Podcast | How The CEO Of A $2 Billion RIA Approaches Buying Other Firms

Mike Langford:

Hi there, it's Mike Langford. Welcome to another episode of the Advisor Financing Forum, a podcast presented by SkyView Partners. This week on the show, Scott Wetzel and I are joined once again by Nick Asmus, the CEO of Berger Financial Group for a conversation about Berger's latest acquisition and what Nick and his team have learned since Scott and I first had him on the podcast back in 2021. Nick was also gracious enough to take us behind the curtain as he shared how Berger Financial Group approaches the landscape for M&A deals. Whether you're looking to buy or sell a financial advisory business, you are going to get a ton of insights and helpful tips out of this episode.

Now, before we get rolling, as always, if you have questions about your specific M&A plans, please feel free to swing by skyview.com or call (866) 567-6282, and the SkyView team will be happy to walk you through the options that are best for you and your business. And of course, if you haven't done so already, please make sure you subscribe to the podcast so you don't miss an episode going forward. We're active on Apple Podcasts, Spotify, Google, Amazon, YouTube, wherever you like to get your podcast jam on, you can find us there. All right, let's get to our conversation with Nick Asmus.

Well, Scott, Nick, wonderful to see you guys. Nick, welcome back to the Advisor Financing Forum podcast. It's so wonderful to have you with us today.

Nick Asmus:

Thanks, Mike. It's great to be a part of it again. I enjoyed our last conversation a few years ago.

Mike Langford:

I hear a few things have happened on your end, according to Scott. He said some big things are happening over there at Berger Financial Group.

Nick Asmus:

Yeah.

Scott Wetzel:

Well, first and foremost, it looks like he's getting a tan in his office today, he's got so much sunlight coming in there. Is Minnesota really that sunny, Nick? I mean, come on.

Nick Asmus:

I want you guys to know, I think the feels like temperature is like 25 below right now, so don't let this side of my face misconstrue the temperature here.

Mike Langford:

So I used to be hardy. I'm a native New Englander, grew up in the Boston area, but I've lived here in Austin, Texas now for just over 10 years and my blood is completely thin. It is true what they say. We had some teens, down into the teens temperatures these last few days, and I was a complete baby about it. You should have seen me whimpering as I'm walking the dog. So sorry, dude, you're stuck with it. But don't send any more of that this way. I'm tired of it.

Scott Wetzel:

Brutal.

Nick Asmus:

Keep it up here.

Scott Wetzel:

We got down to 42 last night, 44, and I was miserable, but no.

Mike Langford:

No, must have been awful. You had to wear shoes, right?

Scott Wetzel:

Well, no. As a matter of fact, I'm not right now. But [inaudible 00:02:44]. Well, hey, Nick, thanks for joining very much. We've not been on a podcast together and I talked to Mike about the fact that Nick is absolutely one of the best operators, if not the best operator, that we work with in the M&A space. I think, Nick, we've worked on two transactions that came to close with Berger, correct?

Nick Asmus:

That's correct, yeah.

Scott Wetzel:

And I can say for Nick that through the process of getting...It's a lengthy, burdensome, laborious process, an emotional process for sellers. We know that our clients are in very good hands with Nick during the entire process and as, or even more, importantly to us post-transaction, we've got very happy clients. So that's paramount importance of what we do here at SkyView Partners, ensure that we have a seamless transaction and that our clients are very happy as they make a transition to the next part of their life.

Nick Asmus:

Well, that's very kind words. Thanks, Scott. We've had two transactions and they've both been great. They've both been great partners. One of them was very recently and we had a, I'm just going to throw this out there because I'm really proud, we had a 99.8% retention on that one, so that was our highest service, over 800 clients, so it was a phenomenal success.

Scott Wetzel:

Wow.

Mike Langford:

Wow.

Scott Wetzel:

So can you give us the magic and the madness that makes that happen?

