Research Note: Clayton, Dubilier & Rice (CD&R) Has An Estimated $2 Billion in Hidden No Cost Deposits
Clayton, Dubilier & Rice (CD&R)- A Leading Private Equity Firm
Clayton, Dubilier & Rice (CD&R) is a leading private equity firm that was founded in 1978 and is headquartered in New York City. The firm has a long history of investing in and building stronger, more profitable businesses across a wide range of industries. Since its inception, CD&R has managed the investment of over $40 billion in more than 100 companies, with an aggregate transaction value exceeding $175 billion.
CD&R's Investment Strategy
CD&R's investment strategy is predicated on partnering with management teams to drive operational improvements, accelerate growth, and enhance the long-term value of its portfolio companies. The firm has deep expertise across several key industries, including consumer & retail, financial services, healthcare, industrials & business services, and technology. CD&R's portfolio includes a diverse mix of both control and non-control investments, and the firm has demonstrated a track record of successful exits through initial public offerings, strategic sales, and other transactions.
Notable recent investments and acquisitions made by CD&R include the $4.7 billion acquisition of enterprise software provider Epicor in 2020, the $9.7 billion take-private of UK supermarket chain Morrisons in 2021, and the $8.9 billion acquisition of healthcare IT services company R1 RCM in 2024. The firm's strong performance and reputation have allowed it to raise large, multi-billion dollar funds, with its most recent flagship vehicle, CD&R Fund XII, targeting over $20 billion in commitments from limited partners. Clayton, Dubilier & Rice (CD&R) is a highly respected and influential private equity firm that has established itself as a leading investor in technology, software, and other high-growth industries.
With over four decades of experience, the firm has developed a proven track record of successfully acquiring, operating, and building value in its portfolio companies. CD&R's deep industry expertise, operational capabilities, and sizable financial resources have enabled it to secure control or strategic investments in numerous prominent technology firms, including enterprise software providers, IT services companies, and innovative technology-enabled businesses.
The firm's willingness to take long-term, hands-on approaches to value creation has allowed it to drive transformative change and position its portfolio companies for sustained growth and market leadership. As an active and discerning investor, CD&R remains well-positioned to capitalize on emerging trends and opportunities in the rapidly evolving technology landscape. Leveraging Focus Financial Partners and Vialto Partners to Create Unique Omnibus Cash Accounts
The Proposed Strategic Combination with a Custodian or Trust Company
Strategic Planning Assumption: CD&R has $18 billion in cheap deposits embedded within its wealth management and tax service architecture with 2 billion of the deposits having no cost with an estimated $100 million to $400 million in free cashflows yet to be unleashed from the combination. The cashflow, when fully valued, should more than pay for the acquisitions. (Probability .96)
The strategic combination of Focus Financial Partners, CD&R's wealth management platform, and Vialto Partners, its global mobility and tax services business, presents a unique opportunity to create highly valuable omnibus cash accounts. Given the typical 10% average cash holdings associated with wealth management accounts, and the appropriate 3% allocation for "now" accounts, these cash balances can be effectively swept overnight, providing significant scale and earning potential.
By integrating the capabilities of Focus Financial Partners and Vialto Partners, CD&R can establish two distinct omnibus cash accounts that leverage the collective client assets under management. The first account would encompass the wealth management cash balances from the Focus Financial Partners network, while the second would capture the cash holdings related to Vialto Partners' multinational client base. These specialized accounts can be structured to earn near-zero interest rates, thereby maximizing the value extracted from the vast sums of cash that typically sit idle within these types of financial services businesses.
The implementation of this strategic initiative would enable CD&R to generate substantial incremental earnings from the cash management function, further strengthening the financial profiles of both Focus Financial Partners and Vialto Partners. Moreover, this approach aligns with CD&R's proven track record of identifying innovative ways to drive operational improvements and enhance the long-term value of its portfolio companies. By capitalizing on the unique synergies between these two specialized firms, CD&R can deliver superior returns for its investors while providing enhanced services and capabilities to its wealth management and global mobility clients. Bottom Line
Bottom Line
CD&R has $1.8 billion in near zero deposits and 18 billion in low cost deposits embedded within its wealth management and tax service architecture or $100 million to $400 million in free cash flows yet to be unleashed from the architecture. The strategic combination of CD&R's wealth management platform, Focus Financial Partners, and its global mobility and tax services business, Vialto Partners, presents a compelling opportunity to create unique and highly valuable omnibus cash accounts. By integrating the substantial cash holdings associated with wealth management accounts and multinational client assets, CD&R can establish two specialized overnight sweep accounts capable of earning near-zero interest rates. This innovative approach allows CD&R to generate substantial incremental earnings from the cash management function, further strengthening the financial profiles of both Focus Financial Partners and Vialto Partners. Leveraging the collective scale and capabilities of these two specialized firms, CD&R can deliver superior returns for its investors while providing enhanced services and capabilities to its wealth management and global mobility clients. The implementation of this strategic initiative demonstrates CD&R's prowess in identifying innovative ways to drive operational improvements and enhance the long-term value of its portfolio companies.
Clayton, Dubilier & Rice (CD&R) has invested in:
1. Epicor Software Corporation - CD&R acquired the enterprise software provider Epicor for $4.7 billion in 2020.
2. Presidio - In 2024, CD&R acquired a majority ownership position in the technology services and solutions provider Presidio.
3. Covetrus - In 2022, CD&R and TPG Capital acquired the animal-health technology and services company Covetrus.
4. Cloudera - In 2021, CD&R and KKR acquired the cloud-based data analytics company Cloudera.
5. Focus Financial Partners - In 2023, CD&R acquired the wealth management technology and services firm Focus Financial Partners.
6. Vialto Partners - In 2022, CD&R acquired the global mobility tax and immigration services business from PwC, which became the newly independent company Vialto Partners.
7. Carestream Dental - In 2017, CD&R and CareCapital Advisors acquired Carestream Dental, a provider of dental imaging and software solutions.
8. Sirius Computer Solutions - In 2021, CD&R sold Sirius Computer Solutions, an IT services and solutions provider, to CDW.
9. Atkore - CD&R's portfolio company Atkore, a manufacturer of electrical products, has made several acquisitions in the technology space.
10. Resideo - In 2024, Resideo, a smart home technology company, acquired Snap One, a provider of smart living products and services.