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Buyout firm flips proxy advisor ISS

Private equity firm Genstar Capital has agreed to acquire proxy advisory firm Institutional Shareholder Services from Vestar Capital Partners for $720 million. It's a strong return for Vestar, which paid $364 million to buy ISS three years ago in a competitive auction.

Why it's a big deal: The high sale price masks some secular threats to the central role that ISS and fellow proxy advisor Glass Lewis have played in the M&A market. Not only active fund managers making their own decisions, but also giant index funds relying on ever-growing internal research and corporate governance groups. Perhaps this is why ISS revenue and EBITDA only climbed 3% during the majority of Vestar's ownership, per Moody's.