Nick Asmus:

Yeah. Well, first of all, the team was awesome. Both teams. I'll start with their team was ready to go. They worked hard. And admittedly we did a lot of it digital, but it's never 100% digital as we know in dealing with the typical client demographic in our industry, there's still a fair amount of paper signatures that needed to happen too. And they were ready to work as hard as needed. And by the way, we did that in six weeks. That was our timetable, our turnaround for that. And then our team was awesome too. We tried to support as best as possible to just kind of backfill whatever they needed. I remember I was in their office in early December stuffing envelopes, which I'm terrible at by the way, I realized. Because there's so many pieces of paper and you got to put the stamp on and all these things. So-

Scott Wetzel:

Come on. You tried to get yourself fired from that job. You're like, "Well, I'm really terrible at this. I can just probably go back to the office."

Nick Asmus:

We were joking with we call it our central service team, our manager was down there and me and another senior manager, we were like, "We'd be fired, right? You would fire us?" And he's like, "You would be fired." But anyway, the team was great. It was a whole effort with everyone involved. And I think one thing I would say is we did a lot of planning before we started, and so I think the whole measure twice and cut once sort of philosophy also helped.

Scott Wetzel:

And Nick, how many transactions have you closed now with acquisitions?

Nick Asmus:

That was our 18th. Admittedly, some of those are tuck-ins. We've had a few that are pretty small. I define that as like 20 million in AUM. This one was 300 million in AUM. So we do large acquisitions as well. But since 2010, we've done 18 and 16 of those were since 2015.

Scott Wetzel:

I think bring up a salient point, just the importance of the seller and their preparedness and willingness to help facilitate the process. That's just not all on the buy side, right? Without that collaboration, you're not going to get to 99.6% or whatever you were boasting about earlier.

Nick Asmus:

Oh yeah. I can tell a horror story too, because our 17th transaction was our lowest ever success rate.

Scott Wetzel:

Well, let's hear about the bad stuff. Come on, give us the dirt. We want to know what goes right, what goes wrong. What goes wrong, so people contemplating this know what not to do?

Nick Asmus:

And this is going to sound like a sales pitch, but this is a true story. I can't make this up. When you said seller being involved and ready to go, that's what made me think of it. Because you're right, our 18th transaction, the one we just finished, the seller was phenomenal. He was great in helping everyone get ready to go, being supportive of the team. The one before that, our lowest ever was after a death unfortunately. We were in conversations with the firm, the seller was sick but he was supposed to have two years to live. And during negotiations before the LOI was even signed, he passed away. And so we still moved forward with the deal with the estate and our conversion rate, we're still working on this one actually, but it's going to be about 50 to 60%.

Scott Wetzel:

So the other 40, 50%, are they going elsewhere? I mean, I am just kind of curious on how that works.

Nick Asmus:

Yeah, combination of not transferring over just because they didn't have a relationship with the new advisor. Combination of just wanting to move on. Combination of everything. And I was shocked because I think our lowest before that is 85, 90, somewhere in there. So this was, we're all finance geeks here, I mean several standard deviations away from our norm. But it also was this whole fear in the industry, and FINRA, or the SEC or FINRA, I forget which one, maybe both now, SEC demands the backup succession plan, that you have to have it in place. And I mean, it's obviously a very real story and a very real reason that you should have it in place. And we feel terrible for the estate, for the family, for clients. I lived out there for a few weeks and trying to help with the transition. We did everything we could and it still just was an ugly ending.

Scott Wetzel:

Yeah. Have you guys done any other what we probably classify as a distressed sale, anything similar to that?

Nick Asmus:

Well, our first ever transaction, which was in 2010, was a backup succession plan. And it was a woman who had brain cancer that she, I think, also only had... This is before I was part of the firm, but she only had a few weeks or a few months, and she also went quickly. But that one, they did end up retaining, I think, in the 90s, 90 plus percent. So I think even just because she was still alive as part of the transition is where the clients didn't know, and so the story we told clients is like, "Hey, this wasn't a fire sale. We were actually in conversations." And I thought it was a real true, good story. But I don't know if it just didn't resonate. But a fire sale is never a good situation.

Scott Wetzel:

Yeah, and obviously very difficult for anyone to plan or predict for the worst case outcome. But certainly makes sense to put a succession plan in place and maybe that succession plan includes an external buyer. I mean, that's just the reality we're finding with so many advisors is they do not have that next gen that may not be ready from multitude of standpoints. But really from a financing standpoint, we see the biggest concern that really just don't have the personal net worth or the willingness to absorb that kind of debt to take on the practice. So yeah, external succession planning. I know no one likes to think about it. I don't like to think about it. [inaudible 00:11:10] forced to think about it, right? But it's just reality.

