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Focus Financial co-founders Ranjini Kodialam and Lenny Chang are stepping down from their positions and into roles as senior advisors at the firm after its sale to Clayton, Dubilier & Rice in a take-private deal was approved by shareholders last month, according to sources close to the firm.
“I have officially confirmed it with one of the leaders of one of the largest Focus firms who have been getting the messaging today that Rajini and Lenny are no longer going to be with the company,” the source said. “Well, they’re going to be acting as senior advisors and you know what that really means.”
Kodialam, Focus’ chief operating officer, Chang, the managing director and head of M&A, and CEO Rudy Adolf founded Focus in 2004 to be the “partnership of choice for entrepreneurial, growth-oriented, fiduciary wealth management firms.” according to the company website.
Focus is one of the most aggressive acquirers in the still highly fractured RIA space, picking up some 85 partner firms and funding many of those firms’ own acquisitions. It completed 38 deals in 2021 alone, and 24 last year, including sub-acquisitions. The firm now oversees some $350 billion in AUM.
Focus went public in 2008 but earlier this year agreed to be sold to private equity firm Clayton, Dubilier & Rice for $53 a share, valuing the company at more than $7 billion.
Private equity often steps into make changes to management following an acquisition and Focus would appear to be no different. Adolf is remaining with the firm for the present, the source said, but it remains unclear for how long.
“What we’ve heard from partner firms is that Rudy’s timeframe is unclear,” they said.
Both Adolf and Kodialam are receiving millions of dollars as a result of the transaction, which didn’t sit well with all stakeholders due to the price at which the firm was sold and the fact that only one existing investor was able to retain their shares.
The sale is expected to be completed quickly following its approval, and industry watchdogs expect to see CD&R make some significant changes to the Focus business model over the coming months and years to realize opportunities around synergy and scale presented by its network of 90 independent firms.
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