Investment banking giant Goldman Sachs is facing legal action as Hollywood business management firm KSFB Management LLC filed a lawsuit, claiming it was deceived by the bank during a mergers and acquisitions deal. The suit, filed on February 8, 2024, in New York state court, alleges that Goldman pursued a $7 billion deal with private equity firm Clayton Dubilier & Rice LLC while stringing along KSFB in its own sale process.
KSFB Management LLC, led by Hollywood accountant Mickey Segal, accuses Goldman Sachs of deceiving them when the firm was seeking to sell itself in 2022. According to the lawsuit, KSFB provided Goldman with confidential information that facilitated the acquisition of Focus Financial Partners by Clayton Dubilier & Rice in February 2023. Focus, an investment group specializing in wealth and business management firms, is also named as a defendant, along with its co-founder Leonard Chang and Goldman banker Patrick Fels.
The legal dispute revolves around the complex series of transactions involving Nigro Karlin Segal Feldstein & Bolno (NKSFB), the management firm founded by Mickey Segal. In 2018, NKSFB sold its operational assets to Focus, and its principals formed KSFB but continued to provide management services to Focus under a contract. KSFB claims it managed business affairs for high-profile celebrities, including Beyonce, Drake, and Adam Levine.
Goldman Sachs spokesperson Sophia Anthony disputed the allegations, stating, "These claims are without merit. From the outset of our engagement, Goldman Sachs acted fairly and honestly to run an efficient, competitive process." Focus Financial Partners did not immediately respond to requests for comment, and Alex Spiro, the lawyer for KSFB, declined to comment.
This legal battle is the second filed by KSFB on the matter, with the first one filed in Los Angeles last year, dismissed. Goldman argued that New York was the appropriate forum for the claims. The lawsuit alleges that Goldman and Focus schemed to keep KSFB on board to maximize the acquisition price for Focus, misleading KSFB about pursuing a joint sale of KSFB and the NKSFB unit of Focus.
KSFB claims that representations made by Goldman were false, as Focus received an offer from Clayton Dubilier in August 2022, while negotiations took place for months before the deal was announced in February 2023. The suit alleges that the Focus deal negatively impacted KSFB's own sale, substantially decreasing its value. KSFB is seeking undisclosed damages for Goldman's and Focus' alleged fraudulent conduct and violations of state law, including fraudulent inducement and breach of fair dealing.