Nick Asmus:

Yeah. The combination of the business is growing and the valuation's going up and the market's going up and more interest, the tailwind is there where more and more people, you're going to have to go with external because next gen can't afford it.

Scott Wetzel:

So a question for you, we're looking at 2024. We've seen some reports in the industry that deal volume was good last year. I know for us, our loan side was up slightly last year, which I'm very proud of our team. The interest rate environment was not conducive to getting that done, but I'd say it's a much tougher year to get things done. What do you see for this year? What are your thoughts?

Nick Asmus:

Yeah, great question. I personally think 2024 is going to be great. I think it's going to be a new record. I'm not sure if DeVoe and Echelon and all those others have said that as well, but my personal experience is we're seeing a continued interesting dialogue, continued interesting conversations. I think it's kind of similar to, not exactly, but post-COVID, you had 2020, no one was selling because everyone was trying to figure out the world. And then '21 you had a good market and then that was a record volume year. 2022 was a terrible market year, '23 rebounded. And so now not only are valuations probably back up because our revenues are back up, but then also having going through the stress of those two years is more reason for people who were... The great resignation sort of philosophy is people who are on the fence are kind of like, "Yeah, I'm done. Might as well. My valuation is back. It's time to continue to have conversation." So I think it's going to be a record year.

Scott Wetzel:

So you're addressing the sell side, but also from the buy side still we see that we had less urgency, let's put it that way, from the buy side than we've ever experienced last year due to rates. But you obviously were active in the marketplace. What are your thoughts in acquiring and what is a higher rate environment that we're accustomed to and your thoughts around that?

Nick Asmus:

Yeah, and that's a great point. I think a lot of different philosophies existed on this. I think private equity especially was a little more strapped. And so I think that's where you saw a higher slow down. We're not private equity backed at all. So for us personally, we looked at it this way. We had a very low rate coming into this, and we established a new banking partner and had a new rate that was significantly less favorable obviously. But we looked at it that it was a term loan that was going to mature in two years anyway, so this was a conversation we were going to have in two years.

And yes, rates are high, but we looked at rates the same way as we look at the market, there is a perfect time to buy in the market, obviously, and there's a perfect time to sell in the market. But just like we don't time for our clients, we're not going to try to time our acquisitions just on the buy side when the markets are the most attractive. So our philosophy is we're going to continue to acquire. Some of those acquisitions are going to be at great market prices. Some of those are going to be at not great market prices. Perfect example, we closed our last deal in October 15th, 2021. That was not the perfect time to buy. We didn't know that at the time. But knowing what I knew now, 2022, we bought this revenue here and it goes down. So that wasn't great, but now we're back above, we're at market highs now, close enough. And so we're not going to try to time those transactions whether it's either rates or markets.

Scott Wetzel:

And I can say, so for our sell side investment banking business, I think it's probably less than a third of the buy side end up being the non-PE backed firms like yourself that are candidly willing to pay the multiples that we believe our clients deserve and receive. And you've been very aggressive with multiples and making sure the deal gets done. So what are your thoughts on multiples in this environment also historically and how you approach the market? Because you've been very successful in competing with PE where other firms have just backed away and said the math doesn't make sense. But I'm not sure what math they're looking at.

Nick Asmus:

Yeah, I think two things. I think our biggest competitive advantage compared to a PE firm, obviously it's not money and experience, because they got deeper benches and more experience too. And so we look at flexibility. First of all, I think the fact that we come in with a different culture, a different philosophy, different mentality, and willing to look at the deals a little bit more flexible, "What does this look like long-term?" If you believe in that the market's going to continue to grow up, if you've got good strong organic growth, then we have the same opinion about this industry as PE. PE, I've heard some of the biggest PE firms kind of call this industry as a Goldilocks industry because it continues to go up. If you just think about it, you've got the market's going up 9% a year. If you've got organic growth that's decent, let's just call it even 5% a year, that's 14. Then you've got some inorganic growth on top of that, you can get 20% year-over-year returns.

