Celebrity concierge service sues Goldman – 4/6/2023 – Market

A director of a Hollywood company whose clients include Madonna and Drake has sued Goldman Sachs, alleging the bank tricked him into handing over trade secrets as part of an effort to close a $7 billion deal. 5 billion) with a private equity group.

Show business entrepreneur Mickey Segal’s lawsuit focuses on the Wall Street bank’s role when New York-based acquisitions group Clayton, Dubilier & Rice purchased Focus Financial Partners, a publicly traded wealth management firm, in February.

Segal had hired Goldman to sell its “concierge” service [zeladoria] for celebrities, a much smaller company called NKSFB, which had already received funding from Focus. In a lawsuit filed in Los Angeles County court last week, he accused Goldman of “secretly dealing behind his back” by “speculating” a proposed sale of the larger company as well.

Anyone “interested in acquiring [a NKSFB] may be even more interested in acquiring the larger company,” complained Segal’s lawyers.

The messy dispute, involving several major groups on Wall Street, shows how the lives and businesses of high-profile artists have created lucrative opportunities for money managers and intermediaries who operate in narrow circles where discretion is highly valued.

Segal sold a majority economic stake in NKSFB to Focus shortly before the latter’s initial public offering in 2018. At the time, the larger company was looking to branch out from its core business of buying stakes into wealth management “boutiques”. She was drawn to the NKSFB, which coordinates public appearances for its celebrity clients, as well as helping to buy their cars and houses, hire their cooks and nannies, file taxes, pay bills and file their medical claims.

Last year, however, Segal and his partners decided they wanted to split from Focus. They hired Goldman to explore the sale of the company, not knowing that Goldman was simultaneously working on a deal to take Focus private.

Segal worked with Goldman to introduce the NKSFB to at least a dozen potential suitors over the course of several months. At a meeting in December, Segal sought to impress KKR executives with a client list that included artists who had played 13 of the last 15 halftime shows at the Super Bowl, according to two people familiar with the transaction.

KKR did not bid, but five other potential buyers ended up bidding for the NKSFB, each offering hundreds of millions of dollars. But CD&R’s $7 billion deal to take Focus private, announced in February, led to Segal suing Focus and Goldman and disrupting his own company’s auction.

In an email exchange, reprinted in court filings, Segal told Focus co-founder Lenny Chang that an “amicable meeting” was impossible. He suggested buying back Focus’s stake in the NKSFB “at a substantial discount”, saying it “may be the only way to prevent a nuclear war”.

But Chang wrote, “We wouldn’t sell at a discount.”

Focus maintained that it was not trying to prevent the NKSFB sale. In a letter, a lawyer for Focus told Segal that “the sales process was supposed to go to the second round, but it was postponed by your [dele] disturbing actions”.

Focus said in a statement that Segal’s lawsuit was without merit and accused him of “attempting to take advantage of the pending takeover of Focus to increase the savings it derives from the Focus stake.”

Goldman said it acted fairly and honestly and dismissed the lawsuit as without merit. “[Nós] we had every incentive to achieve the best results for our clients, and it is absurd to suggest otherwise,” the bank said.

Translated by Luiz Roberto M. Gonçalves