Investcorp Takes Majority Stake in Employee-Owned Berger

Berger Financial Group, a Plymouth, Minnesota–based registered investment adviser that converted to full employee ownership in 2018, accepted a majority stake investment from Investcorp and will remain roughly 35% employee-owned.

The firm manages $2.95 billion in client assets and operates 10 offices in five states: Minnesota, Illinois, Vermont, Arizona and Maine. Berger plans to expand to 10 states and 25 locations using the new capital.

Berger intends to hire advisory and entry-level staff, add C-suite executives and build a mergers-and-acquisitions business-development function. The firm expects headcount to grow from about 100 employees to as many as 250.

Employees were offered the chance to roll equity into the new ownership structure and on average retained about half of their holdings, leaving the company approximately 35% employee-owned after the transaction.

Berger focuses on the mass-affluent market and does not impose an asset minimum for clients. The average client relationship is about $750,000. Nick Asmus, chief executive, said, ‘We believe the mass affluent space is underserved.’ He added that benefits such as employee ownership and work-from-home flexibility were factors in selecting a partner and cited the firm’s motto: ‘Work hard. Family first.’

Investcorp described the Berger deal as its first direct investment in a registered investment adviser. The firm has previously invested in professional services businesses such as accounting and consulting firms and focuses on mid-market services in the U.S. Vitali Bourchtein, managing director on Investcorp’s North America private equity team, said the firm sees an opportunity to scale Berger’s operating model and client service approach and that Investcorp may add more groups into Berger, likely using broker intermediaries. Investcorp was introduced to Berger through the RIA’s investment-banking advisor.

Private equity involvement remains a prominent feature of consolidation in the RIA sector. Some advisory firms have expressed concerns about changes following private-equity investments and have pursued alternatives such as affiliating with larger platforms or maintaining employee ownership. Berger’s leadership stated the deal structure and choice of partner were intended to preserve workplace culture and client service while providing capital and operational support for expansion.

As part of the growth plan Berger expects to add client-facing advisors and support staff and expand its geographic footprint. Investcorp cited high customer satisfaction and retention at Berger as reasons for the investment and said it will focus on scaling operations to serve more clients and provide a home for advisors aligned with Berger’s model.