FOCS - Focus Financial downgraded at BMO unlikely to see competing bid

• Focus Financial Partners ( NASDAQ: FOCS ) was cut to market perform from outperform as the company is unlikely to see a competing bid after entering exclusive talks with Clayton, Dubilier & Rice, according to BMO.
• "Given this is an exclusivity agreement, we do not expect a competing bid, and believe a definitive agreement is the likely outcome," BMO analyst James Fotheringham wrote in a note on Thursday. Fotheringham cut his price target to $53 from $55.
• Focus Financial ( FOCS ) jumped 8% on Thursday after it was disclosed that it received a non-binding proposal from buyout firm Clayton, Dubilier & Rice for $53 a share. The CD&R offer its is "best and final" bid.
• The transaction equates to ~12x EV/EBITDA (2023E), a premium to where FOCS has historically traded, and roughly in line with BMO's pre-offer target price.
• "We see a fairly high probability of CD&R closing," Fotheringham added.
• Also see SA contributor LWF Equity Research's piece from last month entitled "Focus Financial Partners: Upside But With Risk Of Cost Growth."

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