee) if the Mergers have not occurred on or before November 27, 2023 and the right of the Company to terminate the Merger Agreement to enter into an alternative acquisition agreement providing for a Superior Proposal, subject to specified exceptions and limitations. In addition, the Merger Agreement provides that the Company will be required to pay Parent a termination fee of $150,350,000 if the Merger Agreement is terminated in certain circumstances, including, but not limited to, if (a) either Parent or the Company terminates for failure to obtain the Requisite Company Stockholder Approvals, or Parent terminates because of the Company’s breach of any representation, warranty, covenant or agreement set forth in the Merger Agreement, and such breach is incurable; (b) an Acquisition Proposal has been made publicly (or otherwise becomes publicly known) or announced to the Company or the Board and is not withdrawn at least five business days prior to the Special Meeting or prior to the date of termination in the case of a termination for the Company’s material breach; and (c) the Company consummates a transaction contemplated by an Acquisition Proposal or enters into an alternative acquisition agreement within 12 months following the date of termination. The Merger Agreement also provides that the Company will be required to pay Parent a termination fee of $150,350,000 if (a) Parent terminates the Merger Agreement because the Board or the Special Committee makes a Change of Recommendation or (b) the Company terminates the Merger Agreement to enter into an alternative acquisition agreement providing for a Superior Proposal. If the Company terminates the Merger Agreement based on its receipt of a Superior Proposal and enters into an alternative acquisition agreement with (a) an Excluded Party prior to the Cut-Off Time or (b) any Person prior to the No-Shop Period Start Date, in each case, with respect to a Superior Proposal, then the termination fee paid by the Company would be $69,392,000. For further discussion of the rights of the parties to terminate the Merger Agreement and
 
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the circumstances in which certain termination fees will be payable, see the sections of this proxy statement entitled “The Merger Agreement — Termination” and “The Merger Agreement — Company Termination Fee.”

Remedies; Specific Performance:

If the Merger Agreement is terminated in circumstances where a Company termination fee is paid to Parent, the termination fee and certain associated enforcement costs will be the sole and exclusive remedy of the Parent and its affiliates and Representatives pursuant to the Merger Agreement.

Notwithstanding anything in the Merger Agreement to the contrary, under no circumstances will the collective monetary damages payable by Parent, Merger Subs or any of their affiliates for breaches under the Merger Agreement, the Limited Guarantees or the Equity Commitment Letters exceed an amount equal to $300,701,000 plus any reimbursement obligations in the aggregate for all such breaches.

Prior to the valid termination of the Merger Agreement, each party is entitled to enforce specifically the terms and provisions of the Merger Agreement, including the Company’s right to obtain specific performance of Parent’s obligation to cause the Equity Financing to be funded as and when required under the Equity Commitment Letters in accordance with terms thereof. Under no circumstances will Parent or the Company be permitted or entitled to receive both specific performance that results in the occurrence of the closing of the Mergers and any monetary damages.
The Support Agreement (page 153)
On February 27, 2023 the Existing Stockholders, who collectively owned approximately 20.6% of the issued and outstanding shares of Company Common Stock as of February 27, 2023, entered into the Support Agreement with the Company, Parent and certain affiliates of Parent and solely for the purposes described therein. Pursuant to the Support Agreement, the Existing Stockholders agreed to, among other things, vote or cause to be voted any shares of Company Common Stock owned by them: (1) in favor of (a) the adoption of the Merger Agreement and the approval of the Mergers, (b) the approval of any proposal to adjourn or postpone any stockholder meeting if the Company or Parent proposes or requests such postponement or adjournment in accordance with the Merger Agreement, and (c) the approval of any other proposal considered and voted upon by the stockholders of the Company at any stockholder meeting necessary or desirable for the consummation of the Mergers and the transactions contemplated by the Merger Agreement; and (2) against (a) any proposal, action or agreement that would reasonably be expected to result in a breach of any covenant, representation or warranty or other obligation or agreement of the Company contained in the Merger Agreement or that would reasonably be expected to result in any of the conditions to the consummation of the Mergers under the Merger Agreement not being fulfilled, (b) any Acquisition Proposal, (c) any reorganization, dissolution, liquidation, winding up or similar extraordinary transaction involving the Company (except as contemplated by the Merger Agreement) and (d) any other action, agreement or proposal which would reasonably be expected to prevent, materially impede or materially delay the consummation of the Mergers or any of the transactions contemplated by the Merger Agreement.
Additionally, the Existing Stockholders have also agreed that from the date of the Merger Agreement until the earlier of the termination and consummation of Merger Agreement the Existing Stockholders shall instruct and use their reasonable best efforts to cause their Representatives (as defined in the Merger Agreement) not to, directly or indirectly: (1) initiate, solicit, propose or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, any Acquisition Proposal; (2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any nonpublic information or data to any person relating to, any Acquisition Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an Acquisition Proposal (other than to state that the terms of the Support Agreement prohibit such discussions); (3) furnish to any person (other than Parent or any of its affiliates) any non-public information relating to the Company or any of its subsidiaries or afford to any such person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company and its subsidiaries with the intent to induce, or that could reasonably be expected to result in, the making, submission or
 
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announcement of, an Acquisition Proposal; (4) approve, endorse or recommend any proposal that constitutes or would reasonably be expected to lead to, an Acquisition Proposal; or (5) resolve or agree to do any of the foregoing actions.
TRA Waiver and Exchange Agreements (page 155)
Under the terms of the Tax Receivable Agreements, a Change of Control (as defined under the Tax Receivable Agreements, which includes the occurrence of certain mergers and consolidations, including the Company Merger) will result in an obligation of the Company to make lump-sum payments to the TRA Holders generally equal, in the aggregate, to the TRA Payoff Amount. Concurrently with the execution and delivery of the Merger Agreement, the Company and Parent entered into agreements with the Existing Stockholders and each of the NEOs regarding the Company’s obligations to such persons pursuant to the Tax Receivable Agreements (the “TRA Waiver and Exchange Agreements”) pursuant to which each of the Existing Stockholders and each of the NEOs agreed to receive their respective Holder TRA Payoff Amount in the form of a promissory note with a principal amount equal to such Holder TRA Payoff Amount they were otherwise entitled to receive in cash at the Company Merger Effective Time (the “TRA Notes”). All other TRA Holders will receive the applicable Holder TRA Payoff Amount in cash in connection with the closing of the Mergers. For more information on the Tax Receivable Agreements and TRA Waiver and Exchange Agreement, see the section entitled “TRA Waiver and Exchange Agreements.
Parties to the Mergers (page 157)
The Company and Focus LLC.   Focus Financial Partners Inc., a Delaware corporation, is a holding company whose most significant asset is a membership interest in Focus LLC. Focus LLC directly or indirectly owns all of the outstanding equity interests in the Company’s partner firms. The Company is the sole managing member of Focus LLC and is responsible for all operational, management and administrative decisions of Focus LLC. The Class A Common Stock is listed on Nasdaq under the symbol “FOCS.” Focus LLC is a leading partnership of independent, fiduciary wealth management firms operating in the highly fragmented registered investment adviser industry, with a footprint of over 85 partner firms primarily in the United States. Focus LLC has achieved this market leadership by positioning itself as the partner of choice for many firms in an industry where a number of secular trends are driving consolidations. Focus LLC’s partner firms primarily service ultra-high net worth and high net worth individuals and families by providing highly differentiated and comprehensive wealth management services. Focus LLC’s partner firms benefit from its intellectual and financial resources, operating as part of a scaled business model with aligned economic interests, while retaining their entrepreneurial culture and independence. More information about the Company is available at www.focusfinancialpartners.com.
Parent.   Parent was formed on February 22, 2023, solely for the purpose of completing the Mergers and has conducted no business activities other than those related to the structuring and negotiation of the Mergers and arranging financing therefor.
Company Merger Sub.   Company Merger Sub was formed on February 22, 2023 as a direct, wholly owned subsidiary of Parent, solely for the purpose of completing the Company Merger and has conducted no business activities other than those related to the structuring and negotiation of the Mergers.
LLC Merger Sub.   LLC Merger Sub was formed on February 22, 2023 as a direct, wholly owned subsidiary of Parent, solely for the purpose of completing the LLC Merger and has conducted no business activities other than those related to the structuring and negotiation of the Mergers.
 
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGERS
The following questions and answers are intended to address briefly some commonly asked questions regarding the Mergers, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the section of this proxy statement entitled “Summary” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, all of which you should read carefully. See the section of this proxy statement entitled “Where You Can Find More Information.”
Q.
Why am I receiving this document?
A.
On February 27, 2023, the Company entered into the Merger Agreement. Pursuant to the Merger Agreement, among other things, the Company Merger Sub will merge with and into the Company with the Company surviving the Mergers as a subsidiary of Parent. A copy of the Merger Agreement is attached to this proxy statement as Annex A.
The Board, acting upon the unanimous recommendation of the Special Committee, unanimously (1) determined that the Merger Agreement and transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and its stockholders, including the Unaffiliated Stockholders (2) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, (3) approved the execution and delivery of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations contained therein and the consummation of the Mergers and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (4) directed that the adoption of the Merger Agreement be submitted to a vote of Company’s stockholders at a meeting of the Company’s stockholders, and (5) recommended that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. In evaluating the Mergers, the Special Committee and the Board consulted, where appropriate, with the Company’s management and outside legal and financial advisors, and considered a number of factors.
The Company is soliciting proxies for the Special Meeting. You are receiving this proxy statement because you own shares of Class A Common Stock or Class B Common Stock. The Company is holding the Special Meeting so that its stockholders may vote on the Merger Agreement Proposal (as defined below), the Adjournment Proposal (as defined below) and the Merger-Related Compensation Proposal (as defined below). The approval of Merger Agreement Proposal by our stockholders is a condition to the consummation of the Mergers. This proxy statement contains important information about the Mergers and the Special Meeting, and you should read it carefully. The enclosed proxy card allows you to vote your shares of Company Common Stock without attending the Special Meeting in person.
Your vote is extremely important, and we encourage you to submit your proxy as soon as possible. For more information on how to vote your shares of Company Common Stock, please see the section of this proxy statement entitled “The Special Meeting.”
Q.
What is the proposed transaction and what effects will it have on the Company?
A.
The proposed transaction includes, among other things, the merger of Company Merger Sub with and into the Company, with the Company surviving the Company Merger. If the Merger Agreement is adopted by the affirmative vote of each of (1) the majority of the outstanding shares and (2) the majority of the unaffiliated shares, assuming a quorum is present, and the other closing conditions under the Merger Agreement are satisfied or waived, (a) LLC Merger Sub shall merge with and into Focus LLC, with Focus LLC surviving the LLC Merger, pursuant to and in accordance with the provisions of the DLLCA and (b) immediately following the LLC Merger, Company Merger Sub shall merge with and into the Company, with the Company surviving the Company Merger, pursuant to the DGCL. As a result of the Mergers, the Company will become a subsidiary of Parent and will no longer be a public company.
 
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Q.
What will happen to Company Common Stock as a result of the Mergers?
A.
If the Company Merger is completed, with certain limitations as prescribed in the Merger Agreement, (a) each share of Class A Common Stock issued and outstanding immediately prior to the Company Merger Effective Time (including each such share resulting from the Vested Units Exchanges), other than Excluded Shares, will be converted into the right to receive $53.00 per share of Class A Common Stock in cash, without interest, unless the holder of the Class A Common Stock has properly exercised and not withdrawn its appraisal rights under the DGCL, subject to certain limitations, and (b) each share of Class B Common Stock issued and outstanding immediately prior to the Company Merger Effective Time will automatically be cancelled and cease to exist and no payment shall be made with respect thereto. Following the consummation of the Company Merger, shares of Class A Common Stock will represent only the right to receive the Merger Consideration (unless the stockholder has properly demanded appraisal of such shares of Company Stock in accordance with, and has otherwise complied with, Section 262 of the DGCL, subject to certain limitations), and you will no longer have any interest in our future earnings, growth or value. In addition, following the consummation of the Mergers, the registration of the shares of Class A Common Stock and the Company’s reporting obligation under the Exchange Act with respect to the shares of Class A Common Stock will be terminated upon application to the SEC, the shares of Class A Common Stock will no longer be listed on any exchange or quotation system, including Nasdaq, and price quotations will no longer be available.
If the Mergers are completed, the Class A Common Stock will be delisted from Nasdaq, will be deregistered under the Exchange Act and will cease to be publicly traded.
Q.
What are the material U.S. federal income tax consequences of the Vested Units Exchange and the Company Merger to holders of Focus LLC Common Units (and shares of Class B Common Stock) and shares of Class A Common Stock?
A.
Each of (i) the exchange by U.S. holders (as defined in “Special Factors — Material U.S. Federal Income Tax Consequences”) of Focus LLC Units for shares of Class A Common Stock in the Vested Units Exchange and (ii) the exchange by U.S. holders of shares of Class A Common Stock (including shares of Class A Common Stock received in the Vested Units Exchange) for cash in the Company Merger is expected to be treated as a taxable transaction for U.S. federal income tax purposes. In addition, in connection with the Company Merger, current or former holders of Focus LLC Units may receive a Holder TRA Payoff Amount, all or a portion of which may relate to Focus LLC Units a U.S. holder exchanges in the Vested Units Exchange, and such portion is expected to be treated as additional consideration for the Focus LLC Units exchanged by such U.S. holder in the Vested Units Exchange.
All holders of Focus LLC Units and shares of Class B Common Stock and holders of shares of Class A Common Stock are strongly encouraged to consult with their own tax advisors as to the specific tax consequences of the Vested Units Exchange, the Company Merger and any related transactions to them in their particular circumstances, including the applicability and effect of any U.S. federal, state or local, non-U.S. or other tax laws. In addition, each person who may receive a Holder TRA Payoff Amount is strongly encouraged to consult with its own tax advisors regarding the U.S. federal income tax consequences to it of the receipt of a Holder TRA Payoff Amount. See the section of this proxy statement entitled “Special Factors — Material U.S. Federal Income Tax Consequences”.
Q.
What happens if the Mergers are not completed?
A.
If the Merger Agreement Proposal is not approved by the Company’s stockholders or if the Mergers are not completed for any other reason, the Company’s stockholders will not receive any payment for their shares of Class A Common Stock in connection with the Company Merger. Instead, the Company will remain a public company and shares of Class A Common Stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, so long as the Company continues to meet the applicable listing requirements.
In the event that the Merger Agreement is terminated, then, under specified circumstances, the Company will be required to pay to Parent a termination fee of $150,350,000 or $69,392,000, as applicable, under
 
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the terms of Merger Agreement. See the section of this proxy statement entitled “The Merger Agreement — Termination” for a discussion of the circumstances under which a termination fee is required.
Q.
When and where is the Special Meeting, and who may attend?
A.
The Special Meeting will be held at 515 N. Flagler Drive, Suite 550, West Palm Beach, FL 3340, [  ] Eastern Time on [  ], 2023. Please note that you are not permitted to record the Special Meeting. For more detailed information regarding attendance procedures for the Special Meeting, please see the section of this proxy statement entitled “The Special Meeting — Attendance.”
Q.
Who can vote at the Special Meeting?
A.
All holders of Company Common Stock of record as of the Record Date for the Special Meeting, are entitled to receive notice of, and to vote at, the Special Meeting, or any adjournment or postponement thereof. You will have one vote for each share of Company Common Stock that you owned of record on the Record Date. If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the Merger Agreement Proposal, without your instructions. If you hold your shares in “street name,” you may not vote your shares in person at the Special Meeting unless you obtain a “legal proxy” from your bank, broker or other nominee.
Q.
What is the difference between being a “stockholder of record” and a “beneficial owner” of shares of Company Common Stock held in “street name”?
A.
If, on the Record Date, your shares of Company Common Stock are registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC you are considered, with respect to those shares, the stockholder of record. In that case, this proxy statement and your proxy card have been sent directly to you. As a stockholder of record, you may vote in person during the Special Meeting or vote by proxy card using any of the methods set forth in the section of this proxy statement entitled “The Special Meeting — How to Vote.
If your shares of Company Common Stock are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name.” Your bank, broker or other nominee will send you, as the beneficial owner, a package describing the procedures for voting your shares of Company Common Stock at the Special Meeting. You should follow the instructions provided by your bank, broker or other nominee to vote your shares of Company Common Stock at the Special Meeting. In order to attend and vote at the Special Meeting via the Special Meeting website, you will need to obtain a “legal proxy” from your bank, broker or other nominee. Please note that even if you plan to attend the Special Meeting, we recommend that you vote by Internet, telephone or mail, using the enclosed proxy card in advance, to ensure that your shares of Company Common Stock will be represented.
Q.
What am I being asked to vote on at the Special Meeting?
A.
You are being asked to consider and vote on the following:

A proposal to adopt the Merger Agreement, a copy of which is attached to this proxy statement as Annex A, pursuant to which, (a) at the LLC Merger Effective Time, LLC Merger Sub will merge with and into Focus LLC, with Focus LLC surviving the LLC Merger and (b) immediately following the LLC Merger, Company Merger Sub will merge with and into the Company, with the Company surviving the Company Merger as a subsidiary of Parent (the “Merger Agreement Proposal”);

One or more proposals to adjourn the Special Meeting to a later date or dates if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement Proposal (the “Adjournment Proposal”); and

A nonbinding, advisory proposal regarding certain compensation arrangements for the Company’s NEOs in connection with the Mergers, as disclosed in the table under “Special Factors — Interests of
 
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Executive Officers and Directors of the Company in the Mergers — Golden Parachute Compensation” (the “Merger-Related Compensation Proposal”).
Q.
What is a quorum?
A.
The representation in person or by proxy of the holders of a majority in voting power of the outstanding shares of Company Common Stock entitled to vote at the Special Meeting is necessary to constitute a quorum at the Special Meeting. If you submit a properly executed proxy card, even if you vote “AGAINST” the proposal or vote to “ABSTAIN” in respect of the proposal, your shares of Company Common Stock will be counted for purposes of calculating whether a quorum is present.
If a quorum is not present at the Special Meeting, under the Company’s bylaws, only the person presiding at the Special Meeting will have the power to adjourn the Special Meeting until a quorum is present or represented.
As of the close of business on the Record Date, there were [  ] shares of Class A Common Stock outstanding and [  ] shares of Class B Common Stock outstanding.
Q.
How many votes do I have?
A.
You are entitled to one vote on each of the proposals for each share of Company Common Stock that you owned as of the Record Date. As of the close of business on the Record Date, there were [  ] shares of Class A Common Stock outstanding and [  ] shares of Class B Common Stock outstanding.
For each of the Merger Agreement Proposal, the Adjournment Proposal and the Merger-Related Compensation Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” An abstention, failure to vote or broker non-vote, if any, will have the same effect as a vote “AGAINST” the Merger Agreement Proposal. A failure to vote or broker non-vote, if any, will have no effect on the Adjournment Proposal and the Merger-Related Compensation Proposal. An abstention will have the same effect as a vote “AGAINST” the Adjournment Proposal and the Merger-Related Compensation Proposal.
Q.
What vote is required for the Company’s stockholders to approve the Merger Agreement Proposal?
A.
The approval of the Merger Agreement Proposal requires each of (1) the affirmative vote of the holders of a majority in voting power of the outstanding shares of the Company Common Stock, voting together as a single class, and entitled to vote on the Merger Agreement Proposal at the Special Meeting and (2) the affirmative vote of the holders of a majority in voting power of the outstanding shares of the Company Common Stock, voting together as a single class, held by the Unaffiliated Stockholders and entitled to vote on the Merger Agreement Proposal at the Special Meeting, in each case assuming a quorum is present. Accordingly, an abstention, failure to vote or broker non-vote, if any, will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.
Q.
What vote is required for the Company’s stockholders to approve the Adjournment Proposal?
A.
The approval of the Adjournment Proposal requires the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the Adjournment Proposal, whether or not a quorum is present. If no quorum is present or represented at the Special Meeting, the person presiding over the Special Meeting may adjourn the Special Meeting from time to time, without further notice other than announcement at the Special Meeting of the time and place of the adjourned meeting. Accordingly, a failure to vote or broker non-vote, if any, will not have any effect on the Adjournment Proposal. However, an abstention will have the same effect as a vote “AGAINST” the Adjournment Proposal.
Q.
What vote is required for the Company’s stockholders to approve the Merger-Related Compensation Proposal?
A.
The approval of the Merger-Related Compensation Proposal requires the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the Merger-Related Compensation Proposal, assuming a quorum is present. Accordingly, a failure to vote or broker non-vote, if any, will not have any effect on the Merger-Related
 
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Compensation Proposal. However, an abstention will have the same effect as a vote “AGAINST” the Merger-Related Compensation Proposal.
Q.
How will the Existing Stockholders vote the shares of Company Common Stock they hold?
A.
Pursuant to the Support Agreement, the Existing Stockholders, who collectively owned approximately 20.6% of the issued and outstanding shares of Company Common Stock as of February 27, 2023, agreed to vote or cause to be voted any shares of Company Common Stock owned by them in favor of the adoption of the Merger Agreement and approval of the Mergers, each of the other actions contemplated by the Merger Agreement or necessary or desirable for the consummation of the Mergers and the other transactions contemplated by the Merger Agreement and the adjournment of any meeting of the Company’s stockholders in accordance with the Merger Agreement and against any action or agreement that would reasonably be expected to result in any of the conditions to the consummation of the Mergers under the Merger Agreement not being satisfied or fulfilled and refrain from soliciting or supporting other Acquisition Proposals. For more information, see the section of this proxy statement entitled “The Support Agreement.
Q.
Why are the Company’s stockholders being asked to cast a nonbinding, advisory vote to approve certain compensation arrangements for the NEOs under existing agreements with the Company in connection with the Mergers?
A.
SEC rules require the Company to seek approval on a nonbinding, advisory basis with respect to certain compensation arrangements for the NEOs in connection with the Mergers. Approval of the Merger-Related Compensation Proposal is not required to consummate the Mergers.
Q.
How does the Board recommend that I vote?
A.
The Board recommends that you vote:

FOR” the Merger Agreement Proposal;

FOR” the Adjournment Proposal; and

FOR” the Merger-Related Compensation Proposal.
You should read the section of this proxy statement entitled “Special Factors — Reasons for the Mergers; Recommendation of the Board; Fairness of the Mergers” for a discussion of the factors that the Board considered in deciding to recommend the approval of the Merger Agreement. See also the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Mergers.”
Q.
How do I vote?
A.
If you are a stockholder of record as of the Record Date, you may vote your shares of Company Common Stock on matters presented at the Special Meeting in any of the following ways:

visit the website shown on your proxy card to submit your proxy via the Internet prior to the Special Meeting;

call the toll-free number for telephone proxy submission shown on your proxy card;

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid reply envelope; or

pre-register and obtain an admission ticket by [  ], 2023 and vote during the Special Meeting; in addition, you will need to obtain a “legal proxy” from the organization holding your shares to vote at the Special meeting. An admission ticket and a valid, government-issued photographic identification are required to enter the Special Meeting.
If you are a beneficial owner of the shares of Company Common Stock as of the Record Date, you will receive instructions from your bank, broker or other nominee that describe the procedures for voting your shares of Company Common Stock at the Special Meeting. You should follow the instructions provided by your bank, broker or other nominee to vote your shares of Company Common Stock at the
 
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Special Meeting. In order to attend and vote at the Special Meeting, you will need to obtain a “legal proxy” from your bank, broker or other nominee.
The control number located on your proxy card is designed to verify your identity and allows you to vote your shares of Company Common Stock and to confirm that your voting instructions have been properly recorded when submitting a proxy through the Internet or by telephone.
Q.
What is the deadline for voting my shares of Company Common Stock?
A.
If you are a stockholder of record as of the Record Date and choose to vote your shares of Company Common Stock through the Internet or by telephone, your proxy must be received through the Internet or by telephone by 11:59 p.m. Eastern Time on [  ], 2023, the day before the Special Meeting, for your shares of Company Common Stock to be voted at the Special Meeting. If you choose to submit your proxy by mailing a proxy card, your proxy card must be completed, signed, dated and returned in the enclosed postage-paid reply envelope or otherwise filed with our Corporate Secretary no later than 11:59 p.m. Eastern Time on [  ], 2023, the day before the Special Meeting. You may also attend the Special Meeting and vote in person. If you are a beneficial owner, please review the voting instructions provided by your bank, broker or other nominee for information on the deadline for voting your shares.
Q.
What is a proxy?
A.
A proxy is your legal designation of another person to vote your shares of Company Common Stock. This written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Company Common Stock is called a “proxy card.”
Q.
If I am a stockholder of record, what happens if I do not vote or submit a proxy card?
A.
If you fail to vote, either in person at the Special Meeting or by proxy, your shares of Company Common Stock will not be voted at the Special Meeting and will not be counted for purposes of determining whether a quorum exists.
Additionally, your failure to vote will have (1) the effect of counting as a vote “AGAINST” the Merger Agreement Proposal with respect to the approval thresholds requiring the affirmative vote of (a) the Majority of the Outstanding Shares and (b) the Majority of the Unaffiliated Shares, in each case assuming a quorum is present, and (2) no effect on the Adjournment Proposal or the Merger-Related Compensation Proposal.
Q.
If my shares of Company Common Stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee vote my shares of Company Common Stock for me?
A.
If your Company Common Stock is held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your Company Common Stock with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote Company Common Stock held in street name by returning a proxy card directly to or by voting in person at the Special Meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Your broker, bank or other nominee is obligated to provide you with a voting instruction form for you to use.
Your bank, broker or other nominee will only be permitted to vote your shares of Company Common Stock if you instruct your bank, broker or other nominee as to how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares of Company Common Stock. Under the rules of Nasdaq, a bank, broker or other nominee does not have discretionary authority to vote on “non-routine” matters without specific instructions from its customers and all of the matters to be considered at the Special Meeting are “non-routine” for this purpose. When a bank, broker or other nominee refrains from voting your shares on a particular proposal because the bank, broker or other nominee has not received your instructions and has discretionary authority to vote on the “routine” matters to be considered, it is called a “broker non-vote.” Because there are no routine matters to be considered at the Special Meeting, there should not be any broker non-votes.
 
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A failure to provide instructions to your bank, broker or other nominee with respect to any of the proposals will have (1) the effect of a vote “AGAINST” the Merger Agreement Proposal with respect to the approval thresholds requiring the affirmative vote of (a) the Majority of the Outstanding Shares and (b) the Majority of the Unaffiliated Shares, assuming a quorum is present, and (2) no effect on the Adjournment Proposal or the Merger-Related Compensation Proposal. In such instance, your shares will not be counted towards determining whether a quorum is present.
If you instruct your bank, broker or other nominee how to vote on at least one, but not all of the proposals to be considered at the Special Meeting, your shares of Company Common Stock will be voted according to your instructions on those proposals for which you have provided instructions and will be counted as present for purposes of determining whether a quorum is present at the Special Meeting.
Q.
If a stockholder gives a proxy, how are the shares of Company Common Stock voted?
A.
Regardless of the method you choose to submit a proxy, the individuals named on the enclosed proxy card will vote your shares of Company Common Stock as you instruct. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Company Common Stock should be voted “FOR” or “AGAINST,” or to “ABSTAIN” from voting on, all, some or none of the specific items of business to come before the Special Meeting.
If you are a record holder of Company Common Stock and properly sign your proxy card but do not mark the boxes indicating how your shares of Company Common Stock should be voted on any particular matter, the shares of Company Common Stock represented by your properly signed proxy will be voted as recommended by the Board, which means your shares of Company Common Stock will be voted “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.
Q.
Can I change or revoke my vote?
A.
Yes. You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised by:

submitting another proxy, including a proxy card, at a later date through any of the methods available to you;

giving written notice of revocation to the Company’s Corporate Secretary, which must be filed with the Company’s Corporate Secretary before the Special Meeting begins; or

attending the Special Meeting in person and voting again in person. In order to attend the Special Meeting in person, you will need to pre-register and obtain an admission ticket by [  ], 2023. An admission ticket and a valid, government-issued photographic identification are required to enter the Special Meeting.
If your shares of Company Common Stock are held in “street name” by your bank, broker or other nominee, please refer to the information forwarded by your bank, broker or other nominee for procedures on revoking your proxy.
Only your last submitted proxy will be considered. Please vote “FOR” each of the proposals, following the instructions in your proxy card or voting instructions form provided by your bank, broker or other nominee, as promptly as possible.
Q.
What do I do if I receive more than one proxy or set of voting instructions?
A.
If you hold shares of Company Common Stock in “street name,” or through more than one bank, broker or other nominee, and also directly as a record holder or otherwise, you may receive more than one proxy or set of voting instructions relating to the Special Meeting. These should each be executed and returned separately in accordance with the instructions provided in this proxy statement to ensure that all of your shares of Company Common Stock are voted.
 
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Q.
What happens if I sell my shares of Company Common Stock before the Special Meeting?
A.
The Record Date for the Special Meeting is earlier than the date of the Special Meeting. If you sell or transfer your shares of Company Common Stock after the Record Date but before the Special Meeting, unless you provide the person to whom you sell or otherwise transfer your shares of Company Common Stock with a proxy, you will retain your right to vote at the Special Meeting. Even if you sell or otherwise transfer your shares of Company Common Stock after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the enclosed postage-paid reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card).
Unless special arrangements are made between you and the person to whom you sell or otherwise transfer your shares of Company Common Stock and each of you notifies the Company in writing of such special arrangements, you will have transferred the right to receive the Merger Consideration, if the Company Merger is completed, to the person to whom you sell or transfer your shares.
Q.
Am I entitled to rights of appraisal under the DGCL?
A.
If the Company Merger is completed, holders of record or beneficial owners of Company Common Stock who (1) do not vote in favor of the Merger Agreement Proposal (whether by voting against the Merger Agreement Proposal, abstaining or otherwise not voting with respect to the Merger Agreement Proposal), (2) continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) their applicable shares of Company Common Stock through the effective date of the Company Merger, (3) properly demand appraisal of their applicable shares, (4) meet certain statutory requirements described in this proxy statement, and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the Company Merger under Section 262 if certain conditions set forth in Section 262(g) of the DGCL are satisfied. This means that these holders of record and beneficial owners may be entitled to have their shares of Company Common Stock appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Company Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Company Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the Company Merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Company Merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to persons entitled to appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (2) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, any persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights. Persons considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 could be more than, the same as or less than the value of the consideration that they would receive pursuant to the Merger Agreement if they did not seek appraisal of their shares. The DGCL requirements for perfecting and exercising appraisal rights are described in additional detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, which may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. See the section of this proxy statement entitled “Special Factors — Appraisal Rights.”
 