The only thing that can do that is technology or SaaS. And the difference between them and us is they've got to reinvent themselves every five, seven years depending on your tech outlook and tech specific sector. And you look at our industry, not a lot has changed in 30 years. Sure, we're doing more, we're providing more services. But as a fundamental basis, not a lot has changed. And so I think we look at it as, yeah, multiples are high. They might stagnant, but I don't think they're going down. I think the industry is starting to mature, much like I think the best analogies are the insurance industry, kind of where they were 20, 30 years ago, it's kind of where we're at in the financial services. And there's going to continue to be acquisitions and I think some firms are just looking for that multiple arbitrage. But I think if you've got a good growing firm and a well-run enterprise, it's much more than just that.

Scott Wetzel:

So put you on the spot here, multiple over EBITDA. What kind of range do you guys usually reside in?

Nick Asmus:

Yeah, great question. Of course, everyone likes it.

Scott Wetzel:

It's all about the add-backs. I know that, but right?

Nick Asmus:

I think it depends on the size first of all. So I think if you're a billion plus, I think multiple EBITDA's are around 15, I think if you are-

Scott Wetzel:

Of course you do. You guys are a billion plus.

Nick Asmus:

Yeah, just ask [inaudible 00:18:04].

Scott Wetzel:

Make it 30, come on. Why are you going so low on yourself?

Nick Asmus:

Well, I think there's [inaudible 00:18:10] in 2021, I think you can get 20, right? I think there's firms that'll pay 20, but I think if you look at a good partnership, probably 15 is a good range. Call it 14 to 17. And I think if you're 100 million to a billion, let's just say that, I know those are a lot of variants there, but I think let's say that an average firm of 300, I think you're probably around that 7 to 10 range. And I think if you're under 100, I think it's quite a bit less. I think you're in that five-ish and it can fluctuate there.

Scott Wetzel:

Do you have an idea how that translates to multiple on revenue? I know that's not a great way of looking at it, but historically that's the way that the industry really looked at valuations.

Nick Asmus:

And so I mean, if you think... That's what's hard is what is the margin of the business? So let's say a sustainable business, an enterprise, and these are all the benchmark studies, are going to be in between that 3 to 40% margin. I'm talking a billion plus, right? Because you can't get more than that once you add middle management, operations, you've got to have all that extra team. I think a solo producer or a small firm can run 70% margins. But smart acquirers know that that's going to normalize to some degree. You can drop some of that in, but 70 margin business into our firm isn't going to be 70. It might be 50 for that location, but there's some normalization to it. And so I think we kind of look at it as what does it look like and then what are we not counting for an additional expense or layered expenses that are variable costs that probably didn't exist with their and do exist with our business?

So if you assume a third, let's call it, then you basically can multiply or divide whatever number we say by a third. And so at a 15 times big firm, that is five times revenue. And I think you can do a partnership payout structure and you hear some people say, "Well, I got eight times top line." That's true, right? I mean, we've done partnerships where technically they got seven to eight times top line, but they also worked for us and it was a salary. And so I think the devil's in the details on all of these types of transactions. And [inaudible 00:20:32].

Scott Wetzel:

Nick, I'm glad you brought that up because I think so oftentimes that business owners look at the possibility of doing a quote, unquote, "transaction" involves them going away, and oftentimes that's very much not the case. Can you talk about how you've seen the glide path of that senior advisor post-transaction and the involvement they've had that has worked well for you?

Nick Asmus:

Yeah. So we actually do two types of transactions. We do what I call transactions, and we also do partnerships. So I'll speak to specifically the transactions. Even in a transaction, and I define the difference between a transaction is a seller who wants to sell and retire and move on. And that seller is still involved for usually depends on the deal structure, but a clawback period, which at a minimum is probably six months up to three years, with the average being a year to 18 months probably. I feel like it's changed a lot over the years too, but that's where it's at right now, and I think that's probably where it will stay.

