Cloud 9fin
Focus and Foresight
May 11, 2023
The podcast explores Focus Financial's unique loan deal that allowed them to fund an acquisition without refinancing existing debt, discussing the implications of the wording of the credit agreement. They also delve into CD&R's strategy of majority equity ownership without board control, the complexities in sponsor and board dynamics, potential legal action for lenders due to change of control, and the maneuver's implications for future situations.
14:03
AI Summary
AI Chapters
Episode notes
Podcast summary created with Snipd AI
Quick takeaways
- Focus Financial avoided triggering a change of control in its debt by leaving existing term loans untouched while raising funds for a buyout through an incremental loan.
- The loan deal structure raises concerns about the board's decision-making power and the potential for similar situations in the future with other companies.
Deep dives
Loan deal structure without triggering change of control
Focus Financial, a conglomerate of wealth management firms, recently underwent a change in ownership without triggering a change of control in its debt. Typically, when a company gets a new majority owner, the company needs to refinance its debt. However, Focus Financial avoided this by leaving its existing term loans untouched, totaling $2.5 billion, and raising funds for the $7 billion LBO through a $500 million incremental loan. This was achieved by splitting the economics from the voting power, allowing the new majority owner to avoid triggering the change of control clause.
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