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Q.
Who will solicit and pay the cost of soliciting proxies?
A.
The Company has engaged MacKenzie to assist in the solicitation of proxies for the Special Meeting. The Company has agreed to pay MacKenzie a fee of $17,500, and to reimburse MacKenzie for reasonable and customary documented expenses in connection with its services. The Company will indemnify MacKenzie and its affiliates against all claims, expenses, losses, damages, liabilities and/or judgments of any kind whatsoever that arise out of or relate to MacKenzie’s services with certain customary exceptions for willful misconduct and breach. The Company also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of the shares of Company Common Stock for their expenses in forwarding solicitation materials to beneficial owners of our shares of Company Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies in person, by telephone or by electronic means. They will not be paid any additional amounts for soliciting proxies.
Q.
What do I need to do now?
A.
You should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including the Merger Agreement, along with all of the documents that are referred to in this proxy statement, as they contain important information about, among other things, the Mergers and how they affect you. Even if you plan to attend the Special Meeting, after carefully reading and considering the information contained in this proxy statement, please sign, date and return, as promptly as possible, the enclosed proxy card in the enclosed postage-paid reply envelope, or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card) to ensure that your shares of Company Common Stock are represented and can be voted at the Special Meeting, unless you wish to seek appraisal. If you hold your shares in “street name,” please refer to the instructions provided by your bank, broker or other nominee to see which of the above choices are available to you.
Q.
Should I send in my evidence of ownership now?
A.
No. You should not send in any documents evidencing ownership of shares of Company Common Stock with the proxy card. If the Mergers are consummated, the paying agent will send each holder of record of shares of Company Common Stock as of immediately prior to Company Merger Effective Time a letter of transmittal and instructions that explain how to exchange shares of Class A Common Stock for the Merger Consideration. If you are a beneficial owner of shares of Company Common Stock held in “street name,” you may receive instructions from your bank, broker or other nominee as to what action, if any, you need to take to effect the surrender of your shares. If the Mergers are consummated, each share of Class B Common Stock will automatically be cancelled and cease to exist and no payment shall be made with respect thereto.
Q.
What is householding and how does it affect me?
A.
The Company is sending only one copy of this proxy statement to stockholders who share the same last name and address, unless they have notified the Company that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs.
If you received a household mailing and you would like to have additional copies of this proxy statement mailed to you or you would like to opt out of this practice for future mailings, we will promptly deliver such additional copies to you if you submit your request to the Company’s Investor Relations in writing at 515 N. Flagler Drive, Suite 550, West Palm Beach, FL 33401, or call us at (646) 519-2456. You may also contact us in the same manner if you received multiple copies of this proxy statement and would prefer to receive a single copy of future mailings.
Q.
Where can I find the voting results of the Special Meeting?
A.
The Company will publish final voting results from the Special Meeting in a Current Report on Form 8-K to be filed with the SEC following the Special Meeting. For more information, please see the section of this proxy statement entitled “Where You Can Find More Information.”
 
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Q.
Who can help answer my other questions?
A.
If you have additional questions about the Mergers, need assistance in submitting your proxy or voting your shares of Company Common Stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
(800) 322-2885 (toll free)
Email: proxy@mackenziepartners.com
 
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SPECIAL FACTORS
This discussion of the Mergers is qualified by reference to the Merger Agreement, which is attached to this proxy statement as Annex A. You should read the entire Merger Agreement carefully because it is the legal document that governs the Mergers.
We are asking our stockholders to vote on the adoption of the Merger Agreement. If the Mergers are completed, certain holders of the shares of Class A Common Stock (as fully described in the Merger Agreement) will have the right to receive the Merger Consideration.
Background of the Mergers
As part of the Company’s ongoing consideration and evaluation of its long-term strategic goals and plans, the Board and Company management periodically review, consider and assess the Company’s operations and financial performance, as well as overall industry conditions, as they may affect those strategic goals and plans. This review includes, among other matters, the consideration of potential opportunities for business combinations, acquisitions and other financial and strategic alternatives. On March 30, 2022, as part of the Company’s ongoing consideration and evaluation of the Company’s long-term strategic goals and plans, the Board met with representatives of Goldman Sachs, who previously had provided financial advisory services to the Company, and members of Company management to discuss, among other things, the Company’s long-term strategic goals and plans.
On May 11, 2022, the Board held a special meeting by videoconference with representatives of Goldman Sachs and members of Company management. During the meeting and among other things, the Board approved a share repurchase program, the initiation of a study of potential financing and other strategic opportunities, and the potential engagement of investment bankers and counsel to assist the Company with these considerations as well as authorized Company management to provide such information necessary to undertake such study.
Following the May 11th Board meeting, in an effort to facilitate the study of potential financing and other strategic opportunities, members of Company management held introductory meetings with certain potential acquirors or investors.
On June 16, 2022, Mr. Adolf and representatives of CD&R had a meeting, during which CD&R expressed an interest in potentially acquiring the Company. Neither CD&R nor Mr. Adolf discussed or made any indication concerning valuation or price or other transaction terms for a potential transaction at this meeting, or concerning post-closing roles or compensation for members of Company management.
On June 30, 2022, the Board held a special meeting by videoconference with representatives of Goldman Sachs and members of Company management in attendance. During the meeting and among other things, representatives of Goldman Sachs reviewed a preliminary analysis of a potential sales process and certain potential interested financial sponsors (including CD&R) that had expressed an interest in wealth management and had the financial capacity to execute on a potential transaction of this size and members of Company management provided an update on their efforts to facilitate the study of potential financing and other strategic opportunities. As a result of the ongoing conversations among the Board and Company management regarding the Company’s performance since its 2018 initial public offering, its valuation and perception with investors and its potential future strategic initiatives, the Board, in consultation with Company management, determined to explore discussions with potential interested parties. The Board determined not to reach out to strategic acquirors at that time because the Company’s unique business model, which emphasizes growth through acquisitions, substantial partner firm autonomy, and sharing economics and ownership with its principals, would likely make it a more challenging transaction for a strategic acquiror, as well as to mitigate potential competitive harm to the Company associated with sharing confidential information with a strategic acquiror too early in the Company’s exploration of potential strategic transactions. The Board authorized management and representatives of Goldman Sachs to engage in preliminary discussions with the potentially interested financial sponsors (including CD&R) to gauge their interest in the Company.
Beginning on June 30, 2022, acting on behalf of the Company and at the direction of the Board, representatives of Goldman Sachs contacted five financial sponsors (including CD&R) in order to set up
 
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introductory meetings between the Company and each financial sponsor and solicit potential interest in an acquisition of the Company.
Throughout July and August 2022, senior members of Company management held a series of separate introductory meetings with representatives of CD&R and four other financial sponsor firms, Party A, Party B, Party C, and Party D, regarding a potential sale transaction. Party A and Party B expressed some interest in the opportunity to acquire the Company but did not indicate whether they planned to further pursue a strategic transaction with the Company. Party C provided feedback that it was supportive of the Company’s business and would be interested in supporting a strategic transaction involving the Company as a co-investor with another potential acquirer, but could not lead a transaction. Party D indicated that it would consider an evaluation of the Company internally and would revert if interested. Goldman Sachs did not hear back from Party D regarding a potential interest in pursuing a potential acquisition of the Company despite multiple outreaches.
On July 13, 2022, CD&R entered into a confidentiality agreement with the Company concerning discussions about a possible transaction involving the Company and CD&R or its affiliates. Such confidentiality agreement did not contain a “standstill” provision and did not otherwise prohibit CD&R from making any public proposal to acquire the Company without the Company’s prior authorization.
On August 11, 2022, a representative of CD&R communicated to representatives of Goldman Sachs an oral non-binding offer to acquire all of the outstanding common stock of the Company and all of the Focus LLC equity interests not held by the Company at a price per share (or equity interest, as applicable) in cash in the range of mid to high $40s. This information was shared with certain members of Company management, and Company management communicated the information to several members of the Board and it was the consensus of Company management that the Company was not interested in a potential sale transaction at that price per share. Company management directed Goldman Sachs to provide such response to CD&R.
On September 14, 2022, CD&R submitted a written non-binding offer to acquire all of the outstanding common stock of the Company and all of the Focus LLC equity interests for $50.00 per share (or equity interest, as applicable) in cash. CD&R’s proposal indicated that it assumed the full acceleration and satisfaction of the obligations under the Tax Receivable Agreements, which the proposal stated would be approximately $216.8 million (which was the amount of the Tax Receivable Agreements obligations reflected in the Company’s publicly available second quarter 2022 financial statements, which amount reflects only expected future payments in respect of prior exchanges of Focus LLC Units and not the actual TRA Payoff Amount). CD&R’s proposal also contemplated that it expected to fund the acquisition through a combination of equity and debt financing and it was subject to the completion of CD&R’s due diligence and the negotiation of definitive transaction documents. The CD&R offer letter did not address any participation by Stone Point in the transaction. Company management communicated with certain members of the Board about CD&R’s September 14 offer and the consensus was that the offer was not sufficiently compelling.
On September 21, 2022, the Board held a regularly scheduled meeting with Board members attending either in person or by videoconference and with representatives of Goldman Sachs, representatives of Vinson & Elkins LLP, outside legal advisor to the Company (“V&E”), and members of Company management in attendance. A representative of V&E provided the Board with an overview of process, governance and fiduciary duties in connection with a potential sale transaction and other strategic alternatives. Representatives of Goldman Sachs reviewed feedback received from Party A, Party B, Party C, and Party D including, among other things, that Parties A and B had declined to put forth a proposal despite being encouraged to do so, with Party A citing certain desired changes to the Company’s business model and challenges it saw in the Company implementing those changes and Party B citing the challenging financing environment, Party C providing feedback that it was supportive of the Company’s business and would be interested in supporting a strategic transaction involving the Company as a co-investor with another potential acquirer, but could not lead a transaction and Party D showing no interest in pursuing a potential transaction and was unresponsive to multiple outreaches. Representatives of Goldman Sachs then provided the Board with an overview of potential next steps. Following discussion at the meeting, the Board authorized Company management to permit CD&R and its representatives to conduct additional due diligence on the Company, despite finding CD&R’s September 14 offer to be not sufficiently compelling, with the goal of providing such access being to get CD&R to increase its proposal.
 
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On September 30, 2022, the Company provided CD&R and its representatives with access to a virtual data room to review additional non-public due diligence information, including Company management’s September 27, 2022 long-term financial projections (the “September 27 Forecasts”).
On October 6, 2022, members of Company management and representatives of CD&R held a full-day, in-person meeting to discuss the Company’s business.
From October 17, 2022 through October 20, 2022, members of Company management and representatives of CD&R held additional due diligence meetings in-person and by videoconference.
On October 31, 2022, Goldman Sachs provided a customary relationships disclosure memorandum to the Company.
Following receipt of CD&R’s September 14 offer and its reference to an expected TRA Payoff Amount, the Board, in consultation with V&E, recognized that a key issue in any strategic transaction involving a change of control of the Company would be the Company’s payment obligations under its existing Tax Receivable Agreements and that both management members of the Board as well as Stone Point would receive significant payments (relative to other members of the Board) upon a change of control of the Company (to which other stockholders of the Company were not entitled) under the terms of the Tax Receivable Agreements. For this reason, the Board believed that it was appropriate to establish a Special Committee. Members of Company management and V&E had separate conversations with each member of the Board regarding the formation of a Special Committee in light of the foregoing.
On November 1, 2022, in response to the Board’s recent discussions and that certain directors of the Company may be deemed to have material interests in a potential take private transaction with CD&R that were different from, or in addition to, the interests of the public holders of Class A Common Stock, the Board adopted resolutions, by unanimous written consent, which, among other things: (i) formed the Special Committee, comprised of George S. LeMieux, Elizabeth Neuhoff, Greg S. Morganroth, and Joseph Feliciani, Jr., who are independent directors with no material interest in any potential acquisition of all of the outstanding shares of Company Common Stock (including all of the equity of Focus LLC) with CD&R in a cash merger transaction (a “Potential Transaction”), and (ii) provided the Special Committee with the authority to review, evaluate and negotiate the terms and conditions of any Potential Transaction or any alternative thereto and to recommend to the full Board what action, if any, should be taken by the Board with respect to the Potential Transaction or any alternative thereto. The Board resolutions provided that the Board would not approve a Potential Transaction or any alternative thereto, or recommend a Potential Transaction or any alternative thereto, for approval by the Company’s stockholders, without a prior favorable recommendation of the Potential Transaction or any such alternative by the Special Committee. The Board resolutions further provided that the Special Committee had the authority to select and engage its own advisors.
On November 7, 2022, Mr. LeMieux, in his capacity as Chairman of the Special Committee, interviewed three law firms, including representatives of Potter Anderson & Corroon LLP (“Potter Anderson”), to serve as the independent legal advisor to the Special Committee. Following the interviews and after consultation with the members of the Special Committee, the Special Committee determined to engage Potter Anderson to serve as its independent legal advisor in connection with its evaluation of a Potential Transaction or any alternatives thereto. After confirming that Potter Anderson had no relationships that would impair its ability to serve as the Special Committee’s independent legal advisor, an engagement letter with Potter Anderson was executed on November 9, 2022.
On November 9, 2022, a representative of CD&R contacted a representative of Goldman Sachs to discuss CD&R’s interest in a Potential Transaction, during which CD&R orally communicated that it had lowered its proposed offer price from $50.00 per share to $45.00 per share. Representatives of CD&R explained their rationale for such reduction in offer price, including, among other things, the results of CD&R’s due diligence and its views on the Company’s recent financial performance and near-term growth prospects, recent challenges in the financial and debt financing markets, and the actual costs that would be due under the Tax Receivable Agreements as a result of engaging in a Potential Transaction as compared to CD&R’s estimate in its September 14th proposal. A representative of CD&R also said that CD&R had an interest in the possibility of Stone Point potentially participating in a Potential Transaction but that this was not a prerequisite for
 
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CD&R’s engagement. Having Stone Point be a part of the goforward capital structure could allow the Company’s debt to be portable under the Existing Credit Documents, thereby potentially permitting CD&R to submit a higher price per share offer because CD&R would not need to incur cost and expense associated with obtaining new debt financing while at the same time taking advantage of favorable terms under the Existing Credit Documents relative to then-current market terms.
Also on November 9, 2022, a representative of Goldman Sachs contacted a representative of Stone Point to gauge Stone Point’s interest in the possibility of Stone Point rolling over some or all of its equity interests in the Company or making an additional equity investment in a Potential Transaction and to inform Stone Point that Stone Point should inform the Special Committee if it were open to exploring the possibility of so participating.
Later on November 9, 2022, Mr. LeMieux received a call from Fayez Muhtadie, Board member and a Managing Director of Stone Point, during which Mr. Muhtadie said that, in the event the Company were to pursue a transaction with a third-party acquiror, Stone Point would be open to exploring the possibility of rolling over some or all of its equity interests in the Company or making an equity investment in the Company in any such third-party transaction, subject to completion of due diligence review of any such transaction, review, negotiation and finalization of definitive agreements for any such transaction, negotiation and finalization of the governance terms with respect to the operations of the Company as a private company and receipt of necessary internal and other organizational approvals. In connection with such potential exploration, Mr. Muhtadie requested access, on behalf of Stone Point, to the Company’s virtual data room. Mr. LeMieux told Mr. Muhtadie that he would discuss the request with the Special Committee and revert with a response.
On November 10, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Goldman Sachs in attendance. Representatives of Goldman Sachs reported on their meeting with CD&R and CD&R’s revised proposal. Following Goldman Sachs’ departure from the meeting, representatives of Potter Anderson reviewed with the Special Committee its mandate from the Board and conducted an independence and disinterestedness review of each of the Special Committee members, including with respect to the TRA Payoff Amounts that would become payable to each of the members of the Special Committee in a Potential Transaction. After such review and confirmation that any TRA Payoff Amount that would become payable in a Potential Transaction to a member of the Special Committee was not material to such member of the Special Committee, the Special Committee confirmed that each of its members was independent and disinterested for purposes of the Special Committee’s evaluation of a Potential Transaction. The representatives of Potter Anderson further discussed the role of Goldman Sachs in the Special Committee’s process and Goldman Sachs’ relationships with participants in a Potential Transaction, including the Company, that could be relevant to the Special Committee’s assessment of Goldman Sachs’ ability to serve as a financial advisor to the Special Committee in a Potential Transaction. The Special Committee considered the benefits of engaging Goldman Sachs as its financial advisor, including Goldman Sachs’ qualifications, experience and expertise, its knowledge of the Company and its business generally, its familiarity with the Company’s process to date, and its industry expertise. The Special Committee also took into consideration, among other things, Goldman Sachs’ prior financial advisory services for the Company and the impact of such prior services on Goldman Sachs’ ability to serve as the Special Committee’s independent financial advisor. After discussion, the Special Committee determined (i) to proceed with engaging Goldman Sachs as an independent financial advisor to the Special Committee, which such engagement would include Goldman Sachs assisting the Special Committee with running a sales process for a potential acquisition of the Company, and (ii) at the appropriate time, to engage a second, independent financial advisor to provide additional views on valuation of the Company to the Special Committee and to mitigate any potential or perceived conflicts of interest of Goldman Sachs’ based on its prior relationship with the Company. The Special Committee and representatives of Potter Anderson also reviewed the potential roll over by Stone Point of some or all of its equity interests in the Company or potential equity investment by Stone Point in the Company in a Potential Transaction, including Stone Point’s request to access the virtual data room.
Also at the November 10, 2022 meeting, the Special Committee and representatives of Potter Anderson discussed the Company’s potential plan to refinance a portion of the Company’s debt maturing in 2024. Such refinancing was in the ordinary course of business and unrelated to any potential third-party acquisition transaction involving the Company and was an opportunistic refinancing in light of favorable market
 
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conditions. The Special Committee discussed such refinancing because of Stone Point affiliates’ potential involvement in structuring and syndicating such refinancing consistent with their involvement in prior financing transactions for the Company and for which such affiliates would receive customary fees. It was the consensus of the Special Committee that there were no issues with Stone Point’s involvement in the refinancing in this manner.
Following the meeting, Stone Point was granted access to the Company’s virtual data room at which time Stone Point was provided access to the September 27 Forecasts.
In addition, following the meeting, Potter Anderson, on the Special Committee’s behalf, engaged in negotiations with representatives of Goldman Sachs regarding their form of engagement letter. An engagement letter for Goldman Sachs to serve as a financial advisor to the Special Committee was later executed on November 16, 2022. As part of engaging Goldman Sachs as a financial advisor to the Special Committee, the Special Committee considered that Goldman Sachs had also started working, even though it had not yet been formally engaged, as a financial advisor to (i) the Company and (ii) a management company of the Company’s partner firm in connection with the exploration of a potential sale of such partner firm and its management company. The Special Committee did not believe that this additional role would present a material conflict of interest for Goldman Sachs in serving as a financial advisor to the Special Committee in connection with its evaluation of a Potential Transaction.
Also, during the process, the Special Committee members, in their capacity as such, considered whether the sales process for such partner firm would impact the Special Committee’s consideration of a Potential Transaction, and the Special Committee was of the view that it would not. The Special Committee members, in their capacity as members of the Board, also considered whether the Special Committee’s consideration of a Potential Transaction would impact the Company’s sales process for such partner firm, and they were of the view that it would not.
Also on November 10, 2022, the Board held a regularly scheduled meeting by videoconference with members of Company management and representatives of each of V&E, Goldman Sachs and Potter Anderson in attendance. At the direction of the Special Committee, representatives of Goldman Sachs provided the Board with an update on the revised proposal received from CD&R and the Board discussed the revised proposal. The Board and the legal advisors present discussed the authority provided to the Special Committee by the full Board. After discussion at the meeting, the Board resolved, among other things, to clarify that the Special Committee would have the explicit power and authority to determine whether a Potential Transaction or any alternative thereto negotiated by the Special Committee is fair to, and in the best interests of, the Company and its stockholders or any subset of the stockholders of the Company that the Special Committee determined to be appropriate.
On November 14, 2022, Mr. LeMieux received a call from Mr. Muhtadie, during which Mr. Muhtadie requested the Special Committee’s permission for Stone Point to speak with Party C, an investor in the investment funds managed by Stone Point, to understand Party C’s perspectives on the Company and whether Party C was interested in serving as a potential equity participant in a third party’s potential acquisition transaction involving the Company. After consultation with the representatives of Potter Anderson, Mr. LeMieux later told Mr. Muhtadie that such communications would be premature in light of the status of the discussions regarding a potential acquisition transaction and did not grant permission for Stone Point to engage in such discussions with Party C.
During the week of November 14, 2022, a representative of CD&R contacted a representative of Goldman Sachs to discuss the status of the Special Committee’s review of CD&R’s revised proposal. The representative of Goldman Sachs conveyed that the Special Committee was evaluating CD&R’s offer and would respond in due course. Such representative also noted that the Company was in the process of seeking to refinance a portion of its debt with a maturity date of 2024.
On November 16, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Goldman Sachs in attendance. Representatives of Goldman Sachs reported on (i) their communications with CD&R, (ii) the current status of communications with other potential bidders, including that Goldman Sachs had not recently heard from any of the parties that Goldman Sachs had previously contacted on behalf of the Company. The representatives of Goldman Sachs and the Special
 
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Committee also discussed Company management’s November 15, 2022 long-term financial projections, including certain prospective tax amortization benefits projections, which had not previously been presented by management to or reviewed or adopted by the Special Committee or the Board (the “November 15 Forecasts”). The November 15 Forecasts differed from the September 27 Forecasts in the following ways: the November 15 Forecasts were updated to incorporate the Company’s third quarter 2022 results reported on November 3, 2022, updated views on the market and future performance, visibility on near-term mergers and acquisitions pipeline and consideration expected therewith, revised long-term capital deployment for mergers and acquisitions, and estimated timing and costs associated with the Company’s debt refinancing process. The Special Committee and its advisors also discussed Mr. LeMieux’s communication with Mr. Muhtadie on November 14, 2022 and the message relayed to Mr. Muhtadie. Following the representatives of Goldman Sachs’ departure from the meeting, the Special Committee and the representatives of Potter Anderson discussed potential financial advisor candidates to serve as the second financial advisor to the Special Committee and identified three potential financial advisors to interview. The Special Committee authorized the representatives of Potter Anderson to conduct a preliminary, confidential outreach to each of the potential financial advisors identified for purposes of expediting the interview process if the Special Committee determined to move forward with engaging a second financial advisor.
On November 21, 2022, representatives of CD&R contacted representatives of Goldman Sachs to discuss the timing for a Special Committee response to its November 10th proposal.
During the week of November 21, 2022, representatives of each of Goldman Sachs and Stone Point discussed the due diligence information Stone Point would request in connection with exploring the possibility of rolling over some or all of its equity interests in the Company or making an equity investment in the Company in a third party’s potential acquisition of the Company.
On November 23, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Goldman Sachs in attendance. Representatives of Goldman Sachs reported on Goldman Sachs’ recent communications with CD&R and Stone Point and also reviewed certain other potential financial sponsors who may be interested in acquiring the Company and the likelihood that a strategic acquiror would be interested in acquiring the Company. Representatives of Goldman Sachs then reviewed with the Special Committee Goldman Sachs’ preliminary financial analyses of the Company. The Special Committee and representatives of Goldman Sachs also discussed the November 15 Forecasts. The Special Committee and its advisors also discussed the potential benefits and considerations of the Company engaging in a Potential Transaction at this time. After discussion at the meeting, the Special Committee authorized representatives of Goldman Sachs to inform CD&R that the Special Committee rejected the $45.00 price per share offer and would be willing to consider a Potential Transaction at a materially higher price per share. In addition, the Special Committee authorized representatives of Goldman Sachs to inform CD&R that the Special Committee believed that the recent refinancing of a portion of the Company’s debt maturing 2024, which was unrelated to the Potential Transaction, could permit CD&R to submit a higher price per share offer in the event that Stone Point were to roll over some or all of its equity interests in the Company or make a potential equity investment in the Company because having Stone Point be a part of the go-forward capital structure could allow the Company’s debt to be portable under the Existing Credit Documents.
Later on November 23, 2022, representatives of Goldman Sachs delivered the Special Committee’s message to CD&R.
On November 25, 2022, representatives of CD&R and Stone Point met to discuss their perspectives on registered investment advisors and the wealth management segment of the financial services industry, including the Company.
Early during the week of November 28, 2022, a representative of CD&R contacted a representative of Goldman Sachs to discuss the timing of a potential response from CD&R to the Special Committee. The representatives of CD&R said that, as a result of the Company’s refinancing of a portion of its debt maturing in 2024, CD&R anticipated that it could be in a position to provide an additional revised proposal to the Special Committee by the end of the week.
On November 28, 2022, the Company closed on its credit refinance and term loan raise, raising a new $240 million term loan to the Company’s existing first lien term loan, with a maturity date of November 2027,
 
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and $1,760 million in the aggregate of replacement term loans and replacement term loan commitments under the Company’s existing first lien term loan, with a maturity date of June 2028. The Company also amended its revolver to extend the maturity date to November 2027.
On November 29, 2022, Company management provided to CD&R and Stone Point representatives via the data room an updated set of Company management’s long-term financial projections for the Company, which were prepared as of November 28, 2022. These projections included two scenarios, the first of which assumed a more substantial amount of mergers and acquisitions activity with a target net leverage ratio of approximately 4.25x in the projection years. However, Company management determined that operating as a public company with a net leverage ratio of approximately 4.25x in the long term would not be in the best interests of the Company and its stockholders, and that the embedded assumptions regarding mergers and acquisitions activity would be difficult to execute. The second scenario assumed a lesser amount of mergers and acquisitions activity with target acquisition consideration of approximately $1.5 billion annually in the outer projection years, ultimately yielding a net leverage ratio of less than 4.25x (we refer to the projections reflecting the latter scenario as the “November 28 Forecasts”), which Company management determined was more appropriate in operating as a public company. The Company also provided updated prospective tax amortization benefit projections, which were prepared on November 28, 2022 (the “Tax Amortization Projections”). The November 28 Forecasts and the Tax Amortization Projections differed from the November 15 Forecasts in the following ways: the November 15 Forecasts were updated to include market movements and expected future performance, impact of the Company’s debt refinancing process completed November 28, 2022, and visibility on near-term mergers and acquisitions pipeline.
Also on November 29, 2022, representatives of Potter Anderson and an outside legal advisor for Stone Point conferred regarding a recent request from CD&R to Stone Point to discuss a Potential Transaction. Stone Point’s outside legal advisor conveyed its understanding that such a meeting would provide information that would help CD&R evaluate its ability to provide an improved offer for the Company and its stockholders and requested, on behalf of Stone Point, the Special Committee’s permission for Stone Point to speak with CD&R to better understand its perspective on the Company and a Potential Transaction. Such approval was granted by Mr. LeMieux, in his capacity as Chairman of the Special Committee, prior to those discussions occurring.
Also during the week of November 28, 2022, at the direction of the Special Committee, representatives of each of Goldman Sachs and Stone Point held a discussion regarding a Potential Transaction, Stone Point’s communications with CD&R and Stone Point’s due diligence progress in connection with exploring a potential rollover of its equity interests in the Company or potential equity investment in the Company in a third party’s potential acquisition of the Company.
On November 30, 2022, the Special Committee held a meeting by videoconference with the representatives of each of Potter Anderson and Goldman Sachs in attendance. Representatives of Goldman Sachs reported on their meetings with CD&R and Stone Point, and the representatives of Potter Anderson reported on their meeting with Stone Point’s outside legal advisor. The Special Committee and its advisors discussed certain terms relevant to a Potential Transaction, including whether to grant CD&R exclusivity, if requested, and the advisability of seeking a go-shop provision in the definitive transaction agreements for a Potential Transaction. The Special Committee and the representatives of Goldman Sachs further discussed the universe of potential financial sponsor bidders for the Company, including those financial sponsors that Goldman Sachs had previously contacted and other financial sponsors that had not yet been contacted but might have an interest in an acquisition of the Company. The representatives of Goldman Sachs reported that they had not seen meaningful engagement by the potential bidders previously contacted (other than CD&R) but, if the Special Committee determined it was appropriate to enter into exclusive negotiations with CD&R, Goldman Sachs could conduct an additional canvas in advance of the execution of such exclusivity agreement to determine whether there was any additional interest in a potential acquisition of the Company.
Also on November 30, 2022, representatives of CD&R and Stone Point held a preliminary discussion regarding CD&R’s due diligence review of the Company.
On December 1, 2022, a representative of CD&R called a representative of Goldman Sachs to communicate CD&R’s further revised proposal. In the course of that conversation, the representative of CD&R informed the representative of Goldman Sachs that CD&R had increased its proposed offer price to
 
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$47.50 in cash per share. The representative of CD&R also conveyed to the representative of Goldman Sachs CD&R’s views on financing and timing for a Potential Transaction. Following this discussion, CD&R delivered a written proposal documenting the foregoing, which was accompanied by a draft exclusivity agreement providing for a period of exclusivity through December 25, 2022, with customary extension provisions.
On December 2, 2022, the Special Committee held a meeting by videoconference with the representatives of each of Potter Anderson and Goldman Sachs in attendance. The Special Committee discussed its initial views of CD&R’s revised offer price, including that it was not at a value that the Special Committee would consider to be constructive for further negotiations. The representatives of Goldman Sachs discussed their recent communications with CD&R and discussed Goldman Sachs’ preliminary financial analysis of the Company, which had been previously presented to the Special Committee on November 23, 2022, and CD&R’s revised proposal. After discussion at the meeting, the Special Committee authorized representatives of Goldman Sachs to inform CD&R that the Special Committee was not interested in pursuing a Potential Transaction at a price per share of $47.50 and that the Special Committee was not willing to engage in further discussions at that time at this price.
Later on December 2, 2022, representatives of each of Goldman Sachs and CD&R held a telephonic meeting, and Goldman Sachs conveyed the Special Committee’s response to CD&R’s further revised proposal.
On December 5, 2022, representatives of CD&R presented to representatives of Stone Point preliminary observations and diligence findings on the Company’s business.
Also on December 5, 2022, at the request of a financial sponsor, Party E, Mr. Adolf held a meeting with representatives of Party E. During this meeting, Mr. Adolf and representatives of Party E discussed, among other things, Party E’s preliminary interest in evaluating a strategic transaction with the Company. Mr. Adolf requested that Party E speak with the representatives of Goldman Sachs to further discuss a potential transaction with the Company.
On December 6, 2022, Messrs. LeMieux and Muhtadie met to discuss Stone Point’s preliminary perspectives on CD&R’s further revised proposal. During this meeting, Mr. Muhtadie offered his views on such proposal from Stone Point’s perspective as a stockholder of the Company, as well as from the perspective of an experienced financial sponsor.
Shortly after the December 5 call, Mr. Adolf informed Mr. LeMieux of the interest of Party E in potentially evaluating an acquisition of the Company and discussed his views on CD&R’s further revised proposal.
Later during the week of December 5, 2022, pursuant to Mr. Adolf’s instruction, representatives of Party E contacted representatives of Goldman Sachs to discuss Party E’s preliminary interest in evaluating a potential acquisition of the Company. Party E indicated that it would contact the representatives of Stone Point to further discuss a potential acquisition of the Company and gauge whether Stone Point had any interest in potentially exploring a potential rollover of some or all of its equity interests in the Company or potential equity investment in the Company in an acquisition of the Company by Party E. Representatives of Party E then contacted representatives of Stone Point to discuss these matters, and representatives of Stone Point said that Stone Point remained open to exploring the possibility of a potential rollover or investment in an acquisition transaction involving the Company by Party E or any other third-party acquirors.
On December 7, 2022, the Special Committee held a meeting by videoconference with representatives of Potter Anderson in attendance. Mr. LeMieux reported on his recent communications with each of Mr. Muhtadie and Mr. Adolf. Mr. LeMieux also reported that he had conveyed to representatives of Goldman Sachs that the Special Committee would be interested in engaging in additional discussion with CD&R regarding a Potential Transaction if CD&R meaningfully improved its prior proposal but was otherwise not planning to engage with CD&R further based on CD&R’s December 1st proposal. The Special Committee and representatives of Potter Anderson discussed (i) Party E’s interest in a potential acquisition of the Company, and (ii) certain process and procedural matters if the Special Committee determined to reengage in its evaluation of a potential sale of the Company.
 
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On December 10, 2022, a representative of CD&R contacted a representative of Goldman Sachs to further discuss CD&R’s interest in a potential acquisition of the Company, during which the representative of CD&R conveyed that CD&R would be interested in submitting a further revised proposal for a Potential Transaction. Representatives of CD&R discussed CD&R’s views on valuation for a Potential Transaction, including that, if CD&R determined to submit a higher price per share offer, it would not have much room above such revised offer to further increase its offer price. Later that same day, CD&R delivered a written copy of a further revised proposal with an offer price of $50.00 per share in cash. Such proposal also included a list of CD&R’s outstanding due diligence items, an expected timetable for executing a definitive transaction agreement and a request for exclusivity between CD&R and the Company that would run through at least January 6, 2023.
On December 12, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Goldman Sachs in attendance. With only the Special Committee and the representatives of Potter Anderson in attendance, the Special Committee and the representatives of Potter Anderson discussed CD&R’s further revised proposal and the terms therein, and the Special Committee determined that CD&R’s latest proposal represented a constructive basis to proceed with negotiation of a Potential Transaction. The Special Committee and the representatives of Potter Anderson also discussed certain process matters, including the process for engaging a second financial advisor to advise the Special Committee, and certain strategy and tactics for the Special Committee’s evaluation of a Potential Transaction. Representatives of Goldman Sachs then joined the meeting and provided an overview of their recent communications with CD&R and of the terms set forth in CD&R’s further revised proposal that was delivered on December 10, 2022. The Special Committee and representatives of Goldman Sachs discussed potential responses to CD&R, and representatives of Goldman Sachs answered questions from the Special Committee on CD&R’s proposal. The representatives of Goldman Sachs also reviewed Goldman Sachs’ outreach to other potential acquirors earlier that year, discussed its recent communications with Party E and noted that Party E had not engaged further with Goldman Sachs since its initial communication during the prior week. Representatives of Goldman Sachs also discussed certain potential buyers for the Company, including noting that the Company’s unique business model would likely make it a more challenging transaction for a strategic acquiror, and noted that CD&R had recently announced a renewed effort to source and evaluate investments in the financial services sector and had separately highlighted to Goldman Sachs a keen interest in the wealth management space.
Early during the week of December 12, 2022, representatives of each of Goldman Sachs and Stone Point held a discussion regarding CD&R’s proposal for keeping the Company’s existing debt capital structure in place in a Potential Transaction as contemplated by CD&R’s December 1st proposal and the feasibility of such proposal.
On December 14, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Goldman Sachs and members of Company management in attendance. With only the Special Committee and representatives of each of Goldman Sachs and Potter Anderson in attendance, representatives of Goldman Sachs discussed their recent communication with Stone Point. Representatives of Goldman Sachs also reviewed, among other things, (a) certain potential buyers for the Company and (b) certain of the Company’s business initiatives. Representatives of Goldman Sachs also reviewed Goldman Sachs’ earlier outreach to certain potentially interested purchasers of the Company and Goldman Sachs’ preliminary financial analyses of the Company. With the Special Committee, members of Company management and the representatives of each of Goldman Sachs and Potter Anderson in attendance, Company management provided an overview of the November 28 Forecasts and the Tax Amortization Projections, including an overview of the material assumptions embedded therein and certain adjustments thereto from the November 15 Forecasts. Company management also (i) provided its views on the benefits and considerations of engaging in a Potential Transaction at that time, (ii) discussed Mr. Adolf’s conversation with Party E on December 5, 2022, and (iii) reviewed certain business initiatives. After discussion, the consensus of the Special Committee was that it was comfortable with the November 28 Forecasts and that it was appropriate to rely on such forecasts for purposes of evaluating a Potential Transaction. Following Company management’s departure from the meeting, the Special Committee and its advisors discussed certain illustrative responses to CD&R and certain strategy, tactics and considerations in respect therewith.
Later on December 14, 2022, a representative of CD&R contacted a representative of Goldman Sachs regarding, among other things, the timing for a response from the Special Committee. The representatives of
 
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Goldman Sachs indicated that the Special Committee was evaluating CD&R’s latest proposal and would respond when prepared to do so.
On December 16, 2022, the Special Committee held a meeting by videoconference with representatives of Potter Anderson in attendance to interview Jefferies to potentially serve as the Special Committee’s second financial advisor. Prior to interviewing Jefferies, the Special Committee and the representatives of Potter Anderson discussed certain process and procedural matters relating to the Special Committee’s evaluation of a Potential Transaction, including (i) further evaluating the earlier outreach conducted by Goldman Sachs and determining whether additional outreach would be appropriate and (ii) evaluating the advisability of responding to CD&R’s December 10th proposal. Following this discussion, representatives of Jefferies joined the meeting, the Special Committee interviewed Jefferies, and the Special Committee received Jefferies’ observations on, among other things, a Potential Transaction and the Company.
On December 17, 2022, the Special Committee held a meeting by videoconference with representatives of Potter Anderson in attendance. During this meeting, the Special Committee interviewed two additional financial advisor candidates to potentially serve as the Special Committee’s second financial advisor. Following the departure of these two financial advisors from the meeting, the Special Committee evaluated all of the financial advisors interviewed.
Following the meeting on December 17, 2022 and based upon the evaluation at its earlier meeting, the Special Committee determined to engage Jefferies to serve as its second financial advisor in connection with its evaluation of a Potential Transaction, based upon, among other things, Jefferies qualifications, experience and expertise, including with respect to, among other things, advising special committees of boards of directors, rendering fairness opinions, and advising on transactions in the wealth management sector. The Special Committee’s determination to engage Jefferies was subject to (i) receipt of Jefferies’ relationships disclosure memorandum and the Special Committee’s satisfaction with the independence of Jefferies and (ii) the negotiation of a mutually acceptable engagement letter, including any fees and additional terms set forth therein. Jefferies provided a customary relationships disclosure memorandum to the Special Committee on December 21, 2022, which the Special Committee viewed upon receipt to confirm that Jefferies had no material relationships that would disqualify Jefferies from serving as an independent financial advisor to the Special Committee. An engagement letter for Jefferies to serve as a financial advisor to the Special Committee was executed on December 30, 2022.
On December 18, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Goldman Sachs in attendance. Representatives of Goldman Sachs reviewed their recent communications with CD&R, including that CD&R was open to considering a go-shop in the definitive transaction documentation for a Potential Transaction, and noted for the Special Committee that Goldman Sachs had not received any updates from other potential buyers for the Company. Representatives of Goldman Sachs also reviewed its preliminary financial analyses of the Company based on the November 28 Forecasts and the Tax Amortization Projections. The Special Committee and the representatives of Goldman Sachs and Potter Anderson discussed potential responses to CD&R and certain of the Company’s business initiatives. Following Goldman Sachs’ departure from the meeting, the Special Committee and representatives of Potter Anderson discussed that the Special Committee believed that it was not yet in a position to respond to CD&R and reviewed certain outstanding matters that the Special Committee desired to accomplish, or seek clarity on, before responding to CD&R’s December 10th proposal, including receiving further information regarding the extent of the discussions held by Goldman Sachs with potential acquirors during the prior outreach and meeting with Company management to discuss alternatives to the Potential Transaction, including maintaining the status quo as a standalone company. However, the Special Committee authorized Goldman Sachs to inform CD&R at this time that the Special Committee (i) had no objection to CD&R completing the remainder of its due diligence, (ii) was not yet in a position to deliver a counterproposal to CD&R’s December 10th proposal as it was in the process of engaging a second financial advisor and desired to hear from such financial advisor on its perspectives on valuation of the Company before responding to CD&R, and (iii) was willing to meet with a representative of CD&R to discuss CD&R’s views on the Company and a Potential Transaction.
On December 19, 2022, representatives of Goldman Sachs conveyed the Special Committee’s message to CD&R.
 
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On December 20, 2022, members of the Special Committee and representatives of Potter Anderson held an informational meeting with a representative of CD&R. During the discussion, the representative of CD&R provided CD&R’s perspective on a Potential Transaction and views on the Company. The Special Committee conveyed that it was seriously evaluating CD&R’s proposal, that it had determined to engage a second financial advisor and that it would respond to CD&R once it had an opportunity to complete its evaluation.
On December 21, 2022, representatives of Potter Anderson met with representatives of Kirkland & Ellis LLP (“Kirkland”), CD&R’s outside legal advisor, to discuss certain initial process matters relating to a Potential Transaction.
On December 22, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors and members of Company management in attendance. Company management and representatives of each of the Special Committee Financial Advisors discussed, among other things, certain of the Company’s business initiatives that could be pursued as a standalone company as an alternative to a Potential Transaction. Following the Special Committee Financial Advisors’ and Company management’s departure from the meeting, the Special Committee and representatives of Potter Anderson discussed these business initiatives and CD&R’s planned business strategy for the Company following the closing of a Potential Transaction. Representatives of Potter Anderson also reported on their recent communications with Kirkland.
On December 28, 2022, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. Prior to the meeting, the Special Committee requested that the Special Committee Financial Advisors develop a strategy for an additional outreach regarding a potential acquisition of the Company and identify potential third-party bidders for such an outreach. Consistent with the Special Committee’s request, the representatives of the Special Committee Financial Advisors discussed a potential additional outreach to potential bidders for an acquisition of the Company and reviewed a list of potential bidders to contact, which the Special Committee Financial Advisors had identified based upon, among other things, the likelihood that such potential acquirors had the requisite resources and interest to consummate a transaction involving the Company. Representatives of Goldman Sachs also reviewed their prior discussions with Party A, Party B, Party C, Party D, and Party E regarding a potential acquisition of the Company. The potential list of parties to contact included certain parties that Goldman Sachs had previously contacted as well as new financial sponsor and strategic acquirors. After discussion at the meeting, the Special Committee authorized the Special Committee Financial Advisors to contact six financial sponsors, Party A, Party B, Party E, Party F, Party G and Party H, and one strategic acquiror, Party I, regarding a potential acquisition of the Company. Following Goldman Sachs’ departure from the meeting, representatives of Jefferies provided an update on Jefferies’ due diligence and the Special Committee discussed with Jefferies certain matters relating to the TRA Payoff Amount and the portability of the Company’s debt under the Existing Credit Documents in a Potential Transaction. The Special Committee and the representatives of each of Jefferies and Potter Anderson also discussed whether to contact an additional financial sponsor, Party D, that Goldman Sachs had previously contacted but had not expressed follow-up interest in pursuing an acquisition of the Company. After discussion, the Special Committee also authorized the Special Committee Financial Advisors to contact Party D regarding its potential interest in a potential acquisition of the Company. The Special Committee determined not to contact Party C because it had previously informed the representatives of Goldman Sachs that it could not lead a transaction.
Following the Special Committee’s meeting on December 28, 2022, representatives of the Special Committee Financial Advisors conducted outreach to Party A, Party B, Party D, Party E, Party F, Party G, Party H, and Party I. During this initial outreach, the Special Committee Financial Advisors explained to each party that there might be a path to keeping the Company’s existing debt in place under the Existing Credit Documents in connection with an acquisition of the Company but that the party should review the Existing Credit Documents to form their own view on the portability of the Company’s existing debt. Party A, Party E, Party F, Party G and Party I subsequently executed confidentiality agreements with the Company, which contained customary “standstill” provisions relating to a potential bidder’s consideration of a transaction of this type and size but permitted each party to make a confidential proposal directly to the Company and terminated upon the announcement of the Mergers. Despite multiple outreaches by the Special Committee Financial Advisors to Party H, Party H did not respond to such outreach. Following an outreach by the Special Committee Financial Advisors to Party D, Party D indicated that it would consider an
 
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evaluation of the Company internally but that it had concerns relating to the Company’s business. The Special Committee Financial Advisors did not hear back from Party D regarding potential interest in pursuing a potential acquisition of the Company.
On December 30, 2022, a representative of CD&R contacted a representative of Goldman Sachs to discuss the timing for a Special Committee counterproposal.
From January 3, 2023 through January 6, 2023, each of Party A, Party E, Party F, Party G and Party I met with Company management, including Mr. Adolf, to discuss the Company’s business and received a management presentation.
On January 4, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. The representatives of the Special Committee Financial Advisors provided an overview on the current status of outreach and the feedback received from certain potential bidders. The representatives of Goldman Sachs also reviewed CD&R’s potential financing approach for a Potential Transaction, including CD&R’s proposal that, if the Company was able to keep its existing debt capital structure in place as a result of the portability terms in the Existing Credit Documents, that could enable CD&R to provide additional value in a Potential Transaction because the Company’s debt would not need to be repaid or refinanced upon the closing of a Potential Transaction. Following Goldman Sachs’ departure from the meeting, the representatives of Jefferies reviewed with the Special Committee, among other things, Jefferies’ preliminary financial analyses of the Company. The representatives of Jefferies and the Special Committee discussed potential alternatives to a Potential Transaction, including maintaining the status quo with or without certain adjustments to the Company’s business plan, and discussed that pursuing these alternatives would be potentially difficult for the Company as a public company and involved a significant degree of risk. The Special Committee also discussed its rationale for delivering a counterproposal to CD&R at this time, including, among other things, that (i) such decision reflected the Special Committee’s review and evaluation of the November 28 Forecasts and the Tax Amortization Projections, (ii) the Special Committee believed that the public markets did not understand certain fundamental metrics with respect to the Company’s business and, therefore, the Special Committee believed that the Company’s public valuation did not reflect the intrinsic value of the Company, (iii) if the Company maintained the status quo, the Special Committee did not believe that Company management could successfully pursue adjustments to the Company’s business plan or operational improvements that would lead to the market recognizing the intrinsic value of the Company, and (iv) even if the Company pursued such adjustments, there would be a significant risk to the Company’s business. Based on this rationale, among other factors, the Special Committee unanimously believed that it was in the best interests of the Company and the Company’s stockholders to consider engaging in a sale of the Company at this time. The Special Committee and representatives of Jefferies also discussed illustrative responses to CD&R’s latest proposal. With the Special Committee and representatives of each of Potter Anderson and the Special Committee Financial Advisors present, the Special Committee and the Special Committee Financial Advisors discussed potential responses to CD&R on pricing. Following the departure of the Special Committee Financial Advisors from the meeting, the Special Committee discussed its perspectives on pricing for a counterproposal to CD&R and, after discussion, determined to deliver a counterproposal at $55.50 per share in cash.
Later on January 4, 2023, at the direction of the Special Committee, representatives of each of the Special Committee Financial Advisors delivered the Special Committee’s counterproposal to CD&R.
On January 5, 2023, representatives of CD&R delivered CD&R’s counterproposal to representatives of each of the Special Committee Financial Advisors via telephone. The representatives of CD&R orally indicated that CD&R was prepared to engage in a Potential Transaction at a price per share of $51.50 in cash, that this was CD&R’s “best and final” offer and that such offer was contingent upon the Special Committee agreeing to have the Company enter into exclusivity with CD&R. The representatives of CD&R noted that CD&R was prepared to cease its pursuit of a Potential Transaction if the Special Committee did not respond to CD&R’s proposal within a week.
On January 6, 2023, at the direction of the Special Committee, representatives of the Special Committee Financial Advisors requested certain clarifications from CD&R on CD&R’s latest counterproposal, including clarifications around CD&R’s assumptions as to the Company’s fully diluted share count and the
 
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capitalization table underlying its proposal, CD&R’s expected sources and uses, and the requested length of the exclusivity period between the Company and CD&R.
Also on January 6, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. With only the Special Committee and the representatives of each of Potter Anderson and Jefferies in attendance, the representatives of Jefferies reported on CD&R’s response to the Special Committee’s counterproposal. Upon the representatives of Goldman Sachs joining the meeting, the representatives of Goldman Sachs also reported on CD&R’s response. At different points in the meeting, the Special Committee Financial Advisors reported on the status of outreach to other potential acquirors, the feedback received from potential acquirors to date, including interest in providing a preliminary and non-binding bid, and the potential impact on the outreach to other potential acquirors of entering into exclusivity with CD&R at this time. They also discussed certain process risks if the Special Committee continued with its outreach while conducting parallel negotiations with CD&R, including that no other potential buyers could emerge and that CD&R could become aware of that fact and lower its offer price. The Special Committee and its advisors discussed potential additional pathways for securing a higher price per share, including delivering a counterproposal to CD&R on price and approaching each of Stone Point and Company management to forfeit or waive all or a portion of their respective Holder TRA Payoff Amount in connection with a Potential Transaction in order to reallocate the amount of such Holder TRA Payoff Amount to a higher price per share. The Special Committee and its advisors also discussed certain process considerations, including continuing to communicate with the non-CD&R bidders to determine if there was any interest in any such bidder delivering a proposal to the Special Committee.
Later on January 6, 2023, representatives of CD&R provided responses to the Special Committee Financial Advisors’ clarifying questions, including that it was requesting a 30-day exclusivity period with the Company for a Potential Transaction.
On January 7, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors, V&E, the Stone Point affiliated members of the Board, and members of Company management in attendance. Mr. Adolf provided an overview of Company management’s meetings with certain potential bidders and his assessment of such bidders. Representatives of Goldman Sachs also reviewed the status of the outreach to other potential bidders. In response to the discussions at the meeting that some or all of the potential bidders involved in the process may ask Stone Point to roll over some or all of its equity interests in the Company and potentially ask Stone Point to make an equity investment in the Company in a sale transaction, a Board member affiliated with Stone Point discussed whether it might be helpful for the Special Committee’s process for Stone Point to convey its preliminary views, subject to completion of due diligence review of any such transaction, review, negotiation and finalization of definitive agreements for such transaction, negotiation and finalization of the governance terms with respect to the operations of the Company as a private company and receipt of necessary internal and other organizational approvals, on the circumstances in which Stone Point might be willing to consider selling, rolling over all or a portion of its equity interests in the Company, if asked, or rolling over all or a portion of its equity interests in the Company and making a new investment in the pro forma company, if asked. With only the Special Committee and its advisors present, the Special Committee and its advisors discussed, among other things, Stone Point’s views and how they might inform the Special Committee Financial Advisors’ outreach to other potential bidders, the bidding process for those interested parties at that time, and CD&R’s responses to Goldman Sachs and Jefferies’ clarification questions. The Special Committee and the Special Committee Financial Advisors further discussed strategies to assess whether certain potential bidders were in fact interested in pursuing a potential acquisition of the Company and their willingness to enter into a definitive agreement with respect to a potential transaction or, if the Company entered into a definitive agreement with another party, their willingness to participate in a go-shop process. The Special Committee also authorized the Special Committee Financial Advisors to meet with the representatives of Stone Point to discuss Stone Point’s views on its potential rollover of some or all of its equity interests in the Company or potential equity investment in the Company in a potential acquisition of the Company. Separately, the Special Committee also authorized the Special Committee Financial Advisors to contact the remaining potential bidders in the Special Committee’s outreach to receive feedback from those bidders on a potential acquisition of the Company and whether they were interested in submitting a proposal for a potential acquisition of the Company.
 
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Later on January 7, 2023, representatives of each of the Special Committee Financial Advisors and Stone Point held a discussion. Stone Point indicated that it remained open to exploring the possibility of participating with potential acquirors in a sale transaction depending on the terms of such transaction, but noting that a transaction with Party I would involve Stone Point conducting due diligence on and an evaluation of Party I if Stone Point were asked to roll over all or a portion of its equity because, unlike financial sponsor bidders, Party I was a strategic operating entity. Representatives of Stone Point discussed certain illustrative scenarios relating to Stone Point’s potential roll over of some or all of its equity interests in the Company or potential equity investment in the Company in a third party’s acquisition of the Company, noting that they would need to conduct further due diligence and receive the necessary internal and other organizational approvals.
Further, on January 7, 2023, at the direction of the Special Committee, representatives of the Special Committee Financial Advisors held a discussion with Party A. Party A indicated that it had questions regarding, among other things, the Company’s organic growth and Company management’s support for material changes to the Company’s business plan that Party A believed would be required as a private company. Party A also indicated that it would likely need Stone Point to roll over its equity interests in an acquisition and potentially would require Stone Point to make an additional equity investment in the Company as part of an acquisition.
In addition, on January 7, 2023, at the direction of the Special Committee, representatives of the Special Committee Financial Advisors held a discussion with Party F. Party F expressed interest in understanding the Company’s business further and noted, among other things, that understanding the Company’s organic growth was likely a necessity for Party F to pursue an acquisition of the Company. Party F indicated, from a preliminary perspective, that it would likely not require that Stone Point roll over its equity interests or make an equity investment in an acquisition of the Company but acknowledged that such participation by Stone Point could help alleviate Party F’s concerns regarding the availability and costs of financing a potential acquisition in the then-current market.
On January 7, 2023, at the direction of the Special Committee, representatives of each of Goldman Sachs, Jefferies and CD&R held a discussion regarding CD&R’s expected equity financing sources for a Potential Transaction.
On January 8, 2023, a representative of Stone Point contacted representatives of each of the Special Committee Financial Advisors and indicated that Stone Point desired to meet with Company management in connection with its exploration of potentially rolling over some or all of its equity interests in the Company or making an equity investment in the Company in a third-party acquisition of the Company. Stone Point requested the Special Committee’s permission to conduct such a due diligence meeting. The Special Committee granted such request on January 9, 2023.
On January 9, 2023, at the direction of the Special Committee, representatives of the Special Committee Financial Advisors held a discussion with Party E. They discussed, among other things, Party E’s views on a potential rollover by Stone Point of all of its equity interests in the Company and a potential additional equity investment in a potential acquisition of the Company by Party E. Party E stated that it understood that Stone Point would need to be a part of the go-forward capital structure for the Company’s debt to be portable under the Existing Credit Documents and indicated that it would expect Stone Point to make an additional investment in the pro forma company resulting from a potential acquisition by Party E. The representatives of the Special Committee Financial Advisors also indicated that Party E should submit a proposal in the near term based on public information if Party E was interested in pursuing a potential acquisition. Party E noted that, prior to submitting a bid, it would need to further understand the Special Committee’s intended process following a bid from Party E. Party E also indicated that it would need at least four weeks following the submission of a preliminary and non-binding bid before it could be in a position to reach an agreement on a potential acquisition and that, if the Company were to enter into an agreement for an alternative acquisition transaction, it would not participate in a go-shop period (if one was provided for by such alternative acquisition agreement).
Also on January 9, 2023, Party A orally informed representatives of the Special Committee Financial Advisors that Party A would not be pursuing an acquisition transaction of the Company, as it had discussed internally and concluded that it would not be competitive on pricing.
 
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On January 10, 2023, the Special Committee held a meeting by videoconference with representatives of Potter Anderson in attendance. Representatives of Potter Anderson reported on Stone Point’s perspectives regarding, among other things, a potential rollover of some or all of its equity interests in the Company and a potential equity investment in the Company in a potential acquisition of the Company and also reviewed certain recent discussions on the portability of the Company’s debt under the Existing Credit Documents in a Potential Transaction. The Special Committee also discussed the circumstances in which Stone Point might be willing to consider selling, rolling over all or a portion of its equity interests in the Company, if asked, or rolling over all or a portion of its equity interests in the Company and making a new investment in the pro forma company, if asked. The Special Committee and representatives of Potter Anderson discussed certain strategy and tactics in connection with negotiating the value of the Holder TRA Payoff Amounts that would otherwise be payable to Stone Point and Company management in a Potential Transaction and the current gap between price per share offer in CD&R’s January 5th proposal and the Special Committee’s view on price per share for a Potential Transaction. Representatives of Potter Anderson also reported on the Special Committee Financial Advisors’ recent communications with Party A and Party E and the best approach for furthering Party I’s interest in an acquisition of the Company. The Special Committee and representatives of Potter Anderson also discussed the Special Committee’s mandate and its fiduciary duties with respect to its consideration of a Potential Transaction or any alternatives thereto.
Also on January 10, 2023, at the request of Stone Point and with the Special Committee’s consent, certain members of management of the Company presented to Stone Point regarding the Company and Company management’s perspectives on the Company’s prospects, plans and operations.
Also, during this time period, it became clear to the Special Committee that Party B was not interested in pursuing a potential acquisition of the Company based upon, among other things, Party B’s failure to submit an indication of interest or otherwise engage with Company management with respect to a potential acquisition of the Company.
On January 11, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. The representatives of Goldman Sachs provided an update on the Special Committee’s outreach, including that (a) Party F had indicated that it would require additional due diligence material before it could be in a position to submit an initial bid for a potential acquisition of the Company, (b) Party E would require Stone Point to roll over its equity interests in the Company in a potential acquisition and make an additional equity investment in the pro forma company resulting from a potential acquisition, and (c) Party I had provided a list of follow up due diligence questions. The Special Committee authorized representatives of the Special Committee Financial Advisors to contact Party F, Party E and Party I and request that, if those bidders were interested, they should promptly deliver an initial proposal, including their view on the Company’s valuation. Representatives of the Special Committee Financial Advisors then discussed with the Special Committee (i) the Tax Receivable Agreements, (ii) the quantum of additional value that could be available for an increase in per share purchase price offered by CD&R if Stone Point and Company management forfeit their Holder TRA Payoff Amounts in a Potential Transaction, and (iii) certain potential treatments that the Special Committee could propose with respect to the Holder TRA Payoff Amounts otherwise payable to Stone Point and Company management in a Potential Transaction.
On January 12, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and Jefferies in attendance. With only the Special Committee and representatives of Potter Anderson in attendance, the Special Committee discussed its proposed response to CD&R, its views on CD&R’s offer price in its January 5th proposal, the Special Committee Financial Advisors’ preliminary financial analyses and whether to provide CD&R with specific pricing guidance at this time. With the Special Committee and each of the representatives of Potter Anderson and Jefferies in attendance, the Special Committee reviewed its rationale for seeking to have Company management and Stone Point forfeit or waive the Holder TRA Payoff Amounts that would otherwise be payable to them in a Potential Transaction. The Special Committee and the representatives of each of Potter Anderson and Jefferies also discussed certain strategy and tactics for pricing negotiations with CD&R. Following such discussions, the Special Committee authorized the representatives of the Special Committee Financial Advisors to convey to CD&R that (a) there was a gap between CD&R’s offer price in its January 5th proposal and the Special Committee’s view on an offer price that it would be willing to accept for a Potential Transaction, (b) the Special Committee would
 
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attempt to bridge that gap by seeking value from Stone Point and Company management through having them agree to forfeit or reduce the Holder TRA Payoff Amounts that would otherwise be payable to them in a Potential Transaction, and (c) the Special Committee believed that if Stone Point and Company management were to agree to forfeit or reduce the Holder TRA Payoff Amounts, additional value could be available for the stockholders. After discussion of potential messages to each of Stone Point and Company management, the Special Committee authorized its financial advisors to convey to Company management and Stone Point, separately, that (i) there was a gap between CD&R’s offer price in its January 5th proposal and the Special Committee’s view on an offer price that it would be willing to accept for a Potential Transaction, (ii) there was additional value that could be available for the stockholders in the form of a higher price per share if Stone Point and Company management agreed to forfeit or reduce the Holder TRA Payoff Amounts that they would otherwise receive in connection with a Potential Transaction and this value could bridge the price per share gap between CD&R and the Special Committee, (iii) the Special Committee needed a substantial commitment from both Stone Point and Company management to help bridge the valuation gap, and (iv) certain market precedent supporting the Special Committee’s request. The Special Committee also authorized the representatives of the Special Committee Financial Advisors to convey that the Special Committee was willing to consider having the Company enter into exclusivity with CD&R, assuming that all of the parties could reach a satisfactory resolution on the offer price and on the treatment of Stone Point’s and Company management’s Holder TRA Payoff Amounts in connection with the Potential Transaction.
On January 13, 2023, representatives of each of the Special Committee Financial Advisors held a discussion with representatives of CD&R and delivered the Special Committee’s perspectives. The representatives of CD&R expressed CD&R’s view that its “best and final” January 5th offer contemplated settling all of the amounts to be paid with respect to the Tax Receivable Agreements as a result of the Potential Transaction in connection with closing. The representatives of CD&R indicated, however, that they understood that forfeiting some or all of the Holder TRA Payoff Amounts that would otherwise be payable to Stone Point and Company management in connection with a Potential Transaction could allow for additional proceeds to be payable to the Company’s stockholders.
Later on January 13, 2023, the representatives of each of the Special Committee Financial Advisors held a discussion with representatives of Stone Point and delivered the Special Committee’s perspectives. Later that day, a representative of Stone Point conveyed to the Special Committee Financial Advisors that, after having reviewed and considered the Special Committee’s proposal on these matters, Stone Point would not agree to a forfeiture of or reduction in Stone Point’s Holder TRA Payoff Amounts. In addition, a member of the Board affiliated with Stone Point contacted Mr. LeMieux, in his capacity as Chairman of the Special Committee, and expressed substantially similar views.
Also on January 13, 2023, representatives of each of the Special Committee Financial Advisors held a discussion with Mr. Adolf and conveyed the Special Committee’s perspectives. During the meeting, Mr. Adolf, on behalf of Company management, conveyed that Company management would not agree to the Special Committee’s proposal.
On January 13, 2023, representatives of Party I contacted representatives of the Special Committee Financial Advisors regarding the submission of its follow up due diligence list and request for additional information. During the discussion, the representative of the Special Committee Financial Advisors informed such bidder that, if it had an interest in pursuing a transaction, it should make its interest known and that the Company was not prepared to provide additional due diligence information until a qualifying offer was received by the Special Committee.
Separately, on January 13, 2023, Goldman Sachs provided the Special Committee with an updated relationships disclosure memorandum.
On January 14, 2022, the representatives of Potter Anderson met with representatives of Simpson Thacher & Bartlett LLP (“Simpson Thacher”), outside counsel to Stone Point, to discuss the process for any further negotiations relating to Stone Point’s Holder TRA Payoff Amount.
On January 14, 2023, representatives of each of Stone Point and Jefferies met to discuss the Special Committee’s proposal in respect of Stone Point’s Holder TRA Payoff Amounts.
 
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On January 15, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. The representatives of the Special Committee Financial Advisors reported on the feedback received from CD&R, Stone Point and Mr. Adolf. The representatives of Jefferies provided an update on an inbound communication to the Special Committee Financial Advisors from Party I regarding the submission of its follow up due diligence list and request for additional information and indicated that the Special Committee Financial Advisors had informed such bidder that, if it had an interest in pursuing a potential acquisition of the Company, it should make its interest known and that the Company was not prepared to provide additional due diligence information until a qualifying offer was received by the Special Committee. The Special Committee and the representatives of the Special Committee Financial Advisors also discussed whether a proposal from Party I could provide more value than CD&R’s January 5th proposal, the potential timing for receiving a bid from Party I, if it intended to do so, and certain complexity related to Party I’s financing for an acquisition of the Company. The Special Committee and its advisors then discussed various strategies for bridging the gap between the Special Committee’s view on price per share and CD&R’s view on price per share. After further discussion, the Special Committee authorized representatives of the Special Committee Financial Advisors to convey to each of CD&R, Stone Point and Company management that (i) there was still a gap between CD&R and the Special Committee on price per share for a Potential Transaction, (ii) the Special Committee had requested that Stone Point and Company management forfeit or reduce their Holder TRA Payoff Amounts in a Potential Transaction and that request had been rejected, (iii) the Special Committee was now requesting that Stone Point and Company management and CD&R consider pursuing a waiver of Stone Point’s and Company management’s right to be paid their respective Holder TRA Payoff Amounts as a result of the closing of a Potential Transaction and instead have the Tax Receivable Agreements relating to Stone Point and Company management remain outstanding following a Potential Transaction, and (iv) CD&R should increase its price per share to reflect any value saved by virtue of this approach. The Special Committee and its advisors then discussed potential alternatives that the Company could pursue in the absence of an acquisition transaction, including maintaining the status quo or implementing operational changes that could have the potential to create value over time.
On January 16, 2023, representatives of each of the Special Committee Financial Advisors and CD&R held a discussion, during which representatives of the Special Committee Financial Advisors delivered the Special Committee’s feedback and proposal.
Later on January 16, 2023, representatives of each of the Special Committee Financial Advisors and Stone Point held a discussion, and representatives of the Special Committee Financial Advisors delivered the Special Committee’s feedback and proposal. The representatives of Stone Point said that Stone Point would need time to consider this proposal in connection with its continued exploration of possibly rolling over some or all of its equity interests in the Company or making an equity investment in the Company in a third-party acquisition transaction involving the Company.
Also on January 16, 2023, representatives of each of Goldman Sachs and Jefferies and Mr. Adolf held a discussion, and the representatives of the Special Committee Financial Advisors delivered the Special Committee’s feedback and proposal. Mr. Adolf noted that Company management would likely not agree with this proposal.
Further, on January 16, 2023, representatives of each of Potter Anderson and Kirkland met to discuss certain precedent transactions involving tax receivable agreement change of control payments and the remaining gap between the Special Committee and CD&R on the price per share for a Potential Transaction.
On January 17, 2023, Party I, along with its financial sponsors, submitted a preliminary and non-binding proposal to acquire the Company for $51.75 per share in cash. Party I’s proposal stated that it took into account the full acceleration and satisfaction of the obligations under the Tax Receivable Agreements based on the Company’s disclosure of its Tax Receivable Agreements obligations in its SEC filings (which amount reflects only expected future payments in respect of prior exchanges of Focus LLC Units and not the actual TRA Payoff Amount). Party I noted that it expected to fund the acquisition through a combination of equity and debt financing and would support a continued investment by Stone Point. Party I’s proposal did not state that it was contingent upon Stone Point’s continued investment in the Company. Party I indicated that its proposal was based on its knowledge of the Company, publicly available financial and operating information, and its conversations with Company management to date.
 
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On January 18, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. Representatives of the Special Committee Financial Advisors reported on their meetings with Company management, Stone Point and CD&R, and the representatives of Potter Anderson reported on their meeting with Kirkland. Representatives of the Special Committee Financial Advisors then provided an overview of Party I’s proposal and discussed, among other things, Party I’s interest in the Company, Party I’s due diligence efforts to date and expected remaining due diligence matters, Party I’s expected plans for the combined company and their views on certain factors that may impact the price per share offered by Party I for a potential acquisition of the Company, including, among other things, the terms upon which Party I would be able to obtain financing for a transaction. The Special Committee also considered that, after factoring in the full value of the TRA Payoff Amount, there was a risk that Party I’s price per share value would be lower than CD&R’s January 5th proposal due to the quantum of the per share amount represented by the additional TRA Payoff Amount. The Special Committee and its advisors discussed a potential combination involving Party I and the Company, including the benefits and considerations of such a combination, and the potential available synergies for Party I in a transaction with the Company. The Special Committee and its advisors also discussed whether Party I would be willing to participate in a go-shop process for an acquisition of the Company. Following additional discussion, the Special Committee authorized representatives of the Special Committee Financial Advisors to contact Party I and to discuss with Party I the assumptions in its proposal and views on a potential combination of Party I and the Company.
Later on January 18, 2023, representatives of each of Potter Anderson and Kirkland met to discuss CD&R’s request for exclusivity, the timing for a Special Committee decision on a Potential Transaction and the quantum of the value gap between CD&R’s view on price per share and the Special Committee’s view on price per share for a Potential Transaction.
Also on January 18, 2023, at the direction of the Special Committee, representatives of each of the Special Committee Financial Advisors held a discussion with the representatives of Party I and its financial sponsors regarding Party I’s proposal, including Party I’s business and bid assumptions, its equity and debt financing assumptions, and its diligence and process assumptions.
In addition, on January 18, 2023, representatives of Stone Point contacted representatives of Goldman Sachs and conveyed that Stone Point would not agree to the Special Committee’s proposal with respect to the waiver of Stone Point’s right to be paid its Holder TRA Payoff Amount as a result of the closing of a Potential Transaction with CD&R and to have the Tax Receivable Agreement relating to Stone Point remain outstanding following a Potential Transaction. Representatives of Stone Point expressed that, in the event of a Potential Transaction with CD&R, it might be willing to consider a promissory note structure in which CD&R would pay Stone Point’s Holder TRA Payoff Amount over time with interest, so long as such structure would adequately and fairly compensate the Stone Point holders of the Tax Receivable Agreement, and that this could reduce the cash required to be paid at closing by CD&R.
Later during the week of January 16, 2023, a representative of CD&R contacted a representative of Goldman Sachs and (i) expressed a desire to understand the Special Committee’s view on the valuation for a Potential Transaction, (ii) reiterated that CD&R had no additional value to offer the Special Committee for a Potential Transaction, and (iii) requested feedback and direction from the Special Committee on its January 5th proposal. The representative of Goldman Sachs and CD&R also discussed the possibility of CD&R utilizing a promissory note structure that would have CD&R pay Stone Point and Company management their respective Holder TRA Payoff Amounts over time with interest and that this could reduce the cash required to be paid at closing by CD&R.
On January 19, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. The representatives of Goldman Sachs reported on the Special Committee Financial Advisors’ communications with CD&R and Stone Point during the week of January 16, 2023. The representatives of Jefferies reported on the Special Committee Financial Advisors’ meeting with Party I, and the Special Committee Financial Advisors reviewed certain assumptions in Party I’s proposal, including the assumptions on the quantum of debt and equity financing that would be required for a potential acquisition of the Company by Party I and the proposed terms for arranging such financing. The Special Committee and the representatives of the Special Committee Financial Advisors discussed certain strategy and tactics with respect to the Special Committee’s messaging to
 
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CD&R and Party I. After discussion, the Special Committee authorized the representatives of the Special Committee Financial Advisors to convey to CD&R that (a) the Special Committee believed that there was still a gap between CD&R and the Special Committee on price per share for a Potential Transaction, (b) the process was now competitive as interest had emerged from a party that could present a more compelling opportunity for the Company, and (c) if CD&R wanted to preempt the other party’s interest, its proposed price should align with the Special Committee’s view on pricing for a Potential Transaction. The Special Committee also authorized its financial advisors to convey to CD&R that (i) it was willing to have the Company proceed with further discussions regarding a Potential Transaction if CD&R increased its proposed price to $53.00 per share, (ii) in the absence of concessions from Company management and Stone Point with respect to their Holder TRA Payoff Amounts, the Special Committee would insist that a Potential Transaction be conditioned on majority approval of the Company’s disinterested stockholders, (iii) any transaction with CD&R must include a go-shop period, and (iv) the Special Committee would be willing to have the Company enter into a period of exclusivity with CD&R if CD&R was willing to proceed with negotiations on the Special Committee’s terms outlined above. The Special Committee then authorized its financial advisors to convey to Party I that it would need to submit a revised proposal at a higher price per share if it wanted access to additional sources of due diligence and that it would be helpful for the Special Committee to receive a revised proposal on an expedited basis. The Special Committee further authorized the Special Committee Financial Advisors to convey to Party I updated information on the estimated amount of the TRA Payoff Amount in a potential acquisition of the Company by Party I and an up-to-date view on the Company’s outstanding contingent obligations in connection with prior acquisitions by the Company.
On January 20, 2023, representatives of each of the Special Committee Financial Advisors and representatives of CD&R held a discussion, and the representatives of the Special Committee Financial Advisors conveyed the Special Committee’s position. The representatives of CD&R reiterated that its $51.50 per share offer price was its “best and final” offer.
Later on January 20, 2023, representatives of each of the Special Committee Financial Advisors and Party I held a discussion, and the Special Committee Financial Advisors conveyed the Special Committee’s position. During the discussion, the Special Committee Financial Advisors discussed with representatives of Party I, among other things, the estimated amount of the TRA Payoff Amount and an up-to-date view on the Company’s outstanding contingent obligations in connection with prior acquisitions by the Company. The representatives of Party I indicated that it would be difficult to move on pricing without incremental due diligence information. Following this call, the Special Committee Financial Advisors discussed this request with Mr. LeMieux, in his capacity as Chairman of the Special Committee, and, after discussion and consistent with the Special Committee’s views at the January 19, 2023 meeting, Mr. LeMieux instructed the Special Committee Financial Advisors to inform Party I that based on the terms of Party I’s proposal, the Company was not prepared to give Party I additional due diligence information at this time. This determination was based, in part, on the risk that Party I’s proposed price per share would be lowered after taking into account the actual TRA Payoff Amounts given the quantum of the per share amount represented by the additional TRA Payoff Amount.
On January 21, 2023, a representative of CD&R contacted representatives of the Special Committee Financial Advisors and reiterated that CD&R’s proposal of $51.50 per share was CD&R’s “best and final” offer but that CD&R could see a path to a purchase price of $52.00 per share if Stone Point and Company management agreed to defer payment of their Holder TRA Payoff Amounts in connection with a Potential Transaction. The representative of CD&R noted that it had not discussed this proposal with Stone Point or Company management and conveyed that this offer would expire on January 24, 2023.
Later on January 21, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. Representatives of each of the Special Committee Financial Advisors reported on their recent communications with CD&R and Party I. The Special Committee then discussed the potential paths forward with respect to each of CD&R and Party I, including that it appeared that CD&R would not be able to meet the Special Committee’s view on price per share and that Party I’s proposal, while it had the potential to meet the Special Committee’s view on price per share, was preliminary and subject to additional due diligence and unlikely to result in a definitive transaction. The Special Committee, together with its advisors, also discussed certain strategies and tactics for maximizing the competitive tension between CD&R and Party I at this juncture. The Special Committee also
 
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assessed the risks of moving forward with Party I’s preliminary proposal, which was subject to additional due diligence, as compared to moving forward with CD&R, which had substantially completed its due diligence. The Special Committee and representatives of Potter Anderson discussed whether the Special Committee should provide pricing guidance to Party I at this time. After further discussions on CD&R’s proposal and Party I’s proposal and related messaging, the Special Committee determined to authorize the Special Committee Financial Advisors to contact Party I and state that the Special Committee was prepared to have the Company provide additional due diligence and to entertain further discussions on a potential acquisition of the Company by Party I, if Party I submitted a proposal at $55.00 per share.
On January 21, 2023, representatives of each of the Special Committee Financial Advisors and Party I held a discussion, and the Special Committee Financial Advisors conveyed the Special Committee’s message.
Also on January 21, 2023, representatives of Stone Point contacted the Special Committee Financial Advisors and conveyed that, subject to completion of due diligence review of the Potential Transaction, review, negotiation and finalization of definitive agreements for the Potential Transaction, negotiation and finalization of the governance terms with respect to the operations of the Company as a private company and receipt of necessary internal and other organizational approvals, Stone Point was amenable to the deferred payment of its Holder TRA Payoff Amount in connection with a Potential Transaction using a promissory note structure, was supportive of the Special Committee seeking a go-shop in the transaction documentation for a Potential Transaction and was agreeable to conditioning such transaction on the approval of the Company’s disinterested stockholders. Stone Point indicated, however, that, based on the terms proposed as of such date, it was not willing to commit to a rollover of all of its equity interests in the Company in a Potential Transaction and a reinvestment in the pro forma company resulting from a Potential Transaction at a price per share higher than $51.50. Prior to this discussion with the Special Committee Financial Advisors, Stone Point had not engaged in any discussion or negotiation on specific governance or other transaction terms regarding a Potential Transaction with CD&R, and no agreement, arrangement or understanding had been reached between or among Stone Point, CD&R and any of their respective affiliates or associates. Throughout this time, Stone Point remained solely in the mode of exploring the possibility of participating in a rollover of its equity interests in the Company or making an equity investment in the Company in a third-party acquisition transaction involving the Company. Representatives of the Special Committee Financial Advisors informed Stone Point that the Special Committee had received another proposal from a strategic acquiror and that the Special Committee was evaluating whether such proposal was worth pursuing.
On January 22, 2023, Mr. Adolf contacted representatives of the Special Committee Financial Advisors and noted that Company management would likely be amenable to a deferred payment of their Holder TRA Payoff Amounts in connection with a Potential Transaction, so long as the amount of the payout and timing were on market terms, such as a reasonable interest rate. The representatives of the Special Committee Financial Advisors informed Mr. Adolf that the Special Committee had received an additional proposal from a strategic acquiror and was evaluating such proposal.
Also on January 22, 2023, Party I informed representatives of each of the Special Committee Financial Advisors that it was prepared to increase its offer price to $55.00 per share in cash but that this increased offer price would be preliminary and non-binding and would be subject to continued due diligence and Party I’s receipt of the requisite financing. The representatives of Party I also indicated that its increased offer price would be contingent upon the Special Committee authorizing the Company to enter into exclusivity with Party I and that it would deliver a written proposal if the Special Committee was agreeable to Party I’s request for exclusivity.
In addition, on January 22, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. The representatives of the Special Committee Financial Advisors reported on their communications with each of Stone Point, Company management and Party I. Representatives of Goldman Sachs reviewed (a) Party I’s request for exclusivity and the potential impact on the Special Committee’s negotiating position if it accepted exclusivity at that time and (b) the outstanding items that Party I required to finalize its proposal, including securing the contemplated equity and debt financing on the terms previously conveyed to the Special Committee Financial Advisors. Representatives of Jefferies indicated that they believed there was a risk of Party I decreasing its offer if, for example, it could not arrange for debt financing on the terms indicated. Representatives of Goldman Sachs also discussed that Party I did not expect significant synergies to exist
 
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shortly following the closing of a transaction involving the Company and Party I and that, based on its views on how it would operate the combined company, Party I contemplated that the potential synergies in a transaction could become more meaningful over time. The Special Committee and the representatives of the Special Committee Financial Advisors discussed a potential response to CD&R and, after discussion, the Special Committee authorized the Special Committee Financial Advisors to convey to CD&R that (i) the Special Committee was prepared to negotiate a Potential Transaction with CD&R at a price of $53.00 per share, and (ii) the Special Committee would be willing to hold further discussions on a Potential Transaction if CD&R agreed to the Special Committee’s proposed price of $53.00 per share but that otherwise the Special Committee did not plan on further engaging on CD&R’s current proposal. The Special Committee determined to propose $53.00 per share based upon the Special Committee’s collective judgment on the fair value of the Company, which was informed by, among other things, the prior financial analyses prepared by the Special Committee Financial Advisors. The Special Committee and its advisors then discussed a potential response to Party I and, after discussion, the Special Committee authorized the Special Committee Financial Advisors to convey to Party I that (A) the Special Committee was not prepared to grant exclusivity at this time, (B) the Special Committee was supportive of inviting Party I to conduct additional due diligence, and (C) there was no other bidder ahead of Party I on information sharing that was, at that time, offering a price at which the Special Committee was not supportive of further engaging.
On January 23, 2023, representatives of Goldman Sachs, Jefferies and CD&R held a discussion, and the representatives of the Special Committee Financial Advisors delivered the Special Committee’s message.
Also, on January 23, 2023, the representatives of Goldman Sachs, Jefferies and Party I held a discussion, and the representatives of the Special Committee Financial Advisors delivered the Special Committee’s message.
On January 24, 2023, representatives of Party I informed representatives of each of the Special Committee Financial Advisors that its proposed increase in its offer price to $55.00 per share in cash was predicated on exclusivity and that it would only send a written proposal at $55.00 per share in cash if the Special Committee granted exclusivity. Party I also noted that, in the absence of exclusivity, Party I would be willing to continue evaluating a potential acquisition of the Company at a price of $51.75 per share in cash.
Following consultation with the Special Committee and later on January 24, 2023, representatives of the Special Committee Financial Advisors conveyed to Party I that the Special Committee would be willing to grant Party I exclusivity for two weeks, provided that Party I would be required to submit a written proposal for an acquisition of the Company at a price per share of $55.00 in cash.
Also on January 24, 2023, a representative of CD&R contacted a representative of Goldman Sachs regarding CD&R’s interest in the Company and the quantum of the gap between CD&R’s view on price per share and the Special Committee’s view on price per share. A representative of CD&R expressed a willingness to explore creative options to bridge the price per share gap between the two parties, and a representative of Goldman Sachs reiterated that the Special Committee had firm views on pricing. Following consultation with the Special Committee’s advisors and Mr. LeMieux, representatives of Goldman Sachs conveyed to CD&R that the Special Committee did not object to CD&R holding a meeting with Company management to discuss the Company’s recent performance.
On January 25, 2023, representatives of CD&R met with Company management to discuss the Company’s fourth fiscal quarter results for 2022 and to receive an update on year-to-date trends and outlook.
Also on January 25, 2023, a representative of CD&R called a representative of Stone Point to discuss CD&R’s continued interest in the Potential Transaction and the potential price terms at which CD&R would be willing to transact, indicating that, subject to further due diligence, CD&R would be willing to increase its offer relative to its January 5th $51.50 price per share offer.
Also on January 25, 2023, an engagement letter was executed, whereby Goldman Sachs would serve as joint financial advisor to the Company and the management company of a certain partner firm of the Company in connection with the sales process for the management company and such partner firm.
Later during the week of January 23, 2023, a representative of CD&R conveyed to a representative of Goldman Sachs that CD&R might be able to meet the Special Committee’s proposed price of $53.00 per share
 
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in cash for a transaction in the event that Stone Point was willing to roll over its equity interests or make an additional equity investment in the pro forma company at that price, but that CD&R might also need to consider having discussions with other potential sources of equity financing even if Stone Point was willing to so participate in a Potential Transaction.
On January 27, 2023, representatives of Party I provided the Special Committee Financial Advisors with a draft of an exclusivity agreement. Party I also requested the Special Committee’s permission to contact certain sources of equity and debt financing for a potential acquisition of the Company.
On January 28, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. The representatives of Jefferies reviewed Party I’s request for exclusivity and its request to contact certain sources of equity and debt financing for a potential acquisition of the Company. Representatives of Goldman Sachs also reported on their recent discussion with a representative of CD&R. Representatives of Goldman Sachs further reviewed Party I’s current proposal and stated that Party I had not yet arranged its debt and equity financing for a potential acquisition of the Company. The representatives of Goldman Sachs discussed with the Special Committee the risk that Party I would be unable to execute a transaction at $55.00 per share given Party I’s debt and equity financing requirements for a potential acquisition of the Company. During this meeting, a representative of CD&R contacted a representative of Goldman Sachs, and representatives of each of the Special Committee Financial Advisors were excused from the meeting to meet with a representative of CD&R. When such advisors returned to the meeting, they reported on CD&R’s communications, including that CD&R was not making a proposal at this time, but CD&R would be willing to negotiate a Potential Transaction with the Special Committee at $53.00 per share in cash if the Company entered into exclusivity with CD&R. Representatives of Goldman Sachs noted that CD&R had confirmed that it was amenable to a go-shop provision in the transaction documentation for a Potential Transaction and that the other potential bidder would have the opportunity to compete in such a process. After discussion of a proposed response to CD&R, the Special Committee authorized the Special Committee Financial Advisors to convey to CD&R that, consistent with its past messaging to CD&R, the Special Committee was prepared to have the Company move forward, on an exclusive basis, with CD&R at a price per share of $53.00 in cash, assuming Stone Point and Company management agreed to defer the payment of their Holder TRA Payoff Amounts utilizing a promissory note structure, and any agreed upon transaction documentation between the Company and CD&R would need to include a customary go-shop provision. The Special Committee also authorized the Special Committee Financial Advisors to convey to CD&R that, in the absence of a response from CD&R within 48 hours, the Special Committee would anticipate further exploring an acquisition transaction with the other bidder on an exclusive basis.
Later on January 28, 2023, representatives of each of the Special Committee Financial Advisors delivered the Special Committee’s message to CD&R.
In addition, on January 28, 2023, representatives of each of the Special Committee Financial Advisors delivered the Special Committee’s message to Stone Point. Representatives of Stone Point conveyed that, subject to completion of its due diligence review of the Potential Transaction, review, negotiation and finalization of definitive agreements for the Potential Transaction, negotiation and finalization of the governance terms with respect to the operations of the Company as a private company and receipt of necessary internal and other organizational approvals, Stone Point remained open to exploring the possibility of participating in a rollover of its equity interests in the Company or making an equity investment in the Company in a Potential Transaction with CD&R at a price of $53.00 per share and was, as a preliminary matter, generally comfortable with the promissory note approach for Stone Point’s Holder TRA Payoff Amount. Stone Point and the Special Committee Financial Advisors did not negotiate any specific terms with respect to the foregoing matters. As of such time, however, Stone Point still had not made any decisions regarding any such participation.
On January 29, 2023, representatives of each of the Special Committee Financial Advisors and CD&R held a discussion. CD&R conveyed that it, among other things, was agreeable to proceeding with negotiations at the Special Committee’s proposed price of $53.00 per share, required exclusivity to negotiate the Potential Transaction, was agreeable to the Special Committee’s request for a go-shop provision, was agreeable to the promissory note structure for Stone Point’s and Company management’s Holder TRA Payoff Amounts in a Potential Transaction, requested the Special Committee’s permission to speak with certain potential sources
 
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of equity financing for a Potential Transaction and indicated that the offer was conditioned on the Existing Credit Documents remaining outstanding following the closing of a Potential Transaction. The representatives of CD&R further conveyed that it would need three to four weeks to conduct confirmatory due diligence, to arrange its equity financing, and to negotiate the definitive transaction documentation.
Also on January 29, 2023, representatives of Goldman Sachs held a discussion with Mr. Adolf, during which Mr. Adolf indicated that Company management was comfortable with the promissory note structure for Company management’s Holder TRA Payoff Amounts.
Later on January 29, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. Representatives of Goldman Sachs reported on the Special Committee Financial Advisors’ meetings with CD&R, Stone Point and Mr. Adolf. Representatives of Jefferies provided an overview of CD&R’s proposed exclusivity agreement and views on the terms therein. The Special Committee and its advisors discussed CD&R’s request for exclusivity with the Company at a price per share of $53.00 in cash, including the risks posed by entering into exclusivity with CD&R at this time on its discussions with Party I, including that Party I could determine not to proceed with its evaluation of a potential acquisition of the Company during the go-shop period. The Special Committee reviewed its rationale for having the Company enter into exclusivity, including that it believed that it had engaged in a rigorous process to achieve the best price reasonably available for all of the stockholders of the Company and that a Potential Transaction at a price per share of $53.00 in cash was, in the Special Committee’s view, more likely to be consummated than a transaction with Party I at a preliminary price per share of $55.00 in cash, considering, among other things, Party I’s remaining due diligence, the risks associated with Party I’s need to obtain third-party debt and equity financing and each party’s ability to consummate a potential acquisition of the Company. The Special Committee then unanimously approved the Company entering into exclusivity with CD&R based on CD&R confirming that it was amenable to proceeding with negotiations on the Special Committee’s proposed terms for a Potential Transaction and authorized its advisors to negotiate the exclusivity agreement on the Company’s behalf.
On January 30, 2023, representatives of each of Potter Anderson and Kirkland exchanged revised drafts of an exclusivity agreement and met to discuss outstanding points in the draft agreement.
Prior to entering into exclusivity with CD&R on January 30, 2023, at the direction of the Special Committee, representatives of each of the Special Committee Financial Advisors held a discussion with representatives of Party I to convey that the Special Committee anticipated that the Company would be entering into a period of exclusivity with another bidder and that the Company anticipated that there would be a go-shop in any definitive transaction documentation with such bidder, which would allow Party I to continue evaluating a potential acquisition of the Company if it determined to do so.
Later that evening on January 30, 2023, the Company and CD&R entered into an exclusivity agreement, which contemplated that exclusivity between the Company and CD&R would run through 11:59 p.m. New York time on February 20, 2023.
Also on January 30, 2023, representatives of Potter Anderson provided representatives of Simpson Thacher with a draft of a confidentiality agreement for Stone Point. Stone Point and the Company later executed the confidentiality agreement on February 1, 2023.
On January 31, 2023, representatives of Kirkland provided representatives of Simpson Thacher a high-level summary of indicative terms for governance, liquidity and other matters with respect to the operations of the Company as a private company so that Stone Point could consider such indicative terms in connection with its continued evaluation of potentially rolling over some or all of its equity interests in the Company or making an additional equity investment in a Potential Transaction with CD&R.
On February 1, 2023, CD&R requested the Special Committee’s approval of the Potential Transaction at a price per share of $53.00 in cash and approval of entering into certain agreements, arrangements or understandings between Stone Point and its affiliates and associates and CD&R and its affiliates and associates with respect to a Potential Transaction, solely for purposes of the anti-takeover provisions contained in Article Tenth of the Amended and Restated Certificate of Incorporation of the Company (the “Article Tenth Approval”).
 
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Throughout the day on February 1, 2023, the Special Committee’s advisors, Company management and the Company’s advisors, Stone Point and its advisors and CD&R and its advisors engaged in a number of communications to discuss, among other things, (i) the public announcement by the Company of an agreement on exclusivity and CD&R’s proposal that met the Special Committee’s proposed price of $53.00 per share in cash for a Potential Transaction, (ii) certain other internal communications regarding the Company’s public announcement, and (iii) the Article Tenth Approval. During these meetings, representatives of Kirkland conveyed that CD&R would only proceed with a Potential Transaction if it were subject to the non-waivable approval of the holders of a majority of the voting power of the shares held by the Company’s disinterested stockholders.
Early in the morning on February 2, 2023, the Special Committee adopted, by unanimous written consent, the Article Tenth Approval.
Following the delivery of the Article Tenth Approval, a representative of Stone Point contacted representatives of each of the Special Committee Financial Advisors to indicate that Stone Point had determined that it was willing to consider participating in a Potential Transaction with CD&R, subject to completion of its due diligence review of the Potential Transaction, review, negotiation and finalization of definitive agreements for the Potential Transaction, negotiation and finalization of the governance terms with respect to the operations of the Company as a private company and receipt of necessary internal and other organizational approvals. The representative of Stone Point indicated that Stone Point intended to file an amendment to its Schedule 13D that day.
Later on February 2, 2023, Stone Point filed an amendment to its Schedule 13D to reflect its willingness to consider participating in a Potential Transaction with CD&R, subject to completion of its due diligence review of the Potential Transaction, review, negotiation and finalization of definitive agreements for the Potential Transaction, negotiation and finalization of the governance terms with respect to the operations of the Company as a private company and receipt of necessary internal and other organizational approvals.
Later on February 2, 2023, following the filing of Stone Point’s amended Schedule 13D, the Company issued a press release, noting that the Company had entered into an exclusivity agreement with CD&R to engage in exclusive negotiations for a limited period of time regarding the terms and definitive agreements whereby CD&R may potentially acquire the Company for $53.00 per share in cash.
Also on February 2, 2023, representatives of Party I and the financial sponsors of Party I contacted representatives of the Special Committee Financial Advisors and requested permission from the Special Committee to contact potential financing sources. Consistent with the terms of the exclusivity agreement with CD&R, the Special Committee Financial Advisors did not respond to such request.
On February 3, 2023, at the direction of the Special Committee, representatives of V&E distributed an initial draft of the Merger Agreement to Kirkland and Simpson Thacher, which draft Merger Agreement, among other things, (i) contained customary representations, warranties and covenants for a transaction involving a financial sponsor buyer, (ii) provided for a full equity backstop by CD&R for the transaction, (iii) contained a go-shop provision, (iv) provided for the right for the Company to seek specific performance in connection with CD&R’s financing obligations under the agreement and to terminate the agreement in order to enter into an acquisition agreement for a superior proposal (subject to compliance with the terms of the agreement and the payment of an unspecified Company termination fee), (v) contemplated the Company’s “Up-C” structure remaining in place following the closing of the Potential Transaction, and (vi) provided that Parent could terminate the agreement in response to a change of recommendation by the Company resulting from a superior proposal or an intervening event.
On February 4 and 5, 2023, representatives of each of CD&R and Stone Point contacted representatives of each of the Special Committee Financial Advisors and Potter Anderson to discuss receiving the Special Committee’s permission for CD&R and Stone Point to seek approximately $500 million of committed debt financing from the Company’s current lenders for purposes of post-closing matters. The representatives of CD&R and Stone Point also indicated that obtaining this debt financing would not be a closing condition for the Potential Transaction.
On February 6, 2023, representatives of Kirkland sent representatives of Simpson Thacher proposed terms for governance, liquidity and other matters with respect to the operations of the Company as a private company.
 
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On February 7, 2023, representatives of each of CD&R and Jefferies held a discussion regarding CD&R’s confirmatory due diligence progress.
On February 8, 2023, the Special Committee held a meeting by videoconference with members of Company management, members of the Board affiliated with Stone Point and representatives of each of Potter Anderson, the Special Committee Financial Advisors, and V&E in attendance. With all meeting attendees present, Mr. Adolf reported on partner and investor feedback regarding the Company’s public announcement of exclusivity with CD&R and the price per share for a Potential Transaction. With only the Special Committee and the representatives of each of Potter Anderson, V&E, and the Special Committee Financial Advisors present, representatives of each of V&E and Potter Anderson provided an overview of the initial draft of the Merger Agreement and certain terms therein. With only the Special Committee and the representatives of each of Potter Anderson and the Special Committee Financial Advisors present, representatives of Jefferies reported on their due diligence communications with CD&R and provided an overview of the Company’s recent stock price performance and certain analyses in connection therewith, and representatives of Goldman Sachs reviewed certain of the Company’s business initiatives.
Also, on February 8, 2023, representatives of Kirkland and V&E met to discuss certain matters relating to the treatment of the Incentive Units granted to the NEOs in connection with the Company’s initial public offering (the “IPO Incentive Unit Awards”).
On February 9, 2023, representatives of each of CD&R, Stone Point and the Special Committee Financial Advisors held a discussion regarding certain outstanding due diligence matters.
On February 10, 2023, representatives of Kirkland delivered a revised draft of the Merger Agreement to representatives of each of Potter Anderson and V&E, which included a note indicating that the Merger Agreement would later be revised to collapse the Company’s “Up-C” structure. The revised draft of the Merger Agreement also (i) proposed that all “out of the money” options would be canceled for no consideration and that all unvested, but “in the money” options would be converted to contingent cash awards, in each case, at the closing of the Potential Transaction, (ii) reduced the length of the go-shop period from 60 days to 30 days and provided that, during the go-shop period, the Company could not negotiate with any party that it had already reached out to discuss a potential acquisition of the Company (such party, a “Restricted Party”), (iii) proposed a Company termination fee of 3.75% of the Company’s fully diluted equity value, a go-shop termination fee of 2.25% of the Company’s fully diluted equity value, (iv) limited Parent’s liability for monetary damages to an amount equal to 5.5% of the Company’s fully diluted equity value, (v) added certain covenants relating to the Company’s efforts to assist Parent with obtaining the contemplated debt financing for a Potential Transaction, and (vi) included additional regulatory representations to be made by, and covenants involving, the Company and its related businesses in the wealth management sector.
On February 11, 2023, Company management provided to representatives of CD&R, Stone Point and the Special Committee Financial Advisors its most recent analysis of the projections of certain prospective tax benefits covered under the Tax Receivable Agreements, net of payments required under the Tax Receivable Agreements with respect to such tax benefits, related to prior exchanges of Focus LLC Units and deemed exchanges (in connection with a Change of Control) of Focus LLC Units, which were prepared on February 9, 2023 (the “Tax Receivable Projections”). Company management provided several earlier iterations of the Tax Receivable Projections to CD&R, Stone Point and the Special Committee Financial Advisors, with iterations updating for subsequent exchanges of Focus LLC Units, changes in applicable interest rates, timing of payments and deemed exchanges in connection with a Change of Control at a variety of share prices.
Also on February 11, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors and V&E in attendance. The representatives of each of Potter Anderson and V&E discussed Kirkland’s revised draft of the Merger Agreement and certain of the proposed revisions therein, including with respect to the go-shop provision, the proposal on the termination fees and liability limitation and the proposed financing structure and obligations. The Special Committee provided direction to the representatives of Potter Anderson and V&E on certain of these issues. Representatives of Goldman Sachs also reported on their recent meeting with representatives of CD&R.
On February 12, 2023, representatives of Kirkland delivered drafts of the form of Equity Commitment Letter and Limited Guarantee to representatives of V&E and Potter Anderson.
 
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Also on February, 12, 2023, representatives of Kirkland, V&E and Potter Anderson met to discuss the draft Merger Agreement and other outstanding transaction items.
Further on February 12, 2023, representatives of Kirkland sent a draft Interim Investors Agreement to representatives of Simpson Thacher. Between February 6, 2023 and February 26, 2023, representatives of CD&R, Stone Point, Kirkland and Simpson Thacher negotiated the terms of the Interim Investors Agreement, the governance and structure of the pro forma company resulting from a Potential Transaction, liquidity and other matters with respect to the operations of the Company as a private company. CD&R and Stone Point and their respective advisors held numerous meetings during this period to address outstanding matters related to the Interim Investors Agreement and governance and structure of the pro forma company resulting from a Potential Transaction.
On February 14, 2023, representatives of V&E delivered a revised draft of the Merger Agreement to Kirkland and Simpson Thacher, which such draft included, among other things, (i) an increase in the length of the proposed go-shop period to 40 days, the inclusion of an additional 15 days following the initial 40 day period for an excluded party to negotiate with the Company with respect to a superior proposal, and the removal of the Restricted Party concept from the go-shop period, (ii) a Company termination fee of 3.00% of the Company’s fully diluted equity value, a go-shop termination fee of 1.00% of the Company’s fully diluted equity value, (iii) a limitation on Parent’s liability to the Company for monetary damages of 7.00% of the Company’s fully diluted equity value, and (iv) a limitation on the Company’s liability to Parent for monetary damages of 3.00% of the Company’s fully diluted equity value.
Also, on February 14, 2023, representatives of CD&R conveyed CD&R’s position on several transaction items relating to Company management (that were not related to Company management’s go-forward role, equity holdings and compensation), including the post-closing corporate structure of the Company, the desire for Company management to agree to waive certain of their rights under their employment agreements with respect to the IPO Incentive Unit Awards in a Potential Transaction (the “Company Management Matters”), and the timing for engaging in discussions regarding Company management’s go-forward role, equity holdings and compensation.
On February 15, 2023, CD&R requested an approximate one-week extension of the exclusivity period set forth in the exclusivity agreement. The Special Committee did not respond to the request at that time.
On February 16, 2023, representatives of Kirkland and Potter Anderson met to discuss the treatment of the IPO Incentive Unit Awards in a Potential Transaction.
On February 17, 2023, representatives of each of V&E, Potter Anderson, Simpson Thacher and Kirkland met to discuss the draft Merger Agreement and other outstanding transaction items.
Also on February 17, 2023, representatives of Company management met with representatives of CD&R and Stone Point to discuss ongoing due diligence matters and updates on the recent financial performance of the Company and the Company’s near-term mergers and acquisitions pipeline.
On February 18, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, Goldman Sachs, Jefferies and V&E and members of Company management in attendance. With all meeting attendees present, Mr. Adolf reported on recent investor feedback regarding a Potential Transaction. After Company management’s departure from the meeting, the representatives of Potter Anderson and V&E discussed with the Special Committee certain key outstanding issues under the draft transaction documentation as they related to each of Company management and the Company and reported on their recent meeting with Simpson Thacher and Kirkland. The Special Committee and its advisors also discussed the proposed go-shop, the current status of the negotiations on the go-shop provisions, and whether certain terms for the proposed go-shop would allow Party I to effectively participate in a go-shop, if it chose to do so. The Special Committee and its advisors further discussed that exclusivity with CD&R was expected to lapse on February 20, 2023, at 11:59 p.m. New York time, and they discussed the Special Committee’s available leverage to secure its proposed terms on the go-shop and termination fees as a prerequisite for granting any exclusivity extension with CD&R. With only the Special Committee and the representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance, representatives of Goldman Sachs also reported on two in-bound communications regarding interest in the Company, including that neither in-bound communication expressed any pricing or other specific terms in respect of a potential acquisition of
 
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the Company, and that, consistent with the terms of the exclusivity agreement, Goldman Sachs had not responded. The Special Committee and its advisors also discussed connecting the Special Committee’s agreement to extend exclusivity with CD&R to the resolution of the Company Management Matters and CD&R confirming its willingness to proceed with terms generally consistent the Special Committee’s proposed positions on the go-shop and termination fees and, following the discussion, the Special Committee authorized Potter Anderson to negotiate the terms of the go-shop and termination fees within a range that would be considered market terms for transactions similar to a Potential Transaction. The Special Committee also authorized Mr. LeMieux to negotiate and approve the terms of any extension of exclusivity with CD&R on behalf of the Special Committee. Representatives of Goldman Sachs also reviewed certain of the Company’s business initiatives.
Beginning on February 19, 2023 and through February 27, 2023, the Special Committee, Company management, CD&R and Stone Point and their respective legal representatives exchanged multiple drafts of the transaction documentation, including, among other things, the Merger Agreement, the Company’s disclosure schedules, the Support Agreement, the Equity Commitment Letters, the Limited Guarantees, and the form of TRA Waiver and Exchange Agreement (including a term sheet with the expected material terms of the TRA Notes). The parties and their respective advisors held numerous meetings during this period to address outstanding transaction matters, including completion of due diligence review by CD&R and Stone Point.
On February 20, 2023, representatives of Potter Anderson conveyed the Special Committee’s proposed terms for the go-shop and related termination fees to Kirkland, including that (i) the go-shop would run for 40 days, with an additional 10 days for excluded parties, (ii) the go-shop termination fee would be an amount equal to 1.25% of the Company’s fully diluted equity value, the Company termination fee would be an amount equal to 3.25% of the Company’s fully diluted equity value, the Company’s liability for monetary damages to Parent would be capped at the amount of the Company termination fee, and the Parent liability for monetary damages to the Company would be capped at an amount equal to 6.5% of the Company’s fully diluted equity value, and (iii) there would not be a Restricted Parties concept for the go-shop in the Merger Agreement.
Later on February 20, 2023, representatives of Kirkland conveyed CD&R’s response on the go-shop provisions and related termination fees to the representatives of Potter Anderson and V&E, which included (i) accepting the Company’s go-shop time period proposal, termination fee proposal, the Parent liability limitation proposal, and the elimination of the Restricted Party concept proposal, and (ii) proposing the go-shop termination fee be set at an amount equal to 1.7% of the Company’s fully diluted equity value, the Company liability limitation be set at an amount equal to 6.5% of the Company’s fully diluted equity value, expense reimbursement for CD&R in the event the Company stockholders do not approve the Potential Transaction, and certain information rights for CD&R during the go-shop period.
Also on February 20, 2023, following discussion with the Special Committee, representatives of Potter Anderson conveyed to Kirkland the Special Committee’s response on the go-shop provisions and related termination fees, which included the go-shop termination fee set at an amount equal to 1.5% of the Company’s fully diluted equity value.
On February 20, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors and V&E in attendance. Representatives of Potter Anderson reported on a recent meeting involving Potter Anderson, V&E and Kirkland on the go-shop provision and related termination fees and reviewed the counterproposal from CD&R. The representatives of Potter Anderson, V&E and Goldman Sachs also reported on the status of the outstanding Company Management Matters. The Special Committee stated that it was prepared to let exclusivity lapse in the absence of the resolution on the parties’ differing proposals on the go-shop terms and related termination fee provisions and on the resolution of outstanding matters related to Company management. The Special Committee and its advisors discussed potential messages to CD&R and, after discussion, the Special Committee authorized representatives of Goldman Sachs to convey to each of the representatives of CD&R and Mr. Adolf that the Special Committee would be prepared to extend exclusivity between CD&R and the Company for a period of 48 hours, provided that the parties reach resolution on certain outstanding matters, including matters involving the IPO Incentive Unit Awards and the structuring of the deferral of the payment of Company management’s Holder TRA Payoff Amounts and that CD&R drop its request for expense reimbursement in the event the Company stockholders do not approve the Potential Transaction.
 
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Later on February 20, 2023, representatives of Goldman Sachs conveyed the Special Committee’s messages to each of CD&R and Mr. Adolf. Following those conversations, Mr. Adolf and representatives of CD&R discussed and resolved the outstanding matters involving the IPO Incentive Unit Awards and the structuring of the deferral of the payment of Company management’s Holder TRA Payoff Amounts and reported such to representatives of Goldman Sachs. CD&R also dropped its request for expense reimbursement in the event that Company stockholders do not approve the Potential Transaction with CD&R. The representatives of CD&R requested, however, that the parties extend exclusivity by seven days.
Under the terms of the exclusivity agreement, exclusivity between CD&R and the Company lapsed on February 20, 2023, at 11:59 p.m. New York time.
During the morning of February 21, 2023, the members of the Special Committee and Potter Anderson discussed the proposed extension of exclusivity by seven days through separate email and telephone calls. After receiving feedback from the other Special Committee members, Mr. LeMieux proposed a five-day extension of exclusivity and directed Potter Anderson to inform Kirkland of such proposal. Representatives of Potter Anderson subsequently informed Kirkland of the Special Committee’s proposal that exclusivity be extended for five days.
In the morning on February 21, 2023, the Company and CD&R extended exclusivity through 11:59 p.m. New York time on February 26, 2023.
On February 24, 2023, Jefferies delivered an updated relationships disclosure memorandum to the Special Committee.
On February 25, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors and V&E and members of Company management in attendance. With all meeting attendees present, Company management reported on the negotiations of the terms and conditions of the transaction documents and on recent trading in the Company’s stock. Following Company management’s departure from the meeting, representatives of V&E and Potter Anderson reported on the current status of the draft transaction documentation and the timing for resolving the outstanding points under such agreements. Each of the representatives of the Special Committee Financial Advisors then separately reviewed Goldman Sachs’ and Jefferies’ preliminary financial analysis of the Company. Representatives of Goldman Sachs also reviewed certain of the Company’s business initiatives. The Special Committee Financial Advisors then reviewed the potential go-shop process and potential parties to contact during the go-shop period.
Also, on February 25, 2023, the representatives of Potter Anderson, Kirkland, V&E, Simpson Thacher, Stone Point, Company management, and CD&R held an “all-hands” meeting to discuss certain outstanding transaction items. During the course of the meeting, a representative of CD&R indicated that CD&R was supportive of certain ongoing business initiatives of the Company.
Also, on February 25, 2023, Goldman Sachs delivered an updated relationships disclosure memorandum to the Special Committee.
On February 26, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors and V&E in attendance. Representatives of Potter Anderson and V&E reported on the current drafts of the transaction documentation, on certain items that had been recently resolved among the parties and on certain outstanding transaction items. Following V&E’s departure from the meeting, the representatives of Potter Anderson provided an overview of the Special Committee’s fiduciary duties in connection with a Potential Transaction. With only the Special Committee and representatives of Potter Anderson in attendance, representatives of Potter Anderson then reviewed the form of Special Committee resolutions that had been previously circulated to the Special Committee. The Special Committee adjourned and later resumed its meeting following the resolution of the outstanding items on the Merger Agreement, with the representatives of each of Potter Anderson and the Special Committee Financial Advisors in attendance. At the reconvened meeting, the representatives of Potter Anderson provided an update on the resolution of the transaction matters under the draft Merger Agreement and confirmed that there were no economic changes to the agreement. At the request of the Special Committee, representatives of Goldman Sachs delivered Goldman Sachs’ oral fairness opinion, which was subsequently confirmed by delivery of a written opinion, dated February 27, 2023, to the effect that, as of the
 
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date of such opinion based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement was fair from a financial point of view to such holders. At the request of the Special Committee, representatives of Jefferies rendered Jefferies’ oral fairness opinion to the Special Committee to the effect that, as of the date of such oral opinion and based upon and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of Class A Common Stock that are Unaffiliated Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. After Goldman Sachs’ and Jefferies’ departure from the meeting, and, after discussion at the meeting, the Special Committee unanimously (i) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers, and the Transaction Documents are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders; (ii) recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers, and the Transaction Documents, and determine that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers, and the Transaction Documents are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders; and (iii) recommended that, subject to Board approval, the Board submit the Merger Agreement to the stockholders of the Company for their adoption and recommend that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. In consideration of the time and effort expended by Jefferies beyond the anticipated scope of its engagement with the Special Committee, the Special Committee also unanimously approved an amendment to Jefferies’ engagement letter, which amendment would increase the total quantum of the discretionary payment that Jefferies would be eligible to receive in connection with its work advising the Special Committee on a Potential Transaction.
Prior to the Board meeting to consider the Special Committee’s recommendation, the Board adopted, by unanimous written consent, resolutions providing for additional compensation for the Special Committee members, in light of the work performed by the Special Committee and to be performed by the Special Committee during the go-shop period, that had exceeded the Company’s expectations when it first determined to structure compensation for each Special Committee member’s service on the Special Committee.
Following the Special Committee meeting on February 26, 2023, the Board held a special meeting by videoconference with representatives of each of V&E, Potter Anderson, the Special Committee Financial Advisors and members of Company management in attendance. The representatives of V&E reviewed the final terms of the unexecuted transaction documentation for a Potential Transaction and discussed the Board’s fiduciary duties in connection with a Potential Transaction. Mr. LeMieux provided an overview of the Special Committee’s process and recommendation to the Board. After discussion at the meeting, the Board unanimously (i) determined that the Merger Agreement and transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and its stockholders, including the Unaffiliated Stockholders, (ii) approved and declared advisable the Merger Agreement, the Support Agreement, the Limited Guarantee and the TRA Waiver and Exchange Agreements and the transactions contemplated thereby, including the Mergers, (iii) approved the execution and delivery of the Merger Agreement, the Support Agreement, the Limited Guarantee and the TRA Waiver and Exchange Agreements by the Company and the performance by the Company of its covenants and other obligations contained therein and the consummation of the Mergers and the other transactions contemplated by such agreements upon the terms and subject to the conditions contained therein, (iv) directed that the adoption of the Merger Agreement be submitted to a vote of Company’s stockholders at a meeting of the Company’s stockholders, and (v) recommended that the stockholders of the Company vote in favor of the adoption of the Merger Agreement.
On February 27, 2023, the parties executed the Merger Agreement, the Support Agreement, the Limited Guarantees and the TRA Waiver and Exchange Agreements. Stone Point and CD&R each delivered to the Company their Equity Commitment Letters. A press release was later issued that day by each of the Company and CD&R announcing the transaction. Stone Point also filed an amendment to its Schedule 13D on this date to disclose that the parties agreement on a transaction.
Beginning on February 27, 2023, at the direction of the Special Committee, representatives of the Special Committee Financial Advisors contacted 33 parties, including Party A, Party B, Party D, Party E, Party F, Party G, Party H, and Party I. Of the 33 parties contacted, only five parties, two strategic parties and three
 
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financial sponsors that owned strategic parties, requested nondisclosure agreements and indicated an interest in considering a potential acquisition. Three parties (each of whom had not previously been contacted by the Special Committee Financial Advisors) ultimately entered into nondisclosure agreements with the Company and were provided with access to a virtual data room to conduct initial due diligence. No party, including the three parties that had access to the Company’s virtual data room submitted a proposal, offer or indication of interest to acquire the Company during the go-shop period. Throughout the go-shop process, the Special Committee received numerous updates, either at formal meetings or through oral and/or written communications from the Special Committee Financial Advisors, on the status of each of the parties that had expressed an interest in evaluating a potential acquisition of the Company. On March 2, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson, the Special Committee Financial Advisors and V&E and members of Company management to discuss views on the parties that had expressed an interest in considering a potential acquisition of the Company, and the information sharing with, and potential participation of, certain potential bidders in this process. After Company management’s departure from the meeting, the Special Committee and its advisors discussed the current status of the go-shop process and next steps with respect to those parties that had expressed interest in considering a potential acquisition of the Company. In addition, on March 22, 2023, the Special Committee held a meeting by videoconference with representatives of each of Potter Anderson and the Special Committee Financial Advisors. The Special Committee Financial Advisors provided the Special Committee with an update on the go-shop process. Representatives of Goldman Sachs also discussed with the Special Committee certain of the Company’s business initiatives and recent developments with respect thereto.
The go-shop period expired at 11:59 p.m. Eastern Time on April 8, 2023.
Reasons for the Mergers; Recommendation of the Board; Fairness of the Mergers
The Board formed the Special Committee, comprised of four of the Company’s independent and disinterested directors, and empowered the Special Committee to, among other things, to (i) review, evaluate and negotiate a potential transaction involving the acquisition by CD&R of all of the outstanding shares of Company Common Stock (including all of the equity of Focus LLC) in a cash merger transaction or any alternative to such potential transaction, and (ii) recommend to the full Board what action, if any, should be taken by the Board with respect to the foregoing.
Recommendation of the Special Committee
The Special Committee unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders, (2) recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, and determine that the Merger Agreement and the transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and the Unaffiliated Stockholders and (3) recommended that, subject to Board approval, the Board submit the Merger Agreement to the stockholders of the Company for their adoption and recommend that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. In addition, the Special Committee believes that the Mergers are fair to Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 of the Exchange Act (the “unaffiliated security holders”).
In the course of reaching its determination and making its recommendations, the Special Committee considered the following non-exhaustive list of material factors, which are not presented in any relative order of importance and each of which the Special Committee viewed as being generally supportive of its determination and recommendations to the Board:

Potential Strategic Alternatives.   The assessment of the Special Committee that none of the possible alternatives to the Mergers (including pursuing a different transaction, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to the stockholders of the Company of those alternatives and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for the Company to create greater value for the stockholders of the Company, taking into account execution risks as well as business, financial, industry, competitive and regulatory risks. The Special Committee also assessed that the proposed
 
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transaction presented a better value for the Unaffiliated Stockholders than continuing to operate the Company as a public company.

Outcome of Strategic Pre-Signing Contacts.   At the direction of the Special Committee, the representatives of Goldman Sachs and Jefferies contacted or re-contacted seven (7) financial sponsors (exclusive of CD&R) and one (1) strategic party to gauge their interest in a potential acquisition of the Company. These pre-signing contacts supplemented initial pre-signing contacts conducted by the Board following its determination to explore strategic alternatives in which the Board had originally authorized an outreach by management and Goldman Sachs to five (5) financial sponsors, including CD&R. Each of the seven (7) financial sponsors and one (1) strategic party contacted by the Special Committee were selected by Special Committee based upon, among other things, the Special Committee’s view that such parties had the requisite financial capacity and interest in evaluating a potential acquisition of the Company and/or a transaction in the wealth management sector, and that such parties had the ability to engage in, and complete, a potential acquisition of the Company.

Certainty of Value.   The consideration to be received by the stockholders of the Company in the Company Merger consists entirely of cash, which provides certainty of value and immediate liquidity at an attractive price measured against the ongoing business and financial execution risks of the Company’s business plan, including the internal and external risks associated with the Company’s long-term plan, and its continued operations as a public company and allows the stockholders of the Company to realize that value immediately upon the consummation of the Company Merger. In that regard, the Special Committee noted that the amount of cash to be received for each outstanding share of Class A Common Stock is fixed and will not be reduced if the share price of the Class A Common Stock declines prior to the effective time of the Company Merger.

Best Value Reasonably Obtainable.   The belief of the Special Committee that CD&R had no additional value to offer the public stockholders of the Company above $53.00 per share, that such proposal represented CD&R’s “best and final” offer after repeatedly testing CD&R’s position on pricing for a transaction, and that $53.00 per share was the best value that the Special Committee could reasonably obtain from CD&R for the shares of Class A Common Stock, taking into account (1) the Special Committee’s assessment that other parties likely did not have either the interest in, or capability to, acquire the Company on the terms and conditions offered by CD&R, including based on the regulatory, financing and other execution risks applicable to each party; and (2) the Special Committee’s familiarity with the business, operations, prospects, business strategy, assets, liabilities and general financial condition of the Company on a historical and prospective basis and its assessment of associated risks, including execution risks with respect to the Company’s business plan as a public company. In forming this belief, the Special Committee also considered that (1) CD&R was one of two parties out of the 10 potential parties contacted to submit a proposal; (2) only one other third party bidder submitted a proposal during this period to acquire the Company and such proposal, while at a value per share higher than CD&R’s final proposal, was preliminary and non-binding and was subject to the completion of due diligence, debt and equity financing contingencies and regulatory approvals, and the Special Committee risked losing the certainty of value offered by CD&R if it permitted the other bidder to move forward at that time on uncertain terms; and (3) the Special Committee received feedback from certain potential third party bidders for a potential acquisition of the Company that such bidders would have a difficult time obtaining the requisite financing, would not be able to effectively compete on pricing and/or elected not to proceed due to perceived business associated risks with the Company. The Special Committee believed that, after negotiations at the direction of the Special Committee and with the assistance of experienced independent legal and financial advisors, the Special Committee obtained the best terms and the highest price that CD&R was willing to pay for the Company, pursuant to a thorough process and that further negotiations would have created a risk of CD&R abandoning a potential transaction altogether. In addition, the Special Committee believed that, measured against the longer-term execution risks described above, the per share price reflects a fair and favorable price for the shares of Class A Common Stock.

Premium to Market Price.   The Special Committee also considered that the $53.00 per share price constitutes (1) a premium of 36 percent to the 60 day volume weighted average price for the Class A Common Stock as of February 1, 2023, the last trading day prior to the Company’s announcement that it had entered into exclusivity with CD&R; and (2) a premium of approximately 48 percent to the
 
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Class A Common Stock closing trading price of $35.81 on December 28, 2022, the day that the Special Committee specifically authorized its financial advisors to broaden their outreach and contact other potential bidders regarding a potential acquisition of the Company.

History of Negotiations.   The Special Committee negotiated vigorously with CD&R with respect to price and other terms in the Merger Agreement, including obtaining a price increase following CD&R’s revised indication of interest of $45.00 per share to $53.00 per share, which after consultation with representatives of the Special Committee Financial Advisors, the Special Committee believed represented the highest price that CD&R was willing to pay.

Loss of Opportunity.   The Special Committee considered the possibility that, if the Special Committee declined to recommend the Merger Agreement, there may not be another opportunity for the Company’s stockholders to receive a comparably priced offer with a comparable level of closing certainty.

Financial Condition, Results of Operations and Prospects of the Company; Risks of Execution.   The Special Committee also considered the current, historical and projected financial condition, results of operations and business of the Company, as well as the Company’s prospects and risks if it were to remain a public company. In particular, the Special Committee considered the Company’s then-current business plan, including management’s then-current Projections (as defined in the section titled “Special Factors — Unaudited Prospective Financial Information of the Company”). The Special Committee also considered the Company’s status as a public company, its current business plan and the potential opportunities and risks that it presented against, among other things, various execution, operational, market and other risks to achieving the business plan and related uncertainties, including: (1) that despite consistently meeting or exceeding its performance goals under its business plan, the public markets have not provided the Company with its desired financial valuation; (2) the likelihood that the business plan could be achieved in the face of macroeconomic, operational and execution risks; and (3) general risks related to market conditions that could negatively impact the Company’s valuation or reduce the price of the Class A Common Stock. In particular, the Special Committee considered the likelihood and timing of, and risks to, achieving the assumptions underlying the business plan and in the Projections.

Among the potential risks identified by the Special Committee were: (1) the ability to achieve and/or maintain the projected core organic growth rate for the Company over the course of the projections period, (2) the quantum of capital deployed with respect to mergers and acquisitions activity over the projections period and the ability of Company management to execute on, and successfully implement, its mergers and acquisitions strategy and activity in an uncertain macroeconomic and high interest rate environment, and (3) the ability of the Company to achieve and/or maintain its anticipated Adjusted EBITDA margin expansion over the course of the projections period.

The Special Committee also considered the challenges of a public company in making investments, operational changes, and improvements to realize greater long-term growth and profitability. The Special Committee was aware that such investments, changes and improvements could lead to disruption in the Company’s performance and expose the Company to scrutiny based on its quarter-over-quarter operational and financial metrics and results. The Special Committee was also aware that the price of the Class A Common Stock could be negatively impacted if the Company failed to meet investor expectations, including if the Company failed to meet its growth and profitability objectives.

Based on the foregoing factors, the Special Committee considered that the Merger Consideration of $53.00 per share was more favorable to the Company’s stockholders than the potential value that might result from other alternatives reasonably available to the Company, including, but not limited to, the continued operation of the Company on a standalone basis.

Opinion of Goldman Sachs.   The oral opinion of Goldman Sachs rendered to the Special Committee, subsequently confirmed by the delivery of its written opinion, dated as of February 27, 2023, that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
 
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Opinion of Jefferies.   The oral opinion of Jefferies rendered to the Special Committee, subsequently confirmed by delivery of its written opinion, dated February 26, 2023, to the effect, that, as of such date, and based on and subject to the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, matters, limitations, qualifications and assumptions set forth therein, the Merger Consideration to be received by the holders of shares of Class A Common Stock that are Unaffiliated Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

Negotiations with Parent and Terms of the Merger Agreement.   The terms of the Merger Agreement and the transactions contemplated thereby, which were reviewed and negotiated by the Special Committee with assistance from its outside legal counsel and financial advisors and, where appropriate, the Company’s outside legal counsel, and the fact that such terms were the product of arm’s-length negotiations between the parties, including the following favorable terms:

the Company’s ability during the 40-day go-shop period to solicit Acquisition Proposals from, and participate in discussions and negotiations with, third parties, with an additional 10 days to negotiate a definitive agreement with qualifying parties;

the Company’s ability to consider and respond to unsolicited Acquisition Proposals during and after the go-shop period, including to furnish information to and conduct negotiations with third parties under certain circumstances specified in the Merger Agreement;

the ability of the Board, acting upon the recommendation of the Special Committee, and the Special Committee’s ability, in each case under certain circumstances specified in the Merger Agreement, to change, withdraw or modify the recommendation that the stockholders of the Company vote in favor of the adoption of the Merger Agreement;

the Board’s ability, acting upon the recommendation of the Special Committee, under certain circumstances specified in the Merger Agreement, to terminate the Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal. In that regard, the Special Committee believed that the termination fee payable by the Company in such instance was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers; and

that certain funds managed by or affiliated with CD&R and Stone Point provided Limited Guarantees in favor of the Company, which guarantee certain obligations of Parent under the Merger Agreement.

High Likelihood of Closing:   The likelihood that the Mergers would be completed, based upon, among other things (not in any relative order of importance):

the fact that Parent and Merger Subs obtained committed equity financing for the transactions in an aggregate amount sufficient to fund the Required Amounts (as defined below), and the obligation of Parent and Merger Sub to use reasonable best efforts to obtain the equity financing and the limited number and nature of the conditions to the equity financing;

the absence of a financing condition of any kind in the Merger Agreement;

the Company’s ability, under certain circumstances pursuant to the Merger Agreement and the equity commitment letter, to seek specific performance of Parent’s obligation to cause the equity commitments to Parent to be funded pursuant to the Equity Commitment Letter;

the Company’s ability, under certain circumstances pursuant to the Merger Agreement, to seek specific performance to prevent breaches of the Merger Agreement and enforce specifically the terms of the Merger Agreement; and

the ability of investment funds managed by or affiliated with CD&R and Stone Point to complete large acquisition transactions.

Appraisal Rights.   The Company’s stockholders have the right to exercise their statutory appraisal rights under Section 262 and receive payment of the fair value of their shares of Company Common Stock in lieu of the Merger Consideration, subject to and in accordance with the terms and conditions
 
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of the Merger Agreement and the DGCL, unless and until any such Company stockholder fails to perfect or effectively withdraws or loses such holder’s right to appraisal and payment under the DGCL.

Current and Historical Market Prices.   The current and historical market prices of the Class A Common Stock, taking into account the market performance of the Class A Common Stock relative to the capital stock of other participants in the industries in which the Company operates and general market indices.

Other Factors.   The Special Committee also considered:

that the terms of the Merger Agreement provide the Company sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Company Merger or the termination of the Merger Agreement; and

the Special Committee’s belief that it was fully informed about the extent to which the interests of the Existing Stockholders in the Mergers differ from those of the Unaffiliated Stockholders.
In the course of reaching its determination and making its recommendations, the Special Committee also considered the following non-exhaustive list of uncertainties, risks and potentially negative factors concerning the Merger Agreement and the Mergers, which are not presented in any relative order of importance:

No Stockholder Participation in Future Growth or Earnings.   The nature of the Company Merger as a cash transaction means that the stockholders of the Company (other than holders of the Rollover Units and Class A Rollover Shares) will not participate in the Company’s future earnings or growth and will not benefit from any appreciation in value of the Surviving Corporation. The Special Committee considered the other potential alternative strategies available to the Company as a public company, which, despite significant uncertainty and complexity, had the potential to result in a more successful and valuable company.

Risk Associated with Failure to Consummate the Mergers.   The possibility that the Mergers might not be consummated, and if they are not consummated, that: (1) the Company’s directors, management team and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of the Company during the pendency of the Mergers; (2) the Company will have incurred significant transaction and other costs; (3) the Company’s continuing business relationships with partners, partner firms and employees may be adversely affected; (4) the trading price of the Class A Common Stock could be adversely affected; (5) the contractual and legal remedies available to the Company in the event of the breach or termination of the Merger Agreement may be insufficient, costly to pursue, or both; and (6) the failure of the Mergers to be consummated could result in an adverse perception among the Company’s partners, partner firms, employees and investors about the Company’s prospects.

Restrictions on Solicitation.   The Special Committee considered the following possible deterrents for third-parties in making acquisition proposals following the date of the Merger Agreement: (1) the restrictions imposed by the Merger Agreement on the Company’s solicitation of acquisition proposals from third parties after the go-shop period, and (2) CD&R’s right under the Merger Agreement to negotiate with the Company to match the terms of any Superior Proposal prior to the Company being able to terminate the Merger Agreement and accept a Superior Proposal.

Loss of Opportunity with Other Potential Counterparties.   The possibility that another potential counterparty could have submitted a final acquisition proposal with a higher offer price than $53.00 per share of Class A Common Stock if the Company did not enter into the Merger Agreement and continued the process for a strategic transaction with other potential counterparties. However, the Special Committee preserved the right for potential counterparties to continue their evaluation of the Company through the go-shop period and negotiated for a lower termination fee that could become payable by the Company if it determined to enter into an alternative acquisition agreement with respect to a Superior Proposal with a party that participated in the go-shop period.

Impact of Interim Restrictions on the Company’s Business Pending the Completion of the Mergers.    The restrictions on the conduct of the Company’s business prior to the consummation of the Mergers may delay or prevent the Company from undertaking strategic initiatives before the completion of the
 
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Mergers that, absent the Merger Agreement, the Company might have pursued, or from taking certain actions aimed at incentivizing and retaining the Company’s employees.

Effects of the Mergers Announcement.   The effects of the public announcement of the Mergers, including the: (1) effects on the Company’s employees, partners, partner firms, operating results and stock price; (2) impact on the Company’s ability to execute on strategic transactions or initiatives that the Company would otherwise pursue but for the public announcement and pendency of the Mergers; and (3) potential for litigation in connection with the Mergers.

Termination Fees Payable by the Company.   The requirement that the Company pay Parent a termination fee of $69,392,000 or $150,350,000 under certain circumstances following the termination of the Merger Agreement, including if the Company terminates the Merger Agreement to enter into an alternative acquisition agreement relating to a Superior Proposal. The Special Committee considered the potentially discouraging impact that these termination fees could have on a third party’s interest in making a competing proposal to acquire the Company, but believes that the termination fee payable by the Company in such instance was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers.

Interests of the Company’s Directors and Executive Officers.   The interests that the Company’s directors and executive officers may have in the Mergers, which may be different from, or in addition to, those of the Company’s other stockholders.

Interests of Certain Significant Stockholders in the Mergers.   Investment funds or investment vehicles managed by or affiliated with Stone Point that are current stockholders of the Company were offered the opportunity, and elected, to participate in an equity rollover in CD&R’s potential acquisition of the Company, which such option to participate was not extended to all of the Company’s stockholders. In addition, investment funds or investment vehicles managed by or affiliated with Stone Point will be offered the opportunity to provide a new equity investment in the pro forma company resulting from CD&R’s acquisition of the Company. Furthermore, members of Company management may be offered the opportunity to roll over some or all of their equity interests in the Company in CD&R’s potential acquisition, and this opportunity will not be extended to all of the Company’s stockholders. As noted in this section, stockholders who roll over their equity will be able to participate in the future growth or earnings of the post-closing company with respect to that portion of their equity that they are rolling over and/or investing in the post-closing entity. However, those stockholders elected to forgo the certain value of the Merger Consideration for such rollover equity, which value the Special Committee found compelling for the Company’s stockholders.

Cap on Parent’s Liability.   The Merger Agreement provides that the maximum aggregate liability of Parent for breaches under the Merger Agreement, the Limited Guarantees or the Equity Commitment Letters will not exceed, in the aggregate for all such breaches, the Parent Liability Limitation.
The Special Committee also considered a number of factors relating to the procedural safeguards that it believes were and are present to ensure the fairness of the Mergers and to permit the Special Committee to represent effectively the interests of the Unaffiliated Stockholders. The Special Committee believes these factors support its determination and recommendations and provide assurance of the procedural fairness of the Mergers to the Unaffiliated Stockholders:

Independence.   The Special Committee has consisted solely of independent and disinterested directors of the Board. In connection with appointing such directors to the Special Committee, the Board determined that each member on the Special Committee was independent of Company management, had no material relationship (business, familial or otherwise) with CD&R or any parties that would impair his or her ability to independently consider a potential acquisition of all of the outstanding shares of Company Common Stock (including all of the equity of Focus LLC) in a cash merger transaction (a “Potential Transaction”) and did not have a material interest in any Potential Transaction that is different from, or in addition to, the interests of the public stockholders of the Company.

Negotiating Authority.   The power and authority granted to the Special Committee by the Board to, among other things, (1) review and evaluate the terms and conditions, and to determine the advisability of, any Potential Transaction or any alternative thereto, (2) negotiate with any potential acquiror (or any other party the Special Committee deemed appropriate) with respect to the terms and conditions
 
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of any Potential Transaction or any alternative thereto and, if the Special Committee deemed appropriate, but subject to the limitations of applicable law, approve the execution and delivery of documents in connection with any Potential Transaction or any alternative transaction on behalf of the Company, (3) determine whether a Potential Transaction or any alternative thereto negotiated by the Special Committee is fair to, and in the best interests of, the Company and its stockholders (or any subset of the stockholders of the Company that the Special Committee determines to be appropriate), and (4) recommend to the full Board what action, if any, should be taken by the Board with respect to a Potential Transaction or any alternative thereto.

Active Involvement and Oversight.   The numerous meetings held by the Special Committee to discuss and evaluate, among other things, the Special Committee’s pre-signing contacts with other potential acquirors and the proposals from CD&R and the other potential buyer for the Company, and the Special Committee’s active oversight of the negotiation process. The Special Committee was actively engaged in this process on a regular basis and was provided with full access to Company management and its advisors in connection with its evaluation process.

Independent Advice.   The Special Committee selected and engaged its own independent legal and financial advisors and received the advice of such advisors throughout its review, evaluation and negotiation of a potential acquisition of the Company.

No Obligation to Recommend.   The recognition by the Special Committee that it had no obligation to recommend to the Board the approval of the Merger Agreement and the Mergers or any other transaction and had the authority to reject any proposals made. In fact, the Special Committee exercised its “power to say no” on multiple occasions in order to seek additional value from CD&R for the public stockholders of the Company.

Prior Special Committee Action.   The Board was not permitted to approve a Potential Transaction or any alternative thereto or recommend a Potential Transaction or any alternative thereto for approval by the Company’s stockholders without a prior favorable recommendation of the Potential Transaction or any alternative thereto by the Special Committee.

Stockholder Approvals.   The consummation of the Company Merger requires the affirmative vote of (1) the Majority of the Outstanding Shares and (2) the Majority of the Unaffiliated Shares.
In the course of making the decisions, determinations and recommendations described above (as applicable), the Board and the Special Committee did not consider the liquidation value of the Company because (1) they considered the Company to be a viable, going concern; (2) they believed that liquidation sales generally result in proceeds substantially less than sales of going concern; and (3) they considered determining a liquidation value to be impracticable given the significant execution risk involved in any breakup of the Company. For the foregoing reasons, the Board and the Special Committee did not consider liquidation value to be a relevant factor. Further, the Board and the Special Committee did not consider the Company’s net book value, which is an accounting concept, as a factor because they believe (x) that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and (y) net book value does not take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates or the business risks inherent in the industry. In addition, the Board and the Special Committee did not consider recent purchases of shares of Company Common Stock as the Company had not repurchased shares of Company Common Stock during the preceding two years. The Board and the Special Committee believe that the trading price of the shares of Class A Common Stock at any given time represents the best available indicator of the Company’s going concern value at that time so long as the trading price at that time is not impacted by speculation regarding the likelihood of a potential transaction. In addition, the Board and the Special Committee implicitly considered the value of the Company as a going concern by taking into account the value of the Company’s current and anticipated business, financial condition, results of operations, prospects, and other forward-looking matters.
Other than as described in this proxy statement, neither the Board nor Special Committee is aware of any firm offer by any other person during the prior two years for (1) a merger or consolidation of the Company with another company; (2) the sale or transfer of all or substantially all of the Company’s assets; or (3) a purchase of the Company’s securities that would enable such person to exercise control of the Company.
 
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The Special Committee concluded that the uncertainties, risks and potentially negative factors relevant to the Mergers were outweighed by the potential benefits of the Mergers.
Recommendation of the Board
The Board, acting upon the recommendation of the Special Committee, unanimously (1) determined that the Merger Agreement and transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, the Company and its stockholders, including the Unaffiliated Stockholders, (2) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, (3) approved the execution and delivery of the Merger Agreement by the Company and the performance by the Company of its covenants and other obligations contained therein and the consummation of the Mergers and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained therein, (4) directed that the adoption of the Merger Agreement be submitted to a vote of Company’s stockholders at a meeting of the Company’s stockholders, and (5) recommended that the stockholders of the Company vote in favor of the adoption of the Merger Agreement. The Board, by a unanimous vote of the Company’s directors, recommends that the Company’s stockholders vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.
In the course of reaching its determination and making its recommendation, the Board considered the following non-exhaustive list of material factors, which are not presented in any relative order of importance:

The Special Committee’s analysis (as to both substantive and procedural aspects of the transaction), conclusions and unanimous determination, which the Board adopted, that the Merger Agreement and related transactions contemplated thereby are fair to and in the best interests of the Company and the Unaffiliated Stockholders and the Special Committee’s unanimous recommendation that the Board approve the Merger Agreement and the transactions contemplated thereby.

The procedural fairness of the transaction, including that the transaction was negotiated by the Special Committee consisting of four directors who are independent and disinterested, that the members of the Special Committee do not have an interest in the Mergers different from, or in addition to, that of the Unaffiliated Stockholders other than their interests described in the section titled “Special Factors — Interests of Executive Officers and Directors of the Company in the Mergers,” and that the Special Committee was advised by its own independent legal and financial advisors.

The fact that the Special Committee received an opinion addressed to it from Goldman Sachs that, as of February 27, 2023, the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, which opinion was based on and subject to assumptions made, procedures followed, matters considered and limitations on the review undertaken by Goldman Sachs in connection with the preparation of its opinion as more fully described in the section titled “Special Factors — Opinion of Goldman Sachs & Co. LLC”.

The financial analysis of the Merger Consideration reviewed by Jefferies with the Special Committee as well as the opinion of Jefferies rendered to the Special Committee on February 26, 2023, to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received the by the holders of Class A Common Stock that are Unaffiliated Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as set forth in such opinion as more fully described below in the section of this proxy statement titled “Special Factors — Opinion of Jefferies LLC.

The Board’s consideration of the current, historical and projected financial condition, results of operations and business of the Company, as well as the Company’s prospects and risks if it were to remain a public company.

The fact that the Special Committee was fully empowered to review, evaluate and negotiate a potential transaction involving the acquisition by CD&R of all of the outstanding shares of Company Common Stock (including all of the equity of Focus LLC) in a cash merger transaction or any alternative to such potential transaction and to say “no” definitively to any transaction.
 
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Four members of the board, Joseph Feliciani, Jr, George S. LeMieux, Greg S. Morganroth and Elizabeth R. Neuhoff (collectively, the “Unaffiliated Directors”) are included in the defined term “Unaffiliated Stockholders”; accordingly, any shares they beneficially own will be counted toward the vote of Majority of the Unaffiliated Shares. While the Unaffiliated Directors are deemed to be “affiliates” of the Company under Rule 13e-3 of the Exchange Act and thus are not deemed to be “unaffiliated security holders” for purposes of Rule 13e-3, the Board and the Special Committee viewed the vote of Majority of the Unaffiliated Shares as a procedural safeguard of the interests of the unaffiliated security holders because they considered the interests of the Unaffiliated Directors to be entirely aligned with those of the unaffiliated security holders. Accordingly, the Board and the Special Committee considered the vote of Majority of the Unaffiliated Shares as a factor in support of their determination that the Mergers are fair to the Company’s unaffiliated security holders.
The Board concluded that the uncertainties, risks and potentially negative factors relevant to the Mergers were outweighed by the potential benefits of the Mergers.
In addition, the Special Committee and the Board were aware of and considered the interests that the Company’s directors and executive officers may have with respect to the Mergers that may differ from, or are in addition to, their interests as stockholders of the Company generally, as described in the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Mergers.
This discussion of the information and factors considered by the Special Committee and the Board includes the material positive and negative factors considered by the Special Committee and the Board, but it is not intended to be exhaustive and may not include all the factors considered by the Special Committee or the Board. Neither the Special Committee nor the Board quantified or assigned any relative or specific weights to the various factors that it considered in reaching its determination to approve the Merger Agreement and the transactions contemplated thereby. Rather, the Special Committee and the Board each viewed its position and recommendation as being based on the totality of the information presented to and factors considered by it. In addition, individual members of the Special Committee and the Board may have given differing weights to different factors. This explanation of the reasoning of the Special Committee and the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section of this proxy statement entitled “Cautionary Statement Concerning Forward-Looking Information.”
Position of the Parent Entities as to the Fairness of the Mergers
Position of the CD&R Entities as to the Fairness of the Company Merger
Under a possible interpretation of the SEC rules governing Rule 13e-3 “going-private” transactions, each of the CD&R Entities may be deemed to be affiliates of the Company and, therefore, required to express their beliefs as to the fairness of the Company Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The Company Merger is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement has been filed with the SEC. The CD&R Entities are making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. The views of the CD&R Entities as to the fairness of the Company Merger should not be construed as a recommendation to any stockholder of the Company as to how that stockholder should vote on the Merger Agreement Proposal.
The CD&R Entities did not participate in the deliberations of the Special Committee or the Board regarding, nor receive advice from the respective legal, financial or other advisors of the Special Committee or the Board as to, the fairness of the Company Merger. The CD&R Entities have not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the Company Merger to the Unaffiliated Stockholders. No CD&R Entity received any report, opinion or appraisal from any outside party materially related to the Merger Consideration or the fairness of the Merger Consideration or Mergers to the Unaffiliated Stockholders or the Existing Stockholders. Based on, among other things, the factors considered by, and the analysis and resulting conclusions of, the Special Committee and the Board discussed in the section of this proxy statement entitled “Special Factors — Reasons for the
 
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Company Merger; Recommendation of the Board; Fairness of the Company Merger” ​(which analysis and resulting conclusions the CD&R Entities adopt), the CD&R Entities believe that the Company Merger is substantively fair to the Unaffiliated Stockholders. In particular, the CD&R Entities considered the following factors:

the fact that the Merger Consideration represents an approximately 36% premium to the Company’s 60-day volume weighted average price for the Class A Common Stock as of the close on February 1, 2023 (the last trading day prior to the Company’s announcement that it had entered into exclusivity with CD&R) and an approximately 48% premium to the closing price of the Company’s Class A Common Stock on December 28, 2022 (the day the Special Committee specifically authorized its financial advisors to broaden their outreach contact other specified potential bidders regarding a potential acquisition of the Company);

the fact that the Special Committee, comprised solely of disinterested and independent members of the Board, unanimously recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers;

the fact that the Board, acting on the recommendation of the Special Committee, unanimously recommended that the stockholders of the Company vote in favor of adoption of the Merger Agreement;

the fact that the Merger Consideration is all cash, thus allowing the Unaffiliated Stockholders to immediately realize a certain and fair value for their shares and, as a result, to no longer be exposed to the various risks and uncertainties related to continued ownership of the Company Common Stock, which include, among others, the following:

the volatility in the stock price of the Class A Common Stock due to general market volatility and global economic uncertainty;

the decline in the stock price of the Class A Common Stock due to failures of the Company to meet its guidance on operating and financial performance and the expectations of its investors and analysts;

the absence of any current plans by the Company to pay dividends on the Class A Common Stock, meaning that the appreciation in the price of Class A Common Stock is the only opportunity for holders of the Class A Common Stock to achieve a return on their investment; and

future sales or issuances of Class A Common Stock in the public market, which could lead to further reductions in the stock price or a dilution of ownership interests in the Company.

the fact that the Mergers will provide liquidity for the Unaffiliated Stockholders without the delays that would otherwise be necessary in order to liquidate the positions of larger holders, and without incurring brokerage and other costs typically associated with market sales; and

the fact that there are no conditions to the Mergers that are unlikely to be satisfied and that the Mergers are not conditioned on any financing being obtained by Parent, increasing the likelihood that the Mergers will be consummated and that the Merger Consideration to be paid to the Unaffiliated Stockholders in the Mergers will be received.
The CD&R Entities further believe that the Company Merger is procedurally fair to the Unaffiliated Stockholders based upon, among other things, the following factors:

notwithstanding that the opinions of Jefferies and Goldman Sachs were provided solely for the information and assistance of the Special Committee and none of the CD&R Entities are entitled to, and did not, rely on such opinions, the fact that the Special Committee received opinions from Jefferies and Goldman Sachs, regarding the fairness of the Merger Consideration to the Unaffiliated Stockholders;

the fact that the Special Committee was fully informed about the extent to which the interests of the Trident Entities in the Mergers differed from those of the Unaffiliated Stockholders;
 
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the fact that the Special Committee retained, and had the benefit of advice from, independent and nationally recognized legal and financial advisors;

the fact that the Merger Consideration was the result of the Special Committee’s extensive arm’s-length negotiations with CD&R;

the fact that the Special Committee had no obligation to recommend any transaction, including a transaction with Parent, and that the Special Committee had the authority to reject any proposals made by Parent or any other person;

the fact that the closing of the Mergers is conditioned on the Company’s receipt of the Requisite Company Stockholder Approvals, including the adoption of the Merger Agreement by the affirmative vote of the Majority of the Unaffiliated Shares;

the Company’s ability during the go-shop period to solicit, initiate, propose, induce, encourage or facilitate the making, submission or announcement of, or knowingly encourage, facilitate or assist, any discussion, proposal or inquiry that constitutes, could constitute or is reasonably expected to lead to, an Acquisition Proposal, furnish any non-public information relating to the Company and its subsidiaries or afford to any such third parties access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company and its subsidiaries and continue, enter into, maintain, participate or engage in discussions or negotiations with any third parties with respect to an Acquisition Proposal, and cooperate with or assist or participate in or facilitate any such proposals, inquiries, offers discussions or negotiations or any effort or attempt to make any Acquisition Proposal;

the Company’s ability, at any time from and after the end of the go-shop period, to provide information to, and engage or participate in any discussions or negotiations with, the person or parties making such a proposal, if the Board, upon recommendation of the Special Committee, or the Special Committee determines in good faith based on the information then available and after consultation with its financial advisor and outside legal counsel that such Acquisition Proposal either constitutes or is reasonably likely to result in a Superior Proposal and that the failure to take such actions would reasonably be expected to be inconsistent with its fiduciary duties under applicable law;

the Company’s ability, under certain circumstances as set out in the Merger Agreement, to terminate the Merger Agreement to enter into an alternative acquisition agreement related to a Superior Proposal, subject to paying Parent a termination fee of $150,350,000 (or $69,392,000, if the Company terminated the Merger Agreement to enter into an alternative acquisition agreement relating to a Superior Proposal with an Excluded Party prior to the Cut-Off Time or any Person prior to the No-Shop Period Start Date), subject to and in accordance with the terms and conditions of the Merger Agreement; and

the availability of appraisal rights to the Company’s stockholders who comply with all of the required procedures under DGCL for exercising appraisal rights, which allow such stockholders to seek appraisal of the fair value of their shares.
The CD&R Entities also considered a variety of risks and other countervailing factors related to the substantive and procedural fairness of the Company Merger, including the following factors:

the fact that (i) the Unaffiliated Stockholders will not participate in any future earnings, appreciation in value or growth of the Company’s business and will not benefit from any potential sale of the Company or its assets to a third party in the future; (ii) the risk that the Mergers might not be completed in a timely manner or at all; and (iii) the fact that Parent and Merger Subs are newly formed entities with essentially no assets other than (1) the funding commitments of CD&R Fund XII and the Trident Guarantors and (2) the rollover commitments of the Rollover Stockholders;

the restrictions on the conduct of the Company’s business prior to the completion of the Mergers set forth in the Merger Agreement, which may delay or prevent the Company from undertaking business opportunities that may arise and certain other actions it might otherwise take with respect to the operations of the Company pending completion of the Mergers;

the negative effect that the pendency of the Mergers, or a failure to complete the Mergers, could potentially have on the Company’s business and relationships with its partner firms and the principals
 
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who manage their businesses, including retaining and hiring key personnel and maintaining partner firm clients and others with whom the Company and its partner firms do business;

subject to the terms and conditions of the Merger Agreement, following the expiration of the go-shop period, the Company and its subsidiaries are restricted from soliciting, initiating, proposing, inducing, encouraging or facilitating the making, submission or announcement of an Acquisition Proposal or knowingly encouraging, facilitating or assisting, any discussion, proposal or inquiry that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal; and

the possibility that the amounts that may be payable by the Company upon the termination of the Merger Agreement, including payment to Parent of a termination fee of $150,350,000 (or $69,392,000, if the Company terminated the Merger Agreement to enter into an alternative acquisition agreement relating to a Superior Proposal with an Excluded Party prior to the Cut-Off Time or any Person prior to the No-Shop Period Start Date), subject to and in accordance with the terms and conditions of the Merger Agreement, and the processes required to terminate the Merger Agreement, including the opportunity for CD&R to make revisions to its Merger proposal, could discourage other potential acquirors from making a competing bid to acquire the Company.
The foregoing discussion of the information and factors considered and given weight by the CD&R Entities in connection with the fairness of the Company Merger are not intended to be exhaustive but is believed to include all material factors considered by them. The CD&R Entities did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their conclusion as to the fairness of the Company Merger. Rather, the CD&R Entities reached their position as to the fairness of the Company Merger after considering all of the foregoing as a whole. The CD&R Entities believe these factors provide a reasonable basis upon which to form their position regarding the fairness of the Company Merger to the Unaffiliated Stockholders. This position should not, however, be construed as a recommendation to any stockholder of the Company to approve the Merger Agreement. The CD&R Entities make no recommendation as to how stockholders of the Company should vote their shares relating to the Company Merger. The CD&R Entities attempted to negotiate the terms of a transaction that would be most favorable to them, and not to the Unaffiliated Stockholders, and, accordingly, did not negotiate the Merger Agreement with a goal of obtaining terms that were fair to such stockholders.
Based on the CD&R Entities’ knowledge and analysis of available information regarding the Company, the Special Committee and the Board, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Special Committee and the Board and discussed in the section of this proxy statement entitled “Special Factors — Reasons for the Mergers; Recommendation of the Board; Fairness of the Mergers,” the CD&R Entities believe that the Company Merger is fair to the Unaffiliated Stockholders.
Position of the Trident Entities as to the Fairness of the Company Merger
Under the SEC rules governing Rule 13e-3 “going private” transactions, each of the Trident Entities may be deemed to be affiliates of the Company and, therefore, required to express their beliefs as to the fairness of the Company Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The Company Merger is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement has been filed with the SEC. The Trident Entities are making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. The views of the Trident Entities as to the fairness of the Company Merger should not be construed as a recommendation to any stockholder of the Company as to how that stockholder should vote on the Merger Agreement Proposal.
The Trident Entities did not participate in the deliberations of the Special Committee regarding, nor receive advice from the respective legal, financial or other advisors of the Special Committee as to, the fairness of the Company Merger. The Trident Entities have not performed, or engaged a financial advisor to perform, any financial or other analysis for the purposes of assessing the fairness of the Company Merger to the Unaffiliated Stockholders. No Trident Entity received any report, opinion or appraisal from any outside party materially related to the Merger Consideration or the fairness of the Merger Consideration or Company Merger to the Unaffiliated Stockholders or the Existing Stockholders.
 
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The Trident Entities have interests in the Company Merger that are different from, and in addition to, the Unaffiliated Stockholders of the Company. The Special Committee negotiated the terms and conditions of the Company Merger and the Merger Agreement on behalf of the Company, with the assistance of the Special Committee’s respective legal, financial or other advisors. The Special Committee, comprised solely of disinterested and independent members of the Board, unanimously recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Company Merger, and that, subject to Board approval, the Board recommend that the stockholders of the Company vote in favor of adoption of the Merger Agreement. The Board, acting on the recommendation of the Special Committee, unanimously recommended that the stockholders of the Company vote in favor of adoption of the Merger Agreement.
Based on, among other things, the factors considered by, and the analysis and resulting conclusions of, the Special Committee and the Board discussed in the section of this proxy statement entitled “Special Factors — Reasons for the Company Merger; Recommendation of the Board; Fairness of the Company Merger” (which analysis and resulting conclusions the Trident Entities agree with and adopt), the Trident Entities believe that the Company Merger is substantively fair to the Unaffiliated Stockholders. In particular, the Trident Entities considered the following factors:

the fact that the Merger Consideration represents an approximately 36% premium to the Company’s 60-day volume weighted average price for the Class A Common Stock as of the close on February 1, 2023 (the last trading day prior to the Company’s announcement that it has entered into exclusivity with CD&R) and an approximately 48% premium to the closing price of the Company’s Class A Common Stock on December 28, 2022 (the day the Special Committee specifically authorized its financial advisors to broaden their outreach and to contact other specified potential bidders regarding a potential acquisition of the Company);

the fact that the Special Committee, comprised solely of disinterested and independent members of the Board, unanimously recommended that the Board approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers;

the fact that the Board, acting on the recommendation of the Special Committee, unanimously recommended that the stockholders of the Company vote in favor of adoption of the Merger Agreement

the fact that the Merger Consideration is all cash, thus allowing the Unaffiliated Stockholders to immediately realize a certain and fair value for their shares and, as a result, to no longer be exposed to the various risks and uncertainties related to continued ownership of the Company Common Stock, which include, among others, the following:

the volatility in the stock price of the Class A Common Stock due to general market volatility and global economic uncertainty;

the decline in the stock price of the Class A Common Stock due to failures of the Company to meet its guidance on operating and financial performance and the expectations of its investors and analysts;

the absence of any current plans by the Company to pay dividends on the Class A Common Stock, meaning that the appreciation in the price of Class A Common Stock is the only opportunity for holders of the Class A Common Stock to achieve a return on their investment; and

future sales or issuances of Class A Common Stock in the public market, which could lead to further reductions in the stock price or a dilution of ownership interests in the Company.

the fact that the Mergers will provide liquidity for the Unaffiliated Stockholders without the delays that would otherwise be necessary in order to liquidate the positions of larger holders and without incurring brokerage and other costs typically associated with market sales; and

the fact that there are no conditions to the Mergers that are unlikely to be satisfied and that the Mergers are not conditioned on any financing being obtained by Parent, increasing the likelihood that the
 
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Mergers will be consummated and that the Merger Consideration to be paid to the Unaffiliated Stockholders in the Mergers will be received.
The Trident Entities further believe that the Company Merger is procedurally fair to the Unaffiliated Stockholders based upon, among other things, the following factors:

notwithstanding that the opinions of Jefferies and Goldman Sachs were provided solely for the information and assistance of the Special Committee and none of the Trident Entities are entitled to, and did not, rely on such opinions, the fact that the Special Committee received opinions from Jefferies and Goldman Sachs, regarding the fairness of the Merger Consideration to the Unaffiliated Stockholders;

the fact that the Board formed the Special Committee comprised solely of disinterested and independent members of the Board and, other than their other interests described in the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Mergers”;

the fact that the Special Committee was fully informed about the extent to which the interests of the Trident Entities in the Mergers differed from those of the Unaffiliated Stockholders;

the fact that the Special Committee retained, and had the benefit of advice from, independent and nationally recognized legal and financial advisors;

the fact that the Merger Consideration was the result of the Special Committee’s extensive arm’s-length negotiations with CD&R;

the fact that the Special Committee had no obligation to recommend any transaction, including a transaction with CD&R, and that the Special Committee had the authority to reject any proposals made by CD&R or any other person;

the fact that the closing of the Mergers is conditioned on the Company’s receipt of the Requisite Company Stockholder Approvals, including the adoption of the Merger Agreement by the affirmative vote of the Majority of the Unaffiliated Shares;

the Company’s ability during the go-shop period to solicit, initiate, propose, induce, encourage or facilitate the making, submission or announcement of, or knowingly encourage, facilitate or assist, any discussion, proposal or inquiry that constitutes, could constitute or is reasonably expected to lead to, an Acquisition Proposal, furnish any non-public information relating to the Company and its subsidiaries or afford to any such third parties access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company and its subsidiaries, continue, enter into, maintain, participate or engage in discussions or negotiations with any third parties with respect to an Acquisition Proposal, and cooperate with or assist or participate in or facilitate any such proposals, inquiries, offers discussions or negotiations or any effort or attempt to make any Acquisition Proposal;

the Company’s ability, at any time from and after the end of the go-shop period, to provide information to, and engage or participate in any discussions or negotiations with, the person or parties making such a proposal, if the Board, upon recommendation of the Special Committee, or the Special Committee determines in good faith based on the information then available and after consultation with its financial advisor and outside legal counsel that such Acquisition Proposal either constitutes or is reasonably likely to result in a Superior Proposal and that the failure to take such actions would reasonably be expected to be inconsistent with its fiduciary duties under applicable law;

the Company’s ability, under certain circumstances as set out in the Merger Agreement, to terminate the Merger Agreement to enter into an alternative acquisition agreement related to a Superior Proposal, subject to paying Parent a termination fee of $150,350,000 (or $69,392,000, if the Company terminated the Merger Agreement to enter into an alternative acquisition agreement relating a Superior Proposal with an Excluded Party prior to the Cut-Off Time or any Person prior to the No-Shop Period Start Date), subject to and in accordance with the terms and conditions of the Merger Agreement; and

the availability of appraisal rights to the Company’s stockholders who comply with all of the required procedures under the DGCL for exercising appraisal rights, which allow such stockholders to seek appraisal of the fair value of their shares.
 
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The Trident Entities also considered a variety of risks and other countervailing factors related to the substantive and procedural fairness of the Company Merger, including the following factors:

the fact that (i) the Unaffiliated Stockholders will not participate in any future earnings, appreciation in value or growth of the Company’s business and will not benefit from any potential sale of the Company or its assets to a third party in the future; (ii) the risk that the Mergers might not be completed in a timely manner or at all; and (iii) the fact that Parent and Merger Subs are newly formed entities with essentially no assets other than (1) the funding commitments of CD&R Fund XII and the Trident Guarantors and (2) the rollover commitments of the Rollover Stockholders;

the restrictions on the conduct of the Company’s business prior to the completion of the Mergers set forth in the Merger Agreement, which may delay or prevent the Company from undertaking business opportunities that may arise and certain other actions it might otherwise take with respect to the operations of the Company pending completion of the Mergers;

the negative effect that the pendency of the Mergers, or a failure to complete the Mergers, could potentially have on the Company’s business and relationships with its partner firms and the principals who manage their businesses, including retaining and hiring key personnel and maintaining partner firm clients and others with whom the Company and its partner firms do business;

subject to the terms and conditions of the Merger Agreement, following the expiration of the go-shop period, the Company and its subsidiaries are restricted from soliciting, initiating, proposing, inducing, encouraging or facilitating the making, submission or announcement of an Acquisition Proposal or knowingly encouraging, facilitating or assisting, any discussion, proposal or inquiry that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal; and

the possibility that the amounts that may be payable by the Company upon the termination of the Merger Agreement, including payment to Parent of a termination fee of $150,350,000 (or $69,392,000, if the Company terminated the Merger Agreement to enter into an alternative acquisition agreement relating a Superior Proposal with an Excluded Party prior to the Cut-Off Time or any Person prior to the No-Shop Period Start Date), subject to and in accordance with the terms and conditions of the Merger Agreement, and the processes required to terminate the Merger Agreement, including the opportunity for CD&R to make revisions to its Merger proposal, could discourage other potential acquirors from making a competing bid to acquire the Company.
The foregoing discussion of the information and factors considered and given weight by the Trident Entities in connection with the fairness of the Company Merger are not intended to be exhaustive but is believed to include all material factors considered by them. The Trident Entities did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their conclusion as to the fairness of the Company Merger. Rather, the Trident Entities reached their position as to the fairness of the Company Merger after considering all of the foregoing as a whole. The Trident Entities believe these factors provide a reasonable basis upon which to form their position regarding the fairness of the Company Merger to the Unaffiliated Stockholders. This position should not, however, be construed as a recommendation to any stockholder of the Company to approve the Merger Agreement. The Trident Entities make no recommendation as to how stockholders of the Company should vote their shares relating to the Company Merger.
Based on the Trident Entities’ knowledge and analysis of available information regarding the Company, the Special Committee and the Board, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Special Committee and the Board and discussed in the section of this proxy statement entitled “Special Factors — Reasons for the Company Merger; Recommendation of the Board; Fairness of the Company Merger,” the Trident Entities believe that the Company Merger is fair to the Unaffiliated Stockholders.
Opinion of Goldman Sachs & Co. LLC
At a meeting of the Special Committee on February 26, 2023, Goldman Sachs rendered to the Special Committee its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated February 27, 2023, that as of the date of such opinion and based upon and subject to the factors and
 
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assumptions set forth therein, the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated February 27, 2023, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Special Committee in connection with its consideration of the Mergers. Goldman Sachs’ opinion is not a recommendation as to how any holder of Class A Common Stock should vote with respect to the Mergers, or any other matter.
In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

the Merger Agreement;

annual reports to stockholders and Annual Reports on Form 10-K of the Company for the five years ended December 31, 2018, 2019, 2020, 2021 and 2022;

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company;

certain publicly available research analyst reports for the Company;

certain other communications from the Company to its stockholders;

the November 28 Forecasts, as approved for Goldman Sachs’ use by the Special Committee, which together with the Tax Receivable Projections and the Tax Amortization Projections are referred to as the “Projections” ​(as defined in the section titled “Special Factors — Unaudited Prospective Financial Information of the Company”);

certain tax receivable benefits and payments projections for the Company prepared by its management, as approved for Goldman Sachs’ use by the Special Committee, which are referred to as the Tax Receivable Projections; and

certain tax amortization benefits projections for the Company prepared by its management, as approved for Goldman Sachs’ use by the Special Committee, which are referred to as the Tax Amortization Projections.
Goldman Sachs also held discussions with members of the senior management of the Company regarding their assessment of the past and current business operations, financial condition, and future prospects of the Company; reviewed the reported price and trading activity for the Class A Common Stock; compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.
For purposes of rendering its opinion, Goldman Sachs, with the Special Committee’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the Special Committee’s consent that the Projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or any of its subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Mergers will be obtained without any adverse effect on the expected benefits of the Mergers in any way meaningful to its analysis. Goldman Sachs also assumed that the Mergers will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.
Goldman Sachs’ opinion does not address the underlying business decision of the Company to engage in the transactions contemplated by the Merger Agreement or the relative merits of the transactions contemplated by the Merger Agreement as compared to any strategic alternatives that may be available to the
 
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Company, including a proposal made by a third party at a higher price in cash per share of Class A Common Stock than in the transactions contemplated by the Merger Agreement, which proposal the Special Committee advised Goldman Sachs that the Special Committee determined not to pursue prior to the execution of the Merger Agreement; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the Unaffiliated Stockholders, as of the date of the opinion, of the Merger Consideration to be paid to such holders in the Company Merger pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement, the Focus LLC Agreement, the Tax Receivable Agreements, the TRA Waiver and Exchange Agreements or the transactions contemplated by the Merger Agreement or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement, the Focus LLC Agreement, the Tax Receivable Agreements, the TRA Waiver and Exchange Agreements or entered into or amended in connection with the transactions contemplated by the Merger Agreement, any payment pursuant to the Merger Agreement, the Focus LLC Agreement, the Tax Receivable Agreements or the TRA Waiver and Exchange Agreements (other than the payment of the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger, the extent contemplated in Goldman Sachs’ opinion), the fairness of the transactions contemplated by the Merger Agreement, or any consideration received in connection therewith by, the holders of the Class B Common Stock, the holders of any other class of securities, creditors, or other constituencies of the Company or the cancellation of the shares of Class B Common Stock; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or class of such persons in connection with the transactions contemplated by the Merger Agreement, whether relative to the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement or otherwise. Goldman Sachs’ opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of the date of its opinion and Goldman Sachs assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs does not express any opinion as to the prices at which shares of Class A Common Stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on the Company or Parent or the transactions contemplated by the Merger Agreement, or as to the impact of the transactions contemplated by the Merger Agreement on the solvency or viability of the Company or Parent or the ability of the Company or Parent to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.
Summary of Financial Analyses
The following is a summary of the financial analyses delivered by Goldman Sachs to the Special Committee in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 24, 2023, the last trading day before the public announcement of the Mergers, and is not necessarily indicative of current market conditions.
Historical Stock Trading Analysis.   Goldman Sachs reviewed the historical trading prices and volumes for the Class A Common Stock for the period commencing on the initial public offering of the Company and ending on February 24, 2023.
Goldman Sachs analyzed the consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement in relation to (i) the closing price per share of Class A Common Stock on February 1, 2023, the last trading day prior to Company’s announcement that it had entered into exclusivity with CD&R, (ii) the closing price per share of Class A Common Stock on September 14, 2022, the last trading day before CD&R submitted its first written indication of interest, (iii) the closing price per share of Class A Common Stock on November 1, 2022, the day on which the Special Committee was formed, (iv) the closing price per share of Class A Common Stock on December 28, 2022, the day the Special
 
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Committee specifically authorized the Special Committee Financial Advisors to contact other specified potential bidders regarding a potential acquisition of the Company, (v) the volume-weighted average price (“VWAP”) per share of Class A Common Stock for the preceding 30-trading day period ended February 1, 2023, (vi) the VWAP per share of Class A Common Stock for the preceding 60-trading day period ended February 1, 2023, (vii) the VWAP per share of Class A Common Stock for the preceding 90-trading day period ended February 1, 2023, (viii) the high closing price per share of Class A Common Stock for the 52-week period ended February 1, 2023 and (ix) the low closing price per share of Class A Common Stock for the 52-week period ended February 1, 2023.
This analysis indicated that the price per share to be paid to the Unaffiliated Stockholders holders pursuant to the Merger Agreement represented:

a premium of 14.5% based on the closing price per share of Class A Common Stock on February 1, 2023, the last trading day prior to the Company’s announcement that it had entered into exclusivity with CD&R was announced of $46.27 per share;

a premium of 40.0% based on the closing price per share of Class A Common Stock on September 14, 2022, the last trading day before CD&R submitted its first written indication of interest of $37.87 per share;

a premium of 51.5% based on the closing price per share of Class A Common Stock on November 1, 2022, the last day on which the Special Committee was formed of $34.98 per share;

a premium of 48.0% based on the closing price per share of Class A Common Stock on December 28, 2022, the day the Special Committee specifically authorized the Special Committee Financial Advisors to contact other specified potential bidders for a potential acquisition of the Company of $35.81 per share;

a premium of 29.0% to the VWAP per share of Class A Common Stock for the preceding 30-trading day period ended February 1, 2023 of $41.09 per share;

a premium of 35.8% to the VWAP per share of Class A Common Stock for the preceding 60-trading day period ended February 1, 2023 of $39.04 per share;

a premium of 44.1% to the VWAP per share of Class A Common Stock for the preceding 90-trading day period ended February 1, 2023 of $36.78 per share;

a discount of 2.2% to the 52-week high closing price per share of Class A Common Stock for the period ended February 1, 2023 of $54.20 per share; and

a premium of 72.9% to the 52-week low closing price per share of Class A Common Stock for the period ended February 1, 2023 of $30.65 per share.
Illustrative Discounted Cash Flow Analysis.   Using the Projections, Goldman Sachs performed an illustrative discounted cash flow analysis of the Company to derive a range of illustrative present values per share of Class A Common Stock. Using the mid-year convention for discounting cash flows and discount rates ranging from 9.00% to 11.25%, reflecting estimates of the Company’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2022 (i) estimates of Unlevered Free Cash Flows for the Company for the fiscal years 2023 through 2027 as reflected in the Projections, (ii) a range of illustrative terminal values for the Company, which were calculated by applying terminal year exit price-to-earnings (“P/E”) multiples ranging from 8.5x to 10.5x, to 2027E Adjusted Net Income to be generated by the Company, as reflected in the Projections, and added terminal year net debt to derive a range of terminal year enterprise values, and (iii) the projected purchased intangible amortization and associated cash tax benefit for the Company as reflected in the Projections. The range of terminal year P/E exit multiples was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account historical trading multiples of the Company. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including the Company’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the Company’s, as well as certain financial metrics for the United States financial markets generally.
 
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Goldman Sachs derived ranges of illustrative enterprise values for the Company as described above and then subtracted the Company’s net debt, certain contingent and deferred consideration, and added the amount of certain of the Company’s investments and the benefit to the Company under the Tax Receivable Agreements, in each case, as provided by the management of the Company and approved for Goldman Sachs’ use by the Special Committee, to derive a range of illustrative equity values for the Company. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of the Company, as provided by the management of the Company and approved for Goldman Sachs’ use by the Special Committee, using the treasury stock method, to derive a range of illustrative present values per share ranging from $40.76 to $63.12.
Illustrative Present Value of Future Share Price Analysis.   Using the Projections, Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of Class A Common Stock. Goldman Sachs derived a range of theoretical future values per share of Class A Common Stock for the Company as of December 31, for each of the years 2023 through 2025 by applying illustrative next twelve months’ (“NTM”) P/E multiples ranging from 8.0x to 10.0x to estimates of the Company’s earnings per share for each of the years 2024 through 2026. This illustrative range of NTM P/E multiple estimates was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical NTM P/E multiples for the Company.
Goldman Sachs then discounted these implied future equity values per share of Class A Common Stock to December 31, 2022, using an illustrative discount rate of 13.7%, reflecting an estimate of the Company’s cost of equity. Goldman Sachs derived such discount rate by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied present values of $36.02 to $59.09 per share of Class A Common Stock.
Premia Paid Analysis.   For reference purposes only, Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash acquisition transactions announced from 2018 through 2022 involving a public company based in the United States as the target where the disclosed enterprise values for the transaction were between $3 billion and $8 billion. For the entire period, using publicly available information, Goldman Sachs calculated the mean, median, 25th percentile and 75th percentile premiums of the price paid in the selected transactions relative to the target’s last closing stock price at each of the 1-day, 30-day and the 52-week high prior to announcement of the transaction. The following shows a summary of the results of the review:
Entire Period
Premium
to 1-Day
Premium
to 30-Day
Premium/(Discount)
to 52-Week High
25th Percentile
10% 21% (4)%
75th Percentile
51% 52% 21%
Median
18% 33% 7%
Mean
31% 41% 7%
Based on its review of the foregoing data and its professional judgment and experience, Goldman Sachs applied a reference range of illustrative premia of 21%-52% (based on 25th and 75th percentiles of the premia paid in acquisitions announced over the entire period relative to the target company’s share price as of 30 days prior to the original announcement of the transaction) to the closing price per share of Class A Common Stock as of February 1, 2023. This analysis resulted in a range of implied equity values per share of Class A Common Stock of $44.95 to $56.49.
52-Week Trading Range.   For reference purposes only, Goldman Sachs reviewed the 52-week trading range of the Company’s Class A Common Stock based upon market data for the period ending February 1, 2023, which indicated low to high closing prices per share of Class A Common Stock during such period of $30.65 to $54.20.
Analyst Price Targets.   For reference purposes only, Goldman Sachs reviewed the price targets for Class A Common Stock reflected in eight recently published publicly available Wall Street research analyst reports as of February 1, 2023, which indicated low to high price targets per share of Class A Common Stock of $41.00 to $52.00.
 
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Selected Valuation Levels for Public Comparables.   For reference purposes only, Goldman Sachs reviewed and compared certain financial information, ratios and public market multiples for the following publicly traded corporations in the wealth management industry, which we refer to in this section of the proxy statement as the “Selected Companies”:

Brokerage / Wealth

Ameriprise Financial, Inc. U.S.

Raymond James Financial, Inc.

LPL Financial Holdings, Inc.

Stifel Financial Corp.

Avantax, Inc.

Discount Brokers

Charles Schwab & Co., Inc.

Tech Enabled Wealth

Assetmark, Inc.
Although none of the Selected Companies is directly comparable to the Company, the Selected Companies included were chosen because they are publicly traded companies in the wealth management industry with operations that, for purposes of analysis, may be considered similar to certain operations of the Company.
Goldman Sachs also calculated and compared various financial multiples and ratios based on financial and trading data as of February 24, 2023, using information Goldman Sachs obtained from public filings and Institutional Brokers’ Estimate System estimate. With respect the selected companies, Goldman Sachs calculated among other metrics:

P/E multiples for fiscal years 2023 and 2024; and

multiples of enterprise value (“EV”) to estimated EBITDA for fiscal years 2023 and 2024;
The results of these calculations are summarized as follows:
Selected Companies
Price / Earnings Multiple
EV / EBITDA Multiple
2023E
2024E
2023E
2024E
Median – Brokerage / Wealth
10.8x 10.7x 8.2x 7.9x
Median – Discount Brokers
17.4 14.1 12.7 11.4
Median – Tech Enabled Wealth
13.6 12.7 9.3 8.6
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Company or Parent or the contemplated transaction.
Goldman Sachs prepared these analyses for purposes of providing its opinion to the Special Committee as to the fairness from a financial point of view of the Merger Consideration to be paid to the Unaffiliated Stockholders in the Company Merger pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the
 
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parties or their respective advisors, none of the Company, Parent, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.
The Merger Consideration was determined through arm’s-length negotiations between the Special Committee and CD&R. Goldman Sachs provided advice to the Special Committee during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to the Special Committee or that any specific amount of consideration constituted the only appropriate consideration for the Mergers.
As described above, Goldman Sachs’ opinion to the Special Committee was one of many factors taken into consideration by the Special Committee in making its determinations and recommendations with respect to the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Company Merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.
Goldman Sachs and its affiliates are engaged in advisory, underwriting, lending and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Parent, any of their respective affiliates and third parties, including CD&R, and any of its respective affiliates and portfolio companies, Stone Point, affiliates of which are significant stockholders of the Company, affiliates of Ruediger Adolf, a significant stockholder of the Company, and affiliates of Rajini Kodialam, a significant stockholder of the Company, or any of their respective affiliates and, as applicable, portfolio companies or any currency or commodity that may be involved in the transactions contemplated by the Merger Agreement. Goldman Sachs acted as a financial advisor to the Special Committee in connection with, and participated in certain of the negotiations leading to, the transactions contemplated by the Merger Agreement. Goldman Sachs has provided certain financial advisory and/or underwriting services to the Company and/or its affiliates from time to time for which Goldman Sachs Investment Banking has received, and may receive, compensation, including having acted as bookrunner with respect to a follow-on public offering of Class A Common Stock in February 2021; as bookrunner with respect to a follow-on public offering of Class A Common Stock in December 2021; and as a participant in the Company’s revolving credit facility as of November 2022. During the two-year period ended February 27, 2023, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by Goldman Sachs Investment Banking to the Company and/or its affiliates of approximately $5 million, as determined by Goldman Sachs based on its books and records. Goldman Sachs also has provided certain financial advisory and/or underwriting services to CD&R and/or its affiliates and portfolio companies from time to time for which Goldman Sachs Investment Banking has received, and may receive, compensation, including having acted as financial advisor to Beacon Roofing Supply, Inc., a portfolio company of funds associated with CD&R, with respect to the sale of its interiors business in February 2021; as bookrunner with respect to the initial public offering of common stock of Agilon Health, Inc., a portfolio company of funds associated with CD&R, in April 2021, and with respect to the follow-on public offering in September 2021; as bookrunner with respect to the initial public offering of common stock of Core & Main LP, a portfolio company of funds associated with CD&R, in July 2021, and with respect to the follow-on public offering in January 2022; as financial advisor to Clayton Dubilier and Rice (UK), an affiliate of CD&R, with respect to its acquisition of Wm Morrison Supermarkets plc in October 2021; as bookrunner with respect to a U.S. Dollar first-lien term and a Euro first-lien term loan to Fort Dearborn Company, a portfolio company of funds associated with CD&R, in October 2021; and as financial advisor to CD&R with respect to its acquisition of Cornerstone Building Brands, Inc. in July 2022. During the two-year period ended February 27, 2023, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by Goldman Sachs Investment Banking to CD&R and/or its affiliates and portfolio companies of approximately $114 million, as determined by Goldman Sachs based on its books and records. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Stone Point and/or its affiliates and portfolio companies from time to time for which Goldman Sachs Investment Banking has received, and may receive, compensation, including having acted as bookrunner with respect to a follow-on public offering of common stock of Broadstone Net Lease LLC (“Broadstone”), a portfolio company of funds associated with Stone Point, in
 
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June 2021; as bookrunner with respect to the issuance of investment grade notes of Broadstone in September 2021; as bookrunner with respect to the initial public offering of HireRight Inc., a portfolio company of funds associated with Stone Point, in October 2021; as bookrunner with respect to a follow-on public offering of common stock of Broadstone in August 2022; as financial advisor to a consortium co-led by Stone Point, with respect to the consortium’s pending acquisition of TIAA Bank, announced in November 2022; and as bookrunner with respect to term loans to Alliant Holdings Intermediate, LLC, a portfolio company of funds associated with Stone Point, in February 2023. During the two-year period ended February 27, 2023, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by Goldman Sachs Investment Banking to Stone Point and/or its affiliates and portfolio companies of approximately $48 million, as determined by Goldman Sachs based on its books and records. During the two-year period ended February 27, 2023, Goldman Sachs has not been engaged by Ruediger Adolf or his affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. During the two-year period ended February 27, 2023, Goldman Sachs has not been engaged by Rajini Kodialam or her affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to the Company, Parent, CD&R, Stone Point, Ruediger Adolf, Rajini Kodialam, and their respective affiliates and/or as applicable, portfolio companies, for which Goldman Sachs Investment Banking may receive compensation. Affiliates of Goldman Sachs also may have co-invested with CD&R and Stone Point and their respective affiliates from time to time and may have invested in limited partnership units of affiliates of CD&R and Stone Point from time to time and may do so in the future.
The Special Committee selected Goldman Sachs as its financial advisor because of, among other things, it is an internationally recognized investment banking firm that has substantial experience in serving as a financial advisor on transactions similar to the Mergers. Pursuant to a letter agreement dated November 16, 2022, the Special Committee engaged Goldman Sachs to act as a financial advisor to the Special Committee in connection with a possible transaction involving the sale of all or a substantial portion of the outstanding capital stock of the Company. Pursuant to the engagement letter between the Special Committee, the Company and Goldman Sachs, the Company has agreed to pay Goldman Sachs a transaction fee that is estimated, based on the information available as of the date of announcement, of up to approximately $25.4 million, $2 million of which became payable upon the delivery of Goldman Sachs’s opinion to the Special Committee, and the remainder of which is contingent upon consummation of the Mergers. Because of the complexity of the Potential Transaction and in order to incentivize and adequately compensate Goldman Sachs, Goldman Sachs may be entitled to a discretionary fee of up to approximately $6.9 million, payable at the Special Committee’s full and absolute discretion. In determining whether to pay a discretionary fee, if any, the Special Committee may consider, among other things (i) the Special Committee’s satisfaction with the services rendered by Goldman Sachs, (ii) the existing aggregate fees already payable to Goldman Sachs for its service to the Special Committee in connection with the Special Committee’s evaluation of a Potential Transaction or that would become payable to Goldman Sachs for its service to the Special Committee upon the consummation of the Mergers, and (iii) the actual work performed by Goldman Sachs in relation to the anticipated scope of work under its engagement letter with the Special Committee. In addition, the Company has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.
Additional Presentations by Goldman Sachs
In addition to the presentation made to the Special Committee on February 26, 2023 described above, Goldman Sachs also made various preliminary presentations containing preliminary financial analyses to the Special Committee on November 16, 2022, November 23, 2022, December 14, 2022, December 18, 2022 (with materials dated December 16, 2022) and February 25, 2023. Copies of these written preliminary presentations and a copy of the presentation made to the Special Committee on February 26, 2023 have been filed as exhibits (c)(1) - (c)(6) to the Schedule 13E-3 filed with the SEC in connection with the proposed Mergers. These written preliminary presentations and the presentation made to the Special Committee on February 26, 2023 will be available to any interested stockholder of the Company (or any representative of a stockholder who has been so designated in writing) to inspect and copy at the Company’s principal executive offices during regular business hours.
 
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None of the various preliminary presentations to the Special Committee, alone or together, constitute, or form the basis for, an opinion of Goldman Sachs. Information contained in the various preliminary presentations is substantially similar to the information provided in Goldman Sachs’ presentation to the Special Committee on February 26, 2023, as described above. A summary of the written preliminary presentations is provided below. The following summary, however, does not purport to be a complete description of the written preliminary presentations or of the preliminary financial analyses performed by Goldman Sachs.
The November 16, 2022 materials presented to the Special Committee contained, among other information:

a preliminary historical stock trading analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Historical Stock Trading Analysis”;

a summary of certain publicly available research analyst reports for the Company;

a summary of the November 15 Forecasts; and

an illustrative analysis at various prices for the Class A Common Stock.
The November 23, 2022 materials presented to the Special Committee contained, among other information:

a preliminary historical stock trading analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Historical Stock Trading Analysis”;

a summary of certain publicly available research analyst reports for the Company;

a summary of the November 15 Forecasts and an illustrative analysis at various prices for the Class A Common Stock;

a preliminary illustrative discounted cash flow analysis of the Company similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Discounted Cash Flow Analysis”;

a preliminary illustrative present value of future share price analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Present Value of Future Share Price Analysis”; and

preliminary historical mergers and acquisitions premia analyses of similar precedent transactions between $3 billion and $8 billion.
The December 14, 2022 materials presented to the Special Committee contained, among other information:

a preliminary historical stock trading analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Historical Stock Trading Analysis”;

a summary of certain publicly available research analyst reports for the Company;

a summary of the November 15 Forecasts and an illustrative analysis at various prices for the Class A Common Stock;

a preliminary illustrative discounted cash flow analysis of the Company similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Discounted Cash Flow Analysis,” and sensitivities based on differing assumptions;

a preliminary illustrative present value of future share price analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Present Value of Future Share Price Analysis”; and
 
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preliminary historical mergers and acquisitions premia analyses of similar precedent transactions between $3 billion and $8 billion.
The December 16, 2022 materials, presented to the Special Committee on December 18, 2022, contained, among other information:

a summary of the Company’s stock price performance since its initial public offering;

a summary of certain publicly available research analyst reports for the Company;

a summary of the November 28 Forecasts and an illustrative analysis at various prices for the Class A Common Stock;

a preliminary illustrative discounted cash flow analysis of the Company similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Discounted Cash Flow Analysis,” and sensitivities based on differing assumptions;

a preliminary illustrative present value of future share price analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Present Value of Future Share Price Analysis”; and

preliminary historical mergers and acquisitions premia analyses of similar precedent transactions between $3 billion and $8 billion.
The February 25, 2023 materials presented to the Special Committee contained, among other information:

a preliminary historical stock trading analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Historical Stock Trading Analysis”;

a preliminary illustrative discounted cash flow analysis of the Company similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Discounted Cash Flow Analysis”; and

a preliminary illustrative present value of future share price analysis similar to that described above under “Special Factors — Opinion of Goldman Sachs & Co. LLC — Summary of Financial Analyses — Illustrative Present Value of Future Share Price Analysis”.
The preliminary financial analyses in these preliminary presentations were based on market, economic and other conditions as they existed as of the dates of the respective presentations as well as other information that was available at those times. Accordingly, the results of the financial analyses differed due to changes in those conditions. Finally, Goldman Sachs continued to refine various aspects of its financial analyses with respect to the Company until February 26, 2023.
Opinion of Jefferies LLC
The Special Committee retained Jefferies as a financial advisor in connection with a possible sale, disposition or other business transaction or series of transactions involving all or a majority of the assets or outstanding capital stock of the Company. In connection with this engagement, the Special Committee requested that Jefferies evaluate the fairness, from a financial point of view, of the Merger Consideration to be received by the holders of Class A Common Stock that are Unaffiliated Stockholders pursuant to the Merger Agreement. At a meeting of the Special Committee held on February 26, 2023, Jefferies rendered its oral opinion to the Special Committee, which was subsequently confirmed by delivery of a written opinion dated February 26, 2023, to the effect that, as of the date of such opinion and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of shares of Class A Common Stock that are Unaffiliated Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
The full text of Jefferies’ opinion, which describes the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex
 
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C to this proxy statement and is incorporated herein by reference. The Company encourages you to read the opinion carefully and in its entirety. Jefferies’ opinion was provided for the use and benefit of the Special Committee (in its capacity as such) in its evaluation of the Merger Consideration from a financial point of view and did not address any other aspect of the Mergers or any other matter. Jefferies’ opinion did not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to the Company, nor did it address the underlying business decision by the Company to engage in the Mergers or the terms of the Merger Agreement or the documents referred to therein (including the Tax Receivable Agreements, any amendments thereto or agreements in connection therewith or any payments thereunder). Jefferies’ opinion did not constitute a recommendation as to how any holder of Class A Common Stock should vote on the Company Merger or any matter related thereto. The following summary is qualified in its entirety by reference to the full text of Jefferies’ opinion.
In arriving at its opinion, Jefferies, among other things:
(i)
reviewed an execution version, provided to Jefferies on February 26, 2023, of the Merger Agreement;
(ii)
reviewed certain publicly available financial and other information about the Company;
(iii)
reviewed certain information furnished to Jefferies by the Company’s management, including financial analyses relating to the business, operations, tax attributes and prospects of the Company;
(iv)
held discussions with members of senior management of the Company concerning the matters described in clauses (ii) and (iii) above;
(v)
reviewed the share trading price history and valuation multiples for the Class A Common Stock and compared them with those of certain publicly traded companies that Jefferies deemed relevant;
(vi)
compared the proposed financial terms of the Company Merger with the financial terms of certain other transactions that Jefferies deemed relevant; and
(vii)
conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate.
In Jefferies’ review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by the Company or that was publicly available to Jefferies (including, without limitation, the information described above), or that was otherwise reviewed by Jefferies. Jefferies relied on assurances of the management of the Company that it was not aware of any facts or circumstances that would make any of the foregoing information incomplete, inaccurate or misleading. In Jefferies’ review, it did not obtain any independent evaluation or appraisal of any of the assets or liabilities of, nor did Jefferies conduct a physical inspection of any of the properties or facilities of, the Company, and Jefferies was not furnished with, and assumed no responsibility to obtain, any such evaluations or appraisals.
With respect to the financial forecasts provided to and examined by Jefferies, Jefferies noted that projecting future results of any company is inherently subject to uncertainty. However, Jefferies was informed by the Company, and assumed, that the financial forecasts were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of the Company as to the future financial performance of the Company. Jefferies expressed no opinion as to the financial forecasts or the assumptions on which they were made.
Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date thereof. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Jefferies’ opinion of which it became aware after the date thereof.
Jefferies made no independent investigation of any legal or accounting matters affecting the Company and assumed the correctness in all respects material to its analysis of all legal and accounting advice given to the Company and its Board and the Special Committee, including, without limitation, advice as to the legal, accounting and tax consequences of the terms of, and transactions contemplated by, the Merger Agreement to the Company and its stockholders. In addition, in preparing its opinion, Jefferies did not take into account
 
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any tax consequences of the transaction to any holder of Class A Common Stock. Jefferies assumed that in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the Mergers, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on the Company, Parent or the contemplated benefits of the Mergers.
Jefferies’ opinion did not address the fairness to, or any other consideration of, the holders of any class of securities (including shares of Class B Common Stock and Common Units), creditors or other constituencies of the Company or any other party, other than holders of Class A Common Stock that are the Unaffiliated Stockholders. Jefferies’ opinion also did not address the allocation of the aggregate consideration among the various classes of shares of capital stock or other equity interests of the Company and Focus LLC. Jefferies did not express an opinion as to the price at which shares of Class A Common Stock would trade at any time. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable or to be received by any of the Company’s officers, directors or employees, or any class of such persons, in connection with the Mergers relative to the Merger Consideration to be received by the holders of Class A Common Stock that are Unaffiliated Stockholders or otherwise. Jefferies’ opinion was authorized by the Fairness Committee of Jefferies LLC.
In connection with rendering its opinion to the Special Committee, Jefferies performed certain financial and comparative analyses, including those described below. The following summary is not a complete description of all analyses performed and factors considered by Jefferies in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the public trading analysis summarized below, no company used as a comparison was identical or directly comparable to the Company. These analyses necessarily involved complex considerations and judgments concerning financing characteristics and other factors that could affect the public trading or other values of the companies concerned.
Jefferies believes that its analyses and the summary below must be considered as a whole and in context and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Jefferies’ analyses and opinion. Jefferies did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.
The estimates of the future performance of the Company in or underlying Jefferies’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, Jefferies considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. Estimates of the financial value of companies or businesses do not purport to be appraisals or necessarily reflect the prices at which companies, businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the implied reference ranges resulting from, any particular analysis described below are inherently subject to substantial uncertainty and should not be taken as Jefferies’ view of the actual value of the Company or its businesses or securities.
The terms of the Mergers were determined through arm’s length negotiations between the Special Committee and CD&R, and the decision by the Special Committee to recommend to the Board that it approve and declare advisable the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers, was solely that of the Special Committee. Jefferies’ opinion and financial analyses were only one of many factors considered by the Special Committee in its evaluation of the Mergers and should not be viewed as determinative of the views of the Special Committee, Board or the Company management with respect to the Mergers or the Merger Consideration payable in the Company Merger.
Financial Analysis
The summary of the financial analyses described in this section is a summary of the material financial analyses reviewed with the Special Committee and performed by Jefferies in connection with its analyses and opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, the tables must be read together with the text of each summary.
 
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The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses. The order in which the financial analyses summarized below appear does not necessarily reflect the relative importance or weight given to such analyses. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 24, 2023 and is not necessarily indicative of current or future market conditions.
Selected Public Companies Analysis
Jefferies reviewed publicly available financial, stock market and operating information of the Company and the following ten selected publicly traded companies that Jefferies classified as independent broker dealers, turnkey asset management programs (“TAMPs”) or multi-affiliate asset managers and that Jefferies considered generally relevant for purposes of its analysis, collectively referred to in this subsection as the “selected companies”:
Independent Broker Dealers

LPL Financial Holdings Inc.

Avantax Inc.
TAMPs

AssetMark Financial Holdings, Inc.

SEI Investments Co.

Envestnet Inc.
Multi-Affiliate Asset Managers

Affiliated Managers Group, Inc.

Virtus Investment Partners Inc.

Artisan Partners Asset Management Inc.

CI Financial Corp.

Victory Capital Holdings Inc.
In its analysis, Jefferies derived multiples for each of the selected companies by reviewing the closing stock price per share of each of the selected companies as of February 24, 2023 (the last full trading day prior to announcement of the Mergers) as a multiple of estimated adjusted earnings per share for calendar year 2023 (which is referred to below as “CY 2023E EPS”). Estimated financial information of the selected companies was based on publicly available research analysts’ estimates, including from consensus estimates from Visible Alpha Insights and Capital IQ.
This analysis indicated the following:
Selected Companies Multiples
Price / CY 2023E EPS
Mean
Median
Independent Broker Dealers(1)
12.5x 12.5x
TAMPs
20.0x 16.0x
Multi-Affiliate Asset Managers
7.5x 7.4x
(1)
Includes only LPL Financial Holdings Inc., as Avantax Inc. did not have sufficient research coverage following the sale of TaxACT Holdings, Inc.
 
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Jefferies applied a selected range of 9.5x to 12.5x to its calculated Adjusted Net Income (including Tax Adjustments) per share for calendar year 2023, based on the November 28 Forecasts to determine an implied equity reference range per share of Class A Common Stock of $42.09 to $55.38, as compared to the Merger Consideration of $53.00.
None of the selected companies is identical to the Company. In evaluating the selected public companies, Jefferies made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the Company’s and Jefferies’ control.
Selected Precedent Transactions Analysis
Jefferies reviewed, to the extent available, financial information for the following 12 selected transactions involving companies that Jefferies classified as wealth management companies, TAMPs and multi-affiliate asset managers and that, given business and financial characteristics of such companies, Jefferies considered generally relevant for purposes of analysis, collectively referred to in this subsection as the “selected transactions”:
Wealth Management Companies
Announced
Acquiror
Target
March 2019 Blucora, Inc. 1st Global, Inc.
April 2018 Hellman & Friedman LLC Financial Engines Inc.
April 2017 Stone Point Capital LLC/ Kohlberg Kravis Roberts & Co. LP Focus Financial Partners, LLC
October 2015 Blucora, Inc. HD Vest Financial Services Inc.
November 2015 Financial Engines Inc. The Mutual Fund Store LLC
November 2019 Advisor Group, Inc. Ladenburg Thalmann Financial Services Inc.
December 2020 LPL Financial Holdings Inc./ Macquarie Management Holdings, Inc. Waddell & Reed Financial, Inc.
TAMPS
Announced
Acquiror
Target
April 2017 Huatai Securities Co., Ltd. Assetmark Inc.
Multi-Affiliate Asset Managers
Announced
Acquiror
Target
October 2020 Morgan Stanley Eaton Vance Corp.
February 2020 Virtus Investment Partners, Inc. RidgeWorth Investments
February 2020 Franklin Resources, Inc. Legg Mason, Inc.
November 2018 Victory Capital Holdings Inc. USAA Asset Management Company
Jefferies reviewed, among other information, transaction values of the selected transactions, calculated as the enterprise values implied for the target companies involved in the selected transactions based on the consideration paid or payable in the selected transactions, as a multiple of the latest 12 months EBITDA of the target companies as of the announcement date of the applicable selected transaction. Financial data of the selected transactions were based on publicly available research analysts’ estimates, public filings and other available information.
 
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The overall low to high latest 12 months EBITDA multiples observed for the selected transactions involving wealth management companies was 7.9x to 18.0x (with a median multiple of 13.5x) the latest 12 months EBITDA multiple observed for the selected transaction involving a TAMP was 19.5x and the overall low to high latest 12 months EBITDA multiples observed for the selected transactions involving multi-affiliate asset managers was 6.6x to 11.1x (with a median multiple of 9.9x).
Jefferies then applied a selected range of latest 12 months EBITDA multiples derived from the selected transactions of 11.0x to 17.0x to the Company’s calendar year 2022 Adjusted EBITDA. This analysis indicated an implied equity reference range per share of Class A Common Stock of $37.60 to $72.14, as compared to the Merger Consideration of $53.00.
Discounted Cash Flow Analysis
Jefferies performed a discounted cash flow analysis of the Company by calculating the estimated present value of the stand-alone Unlevered Free Cash Flows that the Company was forecasted to generate during the fiscal years ending December 31, 2023 through December 31, 2027 based on the Projections. Jefferies performed a discounted cash flow analysis of the Company’s Acquisition-Related Capital Deployment based on the Projections during the fiscal years ending December 31, 2023 through December 31, 2027, in addition to a deferred or contingent portion that related to pre-2023 mergers and acquisitions activity and a portion that was estimated, based on the Projections, to be paid on a deferred or contingent basis beyond the fiscal year ending December 31, 2027 in each of the fiscal years ending December 31, 2029 and December 31, 2032. The terminal value range of the Company was calculated by applying a multiple range of 8.75x to 9.75x to the Company’s estimated Adjusted EBITDA for the fiscal year ending December 31, 2027, which implied a range of perpetuity growth rates of 2.1% to 3.8% to the Company’s estimated Unlevered Free Cash Flows for the fiscal year ending December 31, 2027 (including normalized levels of capital expenditures, working capital and depreciation and amortization), based on the Projections. The present values of the Unlevered Free Cash Flows, Acquisition-Related Capital Deployment and terminal values were then discounted to present value using a selected discount rate range of 10.5% to 11.5%, based on an estimate of the Company’s weighted average cost of capital, to arrive at a range of enterprise values. In order to derive a range of equity values, Jefferies added to the range of enterprise values the present values of the purchased intangibles tax benefit and tax receivable agreement cash tax benefit based on the Projections, each calculated using a selected discount rate range of 11.4% to 12.6% based on the Company’s implied cost of equity, and subtracted the Company’s net debt as of December 31, 2022. The values in this equity range were then divided by the resulting number of fully diluted shares outstanding using the treasury stock method to calculate a range of implied per share equity values for the Company. This analysis indicated a reference range of implied per share equity values of $45.85 to $60.16 per share, as compared to the Merger Consideration of $53.00 per share.
Certain Additional Information
Jefferies observed certain additional information that was not considered part of Jefferies’ financial analysis with respect to its opinion but was noted for informational purposes, including the following:

the historical trading performance of the shares of Class A Common Stock during the 52-week period ended February 1, 2023 (the last trading day prior to the Company’s announcement that it had entered into exclusivity with CD&R), which indicated low and high intraday prices for the shares of Class A Common Stock during such 52-week period of $30.27 per share and $54.61 per share, respectively, as compared to the Merger Consideration of $53.00; and

publicly available stock price targets for the shares of Class A Common Stock of 10 research analysts, which indicated a stock price target range of $35.00 to $55.00 per share of Class A Common Stock, as compared to the Merger Consideration of $53.00.
Other Presentations by Jefferies
In addition to the presentation made to the Special Committee on February 26, 2023 described above under “Special Factors — Opinion of Jefferies LLC” Jefferies made preliminary presentations containing preliminary financial analyses to the Special Committee on January 4, 2023 and February 25, 2023. Copies of these written preliminary presentations and a copy of the Jefferies’ presentation made to the Special
 
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Committee on February 26, 2023 have been filed as exhibits (c)(8) - (c)(10) to the Schedule 13E-3 filed with the SEC in connection with the proposed Mergers.
None of the various preliminary presentations to the Special Committee, alone or together, constitute, or form the basis for, an opinion of Jefferies. Information contained in the preliminary presentations are substantially similar to the information provided in Jefferies’ oral and written presentation to the Special Committee on February 26, 2023, as described above under “Special Factors — Opinion of Jefferies LLC.” A summary of the preliminary presentations is provided below. The following summary, however, does not purport to be a complete description of the written preliminary presentations or of the preliminary financial analyses performed by Jefferies.
The January 4, 2023 materials presented to the Special Committee by Jefferies contained, among other information:

a summary of CD&R’s proposal to the Special Committee, dated December 10, 2022;

a review of the financial forecasts provided by the Company’s management;

a preliminary discounted cash flow analysis, similar to that described above under “Special Factors — Opinion of Jefferies LLC — Discounted Cash Flow Analysis”;

a preliminary public trading multiples analysis, similar to that described above under “Special Factors — Opinion of Jefferies LLC — Selected Public Companies Analysis”;

a preliminary precedent transaction multiples analysis, similar to that described above under “Special Factors — Opinion of Jefferies LLC — Selected Precedent Transactions Analysis”;

a summary of tactical considerations with respect to the contemplated transactions; and

an illustrative analysis at various prices for the Class A Common Stock.
The February 25, 2023 materials presented to the Special Committee contained, among other information:

a summary of the key transaction terms based on a draft of the Merger Agreement, dated February 22, 2023;

a review of the financial forecasts provided by the Company’s management;

a preliminary discounted cash flow analysis, similar to that described above under “Special Factors — Opinion of Jefferies LLC — Discounted Cash Flow Analysis”;

a preliminary public trading multiples analysis, similar to that described above under “Special Factors — Opinion of Jefferies LLC — Selected Public Companies Analysis”;

a preliminary precedent transaction multiples analysis, similar to that described above under “Special Factors — Opinion of Jefferies LLC — Selected Precedent Transactions Analysis”.
The preliminary financial analyses in these preliminary presentations were based on market, economic and other conditions as they existed as of the date of the presentation as well as other information that was available at such time. Accordingly, the results of the financial analyses differed due to changes in those conditions. Finally, Jefferies continued to refine various aspects of its financial analyses with respect to the Company until February 26, 2023.
Miscellaneous
The Company has agreed to pay Jefferies for its financial advisory services in connection with the Mergers an aggregate fee which is estimated as of the date of this proxy statement to be up to $4.5 million, $300,000 of which became payable on execution of the engagement letter with Jefferies, $200,000 of which became payable one month after the execution of the engagement letter with Jefferies, $3 million of which became payable on delivery of Jefferies’ opinion to the Special Committee and the remainder of which is payable contingent on the closing of the Mergers. Because of the complexity of the Potential Transaction and in order to incentivize and adequately compensate Jefferies, Jefferies may be entitled to a discretionary fee of up to $8.0 million, payable at the Special Committee’s full and absolute discretion. In determining whether to pay a discretionary
 
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fee, if any, the Special Committee may consider, among other things (i) the Special Committee’s satisfaction with the services rendered by Jefferies, (ii) the existing aggregate fees already payable to Jefferies for its service to the Special Committee in connection with the Special Committee’s evaluation of a Potential Transaction or that would become payable to Jefferies for its service to the Special Committee upon the consummation of the Mergers, and (iii) the actual work performed by Jefferies in relation to the anticipated scope of work under its engagement letter with the Special Committee. In addition, the Company agreed to pay Jefferies, for services rendered in connection with any go-shop or post-signing market check, an additional monthly fee of $150,000 beginning on the one-month anniversary of the execution of the Merger Agreement for the duration of the go-shop or post-signing market check period, up to a maximum of $300,000, which is credited against the remaining fees payable contingent on the closing of the Mergers.
In addition, the Company agreed to reimburse Jefferies for expenses, including fees and expenses of counsel, incurred in connection with Jefferies’ engagement and to indemnify Jefferies and related parties against liabilities, including liabilities under federal securities laws, arising out of or in connection with the services rendered and to be rendered by Jefferies under its engagement.
As the Special Committee is aware, in the past two years, Jefferies did not provide financial advisory and financing services to the Company or its affiliates. As the Special Committee is also aware, Jefferies has, in the past, provided financial advisory and financing services to CD&R or its affiliates and financing services to Stone Point or its affiliates, and may continue to do so and has received, and may receive, fees for the rendering of such services. During the two-year period ended February 24, 2023, Jefferies received $9.0 million in financial advisory fees and $9.4 million in debt financing fees from CD&R and $3.7 million in debt financing fees from Stone Point. Jefferies maintains a market in the securities of the Company and, in the ordinary course of its business, Jefferies and its affiliates may trade or hold securities of the Company or Parent and/or their respective affiliates for its own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions in those securities. In addition, Jefferies may seek to, in the future, provide financial advisory and financing services to the Company, Parent or entities that are affiliated with the Company or Parent, for which Jefferies would expect to receive compensation.
Jefferies was selected as a financial advisor to the Special Committee in connection with its evaluation of a Potential Transaction because, among other things, Jefferies is an internationally recognized investment banking firm with substantial experience in advising on mergers and acquisition transactions and based on its familiarity with the Company’s business and industry. Jefferies is regularly engaged in the valuation of businesses and their securities in connection with mergers, acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.
Purpose and Reasons of the Company for the Mergers
The Company’s purpose for engaging in the Mergers is to enable its stockholders to receive the Merger Consideration, which represents an approximately (1) 14.5% premium to the closing price of the Class A Common Stock on February 1, 2023 (the last trading day prior to the Company’s announcement that it had entered into exclusivity with CD&R), (2) a 36% premium to the Company’s 60-day volume weighted average price for the Class A Common Stock on February 1, 2023 (the last trading day prior to the Company’s announcement that it had entered into exclusivity with CD&R), and (3) 48% premium to the closing price of the Class A Common Stock on December 28, 2022 (the day the Special Committee specifically authorized its financial advisors to broaden their outreach and contact other specified potential bidders regarding a potential acquisition of the Company). The Special Committee and the Board believe that the Mergers provide the best opportunity to maximize stockholder value. The Company has determined to undertake the Mergers at this time based on the analyses, determinations and conclusions of the Special Committee and the Board described in detail above under the section of this proxy statement entitled “Special Factors — Reasons for the Mergers; Recommendation of the Board; Fairness of the Mergers.”
Purpose and Reasons of the Parent Entities for the Mergers
Purpose and Reasons of the CD&R Entities for the Company Merger
Under a possible interpretation of the SEC rules governing Rule 13e-3 “going-private” transactions, each of the CD&R Entities may be deemed to be affiliates of the Company and, therefore, required to express its
 
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purposes and reasons for the Company Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The CD&R Entities are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. For the CD&R Entities, the primary purpose of the Company Merger is to allow Parent to own equity interests in the Company and to bear the rewards and risks of such ownership after the Company Merger is completed and the shares of Class A Common Stock cease to be publicly traded. The CD&R Entities believe that structuring the transaction as a merger is preferable to other transaction structures because it (1) will enable Parent to acquire all of the shares of Class A Common Stock at the same time, (2) will allow the Company to cease to be a publicly registered and reporting company, and (3) represents an opportunity for the Company’s stockholders to receive the Merger Consideration in cash, without interest and less any applicable withholding taxes, subject to and in accordance with the terms and conditions of the merger agreement.
Purpose and Reasons of the Trident Entities for the Company Merger
Under the SEC rules governing Rule 13e-3 “going private” transactions, each of the Trident Entities may be deemed to be affiliates of the Company and, therefore, required to express its purposes and reasons for the Company Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The Company Merger is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement has been filed with the SEC. The Trident Entities are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Trident Entities should not be construed as a recommendation to any stockholder of the Company as to how that stockholder should vote on the Merger Agreement Proposal.
If the Mergers are completed, the Company will become a wholly-owned subsidiary of Parent, and the shares of Class A Common Stock will cease to be publicly traded. For the Trident Entities, the purpose of the Mergers is to effectuate the transactions contemplated by the Merger Agreement and the Support Agreement, which will allow the Trident Entities to realize the value of a portion of their shares of Company Common Stock by receiving $53.00 per share in cash for a portion of their shares and also own equity interests of Topco and to bear the rewards and risks of such ownership after the Mergers are completed and the shares cease to be publicly traded.
The Trident Entities believe that it is in the best interests of the Company to operate as a privately held entity. The Trident Entities believe that, as a privately held entity, the Company will have greater operational flexibility to pursue alternatives than it would have as a public company. The Trident Entities believe that this, along with the Company’s existing business and potential future opportunities, will allow the Trident Entities’ investment in the Company to achieve returns consistent with their investment objectives, which are in some cases more difficult for a business to achieve as a public company due to the reporting and associated costs and burdens placed on public companies. The Trident Entities also believe that the management and employees of the Company will be able to execute more effectively on future strategic plans. Based on the reasons discussed in the section of this proxy statement entitled “Special Factors — Purpose and Reasons of the Trident Entities for the Company Merger,” the Trident Entities have undertaken to participate in the Company Merger.
Plans for the Company After the Mergers
Following completion of the Mergers, Company Merger Sub will have been merged with and into the Company, with the Company surviving the merger as a subsidiary of Parent. The shares of Class A Common Stock are currently listed on the Nasdaq and registered under the Exchange Act. Following completion of the Mergers, there will be no further market for the shares of Class A Common Stock and, as promptly as practicable following the effective time and in compliance with applicable law, Class A Common Stock will be delisted from the Nasdaq, deregistered under the Exchange Act and will cease to be publicly traded.
The CD&R Entities currently anticipate that the Company’s strategy and operations will initially be conducted following completion of the Mergers substantially as they are currently being conducted (except that the Company will cease to be a public company and will instead be a wholly owned subsidiary of Parent). The CD&R Entities believe that, as a private company, the Company will be able to improve its ability to execute quickly and effectively on a series of existing value creation levers, including improving service levels, accelerating innovation and with respect to the acquisition and integration of accretive mergers and
 
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acquisitions targets (however, no definitive contracts, arrangements, plans, proposals, commitments or understanding currently exist with respect to such acquisitions). Following completion of the Mergers, the CD&R Entities will continue to assess the Company’s assets, corporate and capital structure, capitalization, operations, business, properties and personnel to determine what additional changes, if any, would be desirable to enhance the business and operations of the Company.
From and after the Company Merger Effective Time, the initial officers of the Company at the Company Merger Effective Time will be the officers of the Surviving Corporation and the directors of Company Merger Sub immediately prior to the Company Merger Effective Time will be the initial directors of the Surviving Corporation, in each case, to hold office until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the DGCL and the certificate of incorporation and bylaws of the Surviving Corporation.
Certain Effects of the Mergers
If the Company’s stockholders approve the Merger Agreement Proposal and all other conditions to the closing of the Mergers are either satisfied or waived, (a) LLC Merger Sub will merge with and into Focus LLC, with Focus LLC surviving the LLC Merger and (b) immediately following the LLC Merger, Company Merger Sub will merge with and into the Company, with the Company surviving the Company Merger as a subsidiary of Parent.
The Company’s net book value as of March 31, 2023 was approximately $1,326.8 million and the Company’s net loss for the three months ended March 31, 2023 was $6,977,000, $632,000 of which was attributable to holders of Class A Common Stock and $6,345,000 of which was attributable to non-controlling interest. As of February 27, 2023, the Existing Stockholders owned, in the aggregate, 7,798,810 shares of Class A Common Stock and 8,250,165 shares of Class B Common Stock, which together represented approximately 20.6% of the then outstanding shares of Company Common Stock, in turn representing beneficial ownership by the Existing Stockholders as of February 27, 2023, of approximately 20.6% of the Company’s net book value attributable to such shares of Company Common Stock (approximately $273.8 million) and approximately 20.6% of the Company’s net loss for the three months ended March 31, 2023 (approximately $1,439,777). If the Mergers are consummated, the Parent Entities will have beneficial ownership of 100% of the Company’s net book value and net loss through their ownership of all of the assets of the Company, having an aggregate beneficial interest in the Company’s net book value and net loss of $1,326.8 million and $6,977,000, respectively (based on the Company’s net book value as of March 31, 2023 and net loss for the three months ended March 31, 2023). The Parent Entities will also be entitled to any future increase in the value and all income generated by the Company’s assets and operations going forward and will also bear the full risk of any future decrease in the value and any losses generated by the Company’s assets and operations going forward.
Treatment of the Shares of Company Common Stock
Each share of Class A Common Stock issued and outstanding immediately prior to the Company Merger Effective Time (including, for the avoidance of doubt, each such share resulting from the Vested Units Exchanges), other than the Excluded Shares, which consist of shares (A) that are to be cancelled, (B) that are Class A Rollover Shares and (C) shares of Company Common Stock that are issued and outstanding as of immediately prior to the Company Merger Effective Time and held by stockholders of the Company who have not voted in favor of the adoption of the Merger Agreement (or consented thereto in writing) and who have properly demanded appraisal of such shares of Company Common Stock in accordance with, and who have otherwise complied with, Section 262 of the DGCL, will be converted into the right to receive the Merger Consideration from Parent. The Class A Rollover Shares will not receive the Merger Consideration and shall, immediately prior to the Vested Units Exchanges, be contributed, directly or indirectly, to an indirect sole owner of Parent as contemplated by the Support Agreement and thereafter such Class A Rollover Shares shall be contributed indirectly to Parent. At the Company Merger Effective Time, each share of Company Common Stock held as treasury stock and not held on behalf of third parties, each share of Company Common Stock owned by Parent or Merger Subs and any direct or indirect wholly owned subsidiary of Parent or Merger Subs (including the Class A Rollover Shares), will be cancelled without payment of any consideration or any conversion thereof and cease to exist. Each share of Class B Common Stock issued and outstanding
 
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immediately prior to the Company Merger Effective Time will be automatically cancelled and shall cease to exist and no payment shall be made with respect thereto. Each share of a class or series of capital stock of Company Merger Sub issued and outstanding immediately prior to the Company Merger Effective Time will be converted into one share of the same class or series of capital stock of the Surviving Corporation.
Treatment of the Focus LLC Units
Immediately prior to the LLC Merger Effective Time and conditioned upon the closing of LLC Merger, the Company will require each member of Focus LLC (other than the Company and its wholly owned subsidiaries and Parent) to effect the Vested Units Exchanges, pursuant to which such member will (A) Exchange all outstanding vested Common Units held by such member, including, with respect to each such member who holds vested Incentive Units, the applicable number of vested Common Units received as a result of the conversion (based on the IU Conversion Ratio (as defined in the Focus LLC Agreement)) of vested Incentive Units held by such member that have a Hurdle Amount (as defined in the Focus LLC Agreement) that is less than the Merger Consideration, other than the Rollover Units, and (B) surrender for cancellation the corresponding number of shares of Class B Common Stock in accordance with the Focus LLC Agreement. Also on the date of the closing and prior to the LLC Merger Effective Time, each Incentive Unit, whether a vested Incentive Unit or unvested Incentive Unit, that has a Hurdle Amount that is equal to or greater than the Merger Consideration shall, automatically and without any action on the part of Focus LLC, Parent, the Company, or the holder thereof, be cancelled for no consideration.
At the Company Merger Effective Time, each then outstanding unvested Common Unit held by a member of Focus LLC (other than the Company and its wholly owned Subsidiaries or Parent) (including, with respect to each such member who holds unvested Incentive Units, each unvested Common Unit received as a result of the conversion (based on the IU Conversion Ratio) of unvested Incentive Units held by such member that have a Hurdle Amount that is less than the Merger Consideration) shall automatically be cancelled and converted into a contingent cash payment in an amount that would be payable pursuant to the Merger Agreement if such unvested Common Units were a Company Restricted Share, which contingent cash payment will vest and become payable pursuant to the same vesting schedule applicable to the corresponding unvested Common Unit or Incentive Unit, as applicable.
At the LLC Merger Effective Time, each Focus LLC Unit issued and outstanding immediately prior to the LLC Merger Effective Time and after the Vested Units Exchanges, other than (i) the Rollover Units and any other Focus LLC Units owned by Parent and (ii) the Focus LLC Units owned by the Company or any of its wholly owned subsidiaries (the units described in clauses (i) and (ii), the “Excluded Units”), will be cancelled and forfeited for no consideration. The Rollover Units will, immediately prior to the Vested Units Exchanges, be contributed, directly or indirectly, to Parent or one of its Affiliates as contemplated by the Support Agreement.
Each Excluded Unit (including the Rollover Units) shall be unaffected by the LLC Merger and will remain outstanding following the closing.
Each limited liability company interest of LLC Merger Sub issued and outstanding immediately prior to the LLC Merger Effective Time will be converted into one common unit of the Surviving LLC.
Treatment of Company Equity Awards
At the Company Merger Effective Time: (1) each then outstanding Company Option that is vested and has a per share exercise price that is less than the Merger Consideration immediately prior to the Company Merger Effective Time will automatically be cancelled and converted into the right to receive an amount in cash equal to the Option Consideration; (2) each then outstanding Company Option that is unvested and has a per share exercise price that is less than the Merger Consideration immediately prior to the Company Merger Effective Time will automatically be cancelled and converted into a contingent right to receive a cash payment, without interest, equal to the Option Consideration with respect to such Company Option and such resulting cash-based award will vest and become payable pursuant to the same vesting schedule applicable to such Company Option from which it was converted immediately prior to the Company Merger Effective Time, subject to the holder’s continued employment with or service to Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates; (3) each Company Option,
 
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