And if the deal structure is done right and done well, that seller and buyer are both financially motivated for retention, and so that seller is going to stick around and make sure that the transaction goes smoothly and that the clients come over and they feel comfortable. We've also done, and I don't know if other people are doing this, but we've also done independent contractor agreements with a bunch of our sellers too. And what we like about that is then the seller is still available and still there. So for those, there's always 10% of the clients who, "Are you retiring?" Or they want to be able to talk to them and having that relationship, or if they're willing to keep paying their licenses with us if they want, we'll keep them on just as kind of a consulting arrangement just for available as needed.

Mike Langford:

One of the things that you hit upon, Nick, not overtly, but I couldn't help but think about it, was that this is a long-term investment. Even going back to what we were talking about the rates you might be paying or the multiple you might be paying for the business, this is a long-term investment. You're thinking of decades ahead, right? I mean, you're buying a future value of annuity basically. And if you're a buyer, you need to think that way. You need to be thinking, "Okay, I'm not just paying this price this year and then paying off the loan if I use financing for it. This is going to be a part of the new business for decades to come. And so if I pay a little bit extra today, that's probably okay." As you mentioned, we're getting 9% market growth, we're getting some organic growth, and then we also might get some inorganic growth from that business as well. We're able to come in and find ways to grow the business. So how do you guys think about that? Are you thinking 20 years down the road when you're looking for businesses, "Is this going to fit us?" Are you thinking more strategically now and then worry about it later?

Scott Wetzel:

Are you trying to flatter Nick because he's so young to be a CEO with a $1 billion practice? Mike, you're so obvious, it's brutal.

Nick Asmus:

Well, I want to retire when I Scott's age, so I don't know about 20 years.

Scott Wetzel:

Whoa. That make me sound so old. Am I supposed to be retiring right now? I didn't know. Come on, if I was making margins of 40 plus percent, I think I'd have better options. Mike and I are clearly [inaudible 00:24:15].

Mike Langford:

Well don't show up in a rocking chair here, Scott, you got a rocking chair.

Scott Wetzel:

I mean, Mike, what are we doing? We're service providers, all these guys. I mean, hello. Light bulb. We're in the wrong biz.

Mike Langford:

Exactly, right? They're coming for you, Nick.

Nick Asmus:

No, that's a great question. Yeah, we do. We do think about it from a sustainability aspect, like, "What does this look like 20 years on the road?" There's a lot of people who say they've been talking about the AUM percentage fee model changing I mean for 20 years, for 30 years. There's always the fear of, "Well, what if Amazon does it?" Or I think Elon Musk said he's going to create something within X, Twitter or whatever to take over financial services. So there's always risks. But realistically, we still do think this industry has a good 20-year runway as minimum.

So with that in mind, I mean I'll just be very transparent. Our previous banking relationship was under 5% as a rate. This new banking relationship is, let's call it, eight, okay? Below five was too low, above eight's too high. But over time, that's going to normalize too, just like the market. And so we understand that rates are going to change because that's part of what we do. We understand markets, we understand rates, we understand how that's going to change. And sure, we'll reanalyze and we look at locking that in again at a six or seven at some point when that goes down. But yeah, we're trying to forecast... That's what's great about some of the P firms that are like family office backed it, that's like the perfect partnership, right? Because they're thinking multi generational family office much, much longer term. I don't want to say we're necessarily that philosophy, but we are more closer to that philosophy than snatch up a bunch of things and then sell.

Mike Langford:

That brings up an interesting thought process here. One of the things that happens as a business grows is the business itself kind of evolves and changes. SkyView, as an example, started off as a commercial lending firm for financial advisors and they added investment banking, and now they've got the new SKYVIEW 1 solution they're rolled out. When I think about Berger Financial Group, you might've just started out just managing people's money and then added financial planning and so forth. How is the business growing? You're over $1 billion AUM, as Scott has mentioned a couple of times. How is the business evolving and changing?

Nick Asmus:

Yeah, no, that's a great question. Well, first of all, to clarify, we're at 2 billion now, Scott.

Mike Langford:

Well, there we go.

Scott Wetzel:

I teed you up for that. Thanks. You're welcome.

Nick Asmus:

Yeah, thank you. Thank you. That was a nice little spike. No, and it is evolving and changing. It's funny, I was just talking, we do a strategic plan every year, and I was just discussing how we're in a situation where we just hired an HR person for the first time, and so we're starting to build up more. We have someone dedicated to M&A, inorganic growth, many people actually dedicated to that. We've got teams that are dedicated to now location management. And so as we continue to expand a fair amount of locations, we just hired in this middle ground. So now I said we're good now for staffing to 3 billion. And so we just hired all the staff. Now we have to grow to 3 billion because we've got capacity there.

And the other thing I was going to say too, when you talked about the Goldilocks 9% and plus organic and 5%, also, I think the bigger you get scale and you get efficiency. So I do think there's a little bit of, maybe you could call that maybe margins can get closer to 40 the bigger you get because you can get more scale. So I think that there are significant benefits as you go through phases. I know Kit's talked about between 100 million to a billion, he said this five years ago, the owner isn't really making any more money, but you're creating an enterprise, you're creating a valuation that's expanded. I think he's very right on that. I think between 100 million and a billion, that's one set of problems. And then between a billion to 2 billion was another set of problems. I don't know what that looks like, but now they're starting to rhyme in the types of expansion. And some firms offer additional services or growth models. So yeah, it's fun to see how you can evolve and how you can continue to grow and offer more services.

Scott Wetzel:

Nick, another question for you again for the listeners, your secret sauce. So from our standpoint, from an investment banking side, we do a very broad buyer search and oftentimes narrow that down, 3, 4, 5 different practices that actually get introduced to our client. And Nick has obviously come out on top in a couple of those scenarios. And I've got my personal impression of why you're successful at it, but I think our listeners would like to hear from you.

Nick Asmus:

Yeah, our secret sauce, I think I've mentioned a little bit earlier, I think flexibility, first of all. I think people, especially either new buyers or very seasoned buyers have this idea that we have to do things this way and we don't necessarily have to do things this way. You have to be a little bit open-minded into creating a deal structure that is unique to the individual seller. No two deals ever look alike. There's always different challenges and different issues and different things that you run into that you might not have expected. Sure, a lot of them start to rhyme and there's these type, here's what they care about, here's what they're concerned about. So I think number one is having flexibility.

And I think number two, we're in a sweet spot where we're not Wealth Enhancement Group. We're not CAPTRUST, we're not Mercer or Mariner where we're doing 15 a year or whatever they're going to do. But we're also not brand new. This is not our first transaction. So we're experienced enough to know what to do and be comfortable with doing it, but also you're not selling to... I think a lot of sellers, more and more you're going to see this, don't want to sell to those buyers. I think that they want to be different, they want to be unique. And I think before they knew that maybe that was a haircut in price, but I don't think it is anymore. I think we're willing to pay market price for businesses.

And the last thing is I think just personality and culture. I would just say I think we really understand that for a lot of these sellers, this is their baby. They spent 40 years building this. It's an emotional process. In every single transaction. I have had very hard uncomfortable conversations with these sellers. But I also understand that it is important to them and it is like their child. And I think when you get that, you can have a little more empathy or respect for the emotion that they're feeling in this situation, because it is a big deal and that should be validated.

Scott Wetzel:

And from my perspective, the biggest thing, the biggest difference is that you listen and it seems simple and it seems intuitive, but you go visit whomever our client is, you sit down, you don't have a preset, "This is how we acquire. This is how things are going to work for you." So yes, extremely flexible. But you're flexible from listening to the client. Because your point, they've been building this for 40 years and all of a sudden they're walking away and then someone's coming in and saying, "This is how you're going away." You sit down, you just listen. And you're also responsive and treating them like they are the most important thing in your world, which they are, which we've had that problem.

And we've had a problem with people just taking the time to really listen to what our clients need and when they don't, they're not a fit. And then we've had some cases when they seem like the right buyer and then just fail to be responsive. And there's nothing that feels worse than you're entering a transaction with somebody and they're not even treating you as well as they might treat a client. You wonder how poorly they treat clients. So I think you do an amazing job at both really understanding the difficulty emotionally, it truly is, and listening to what their needs and wants are, and being flexible enough to accommodate that. And that's where you're today.

Nick Asmus:

Well, thanks. Yeah, I appreciate that. It's funny that you say that because two of the last three transactions I can think of finding something new that was great advice that we weren't doing, that we implemented into our practice. And one of those was actually the death transaction, that it was a very small acquisition. It was about 60 million in AUM, and they were using this incredible tax planning software. We do tax prep, but this was a planning system that was much more efficient than our prep software that we implemented across the firm. And so you're right, listening to them and understanding their business, there's always something that they're going to be doing better than us or unique. And so if we can figure out what that is and implement it across the business, then it helps us too.

Scott Wetzel:

Now, if you'll just start listening to me at some point, that'd be fabulous too. But I realize you struggle with that or maybe you're being smart. But I don't know.

Nick Asmus:

That's what I said, retirement, right? I'll listen to [inaudible 00:33:57].

Scott Wetzel:

Oh God. I am turning 50 later this year and it's already bothering me, so thanks. Thanks.

Mike Langford:

That's hilarious.

Nick Asmus:

Well, I turn 41 tomorrow. I turned 40 last year. So there you go.

Scott Wetzel:

Wow. Aren't you something? Try rolling on 50, pally. Not fun.

Mike Langford:

Yeah, it's funny, going back to talking to the seller, the other piece of this is, look, they could probably get about the same price selling to anyone for the most part, give or take a little bit. And in the same fashion that your advisory client can choose one financial advisor over another, and they chose you, why did they choose you? Well, they chose you because they like you. They feel like you listen, that this is a good relationship for them.

So when they sell to you, they've got to feel like they've got a good steward of those client relationships. Because most of those advisors are not selling to you and just like, "That's it. I'm headed to Mexico." They're probably staying and maintaining a home base in their community and probably going to bump into some of those clients from time to time. They want to know that they're being taken care of with the same standard of care that they gave for the nature of the relationship. So I think it's really smart that you look at it a little bit differently like that. They don't want to just sell to some sort of sterile enterprise and boogie.

Nick Asmus:

Yeah, but I mean, that's well said, right? Out of the 18, I think we still have five or six that have longer term partnerships, they're still involved. And even when they're not involved, you're right. You never know. They're part of that community and it's important to treat them well.

Scott Wetzel:

So Nick, as CEO of Berger Financial, you guys are headquartered in Minneapolis, but what's your reach now today through acquisition, organic growth? Where do you guys have offices? Where are you looking to expand?

Nick Asmus:

Yeah, great question. So our primary location is in Minnesota, Minneapolis specifically. We've got a few regional offices in that area. We've got seven offices overall. We also have one in Vermont. We've got one in Maine and we've got two in Arizona, one in Scottsdale, one in Sun City. And the one we just recently acquired was in Springfield, Illinois. And so we're starting to get a little bit more of a geographical footprint across the United States. We like Arizona, a lot of people from Minnesota, as I said earlier, it's 25 below-

Mike Langford:

Golf.

Nick Asmus:

We want to go to Arizona or Florida. We would like to get a Florida office. It's highly competitive. We've been trying, we still don't have one yet. We'd like to get something in Colorado. That's another area we would like. And then in the Midwest, we feel like we understand well because it's in this area. That's what we liked about Illinois. And then East Coast, we would kind of like to go mid-market. We don't compete in a lot of the largest cities, for example, let's say New York, Philly, Chicago, LA. We kind of generally stay away from those. But we would like upper East Coast as well. And that's kind of our next wave. Texas is another area we've been looking at. We think either Austin, Dallas-Fort Worth. There you go. Yeah.

Mike Langford:

There you go. Come on down. I'll show you around.

Scott Wetzel:

No offense taken to Los Angeles. We'll just mark that down.

Mike Langford:

We mentioned LA. Well, one thing I'd like to dive in there, Nick, you talked about this expansion, and I imagine to a listener, they might be like, "Well, I heard some thread of a methodology there. Okay, Arizona, because you are existing club here-"

Scott Wetzel:

Because Nick likes to golf and he wants to get out of the cold.

Mike Langford:

Golf. Right? Exactly. Well, hey, if you live in a snowbelt place, you want to escape the snow at some point in time. Totally get it. But is there a higher level methodology that you've decided? You mentioned mid-market or whatever. Do you have some checkboxes? "Here's what we're looking to do geographically." Because I imagine some advisory firms are in the same bubble. "Hey, we'd like to expand. We don't want to just expand here in Austin. Maybe we do want to go other places." How did you arrive at some of your methodology for geographic?

Nick Asmus:

Yeah, that's a great question. There's two philosophies we look at. We look at strategic and opportunistic. So a strategic acquisition would be something in southwest Florida. That's an area we want to be. The Colorado phase is something that we also want to be, those are very strategic. Opportunistic is the other area. So opportunistic is both Vermont, Maine, Illinois. When we see a good business that's run well, we're pretty open to it. And those are opportunities that we like to capitalize on. Now since our Vermont office is in Burlington, and so we've looked aggressively within Burlington. We've had a lot of conversations. Nothing's come to fruition. Same thing with Portland, Maine. We've had a few conversations already, that was a newer acquisition.

So once we get a location, we'd like to expand depending on how much the city has to offer, Springfield's brand new, but we look to do the same thing there. And so I think from a broad reach, we look at, "Okay, here's the areas we are intentionally going to try and get into." But then we're also open to if it's a good business and it's a good opportunity, it's a good business. I had never been to Springfield, Illinois up until a month and a half ago, and it's great. Abe Lincoln's hometown, so it was fun. It's a great little city.

Mike Langford:

Did you get the hat, the Abe Lincoln hat?

Nick Asmus:

No, but I did see his house and I did go to the museum. I told our staff, "We have to go to this museum. If going to be here, we're going to go check this out."

Mike Langford:

That's awesome. That's awesome. Are there demographic targeting things that you think about as well? Because I would imagine going back to that question about evolving as a business, as a business grows, you have the ability to serve probably different demographics of clients, right? So higher net worth clients, you mentioned some other businesses expanded into more family office offerings, if you will. When you start thinking about an acquisition, how hard do you look at the demographics of the client roster of that business versus just, "Hey, it just happens to be where we're looking to get into in Colorado or Southwest Florida", or something like that?

Nick Asmus:

Yeah, great, we do. We look at that a lot. We're massive fluid. So to be clear, most firms our size have an ultra high net worth focus. We don't, right? Our average client's 555,000, so we've got a lot of clients, therefore we've got a lot of staff. But our average fee's a little higher. Our revenue's higher compared to our peers of our size. And so we're very open. Our ideal client is somewhere between 500,000 to 2 million investable, right? We view that as massive fluid middle America, and so we want to try to stick with that DNA. We have looked at an ultra high net worth offering, and I think we're of the attitude that I think we would probably acquire it versus build it. We've got still quite a few high net worth clients. And so we've looked at that's a whole different service offering, whether that's a family office, bill pay, whatever that service looks like, we're open to those conversations. But also, that would be a great opportunity for someone to be a lead and teach us on something, on what to do and what to grow. But that is kind of really important to make. And even just culturally, how are they investing? How are they practicing? What is their approach?

And another thing I'll bring up, because I don't think Scott and I talked about this, in the last six months, we've seen three different businesses that we've looked at to acquire that there was no central office, and these were big firms. These were a couple of hundred million AUM. And so I'm starting to see more and more where, I don't know if it's post COVID or whatever, where there's not really an office and their clients are throughout the entire United States. Actually, one of them was kind of a podcast radio feeder show, and they had a bunch of clients. And so it's interesting to see if that will continue to be a trend over the years to come where we talk about locations and hubs, I think that's a very attractive business model because then the bigger you are, then you're spread out all over the United States as well.

Mike Langford:

Yeah.

Scott Wetzel:

Well, Nick don't want to take a ton of your time, want you get back to acquiring more biz, doing more. And I just say that working with Berger, but more specifically with you, you do an outstanding job of listening to our clients' needs, wants, concerns, and addressing them and being flexible. And that makes for a happy client for us, so that makes me happy. So thank you.

Nick Asmus:

Appreciate all the support you and the SkyView team has offered us. We've had two great transactions with the guys, and we couldn't be more pleased with both of those integrations, one two years ago, one very recently. And we're happy to work with you and be a partner with you guys.

Mike Langford:

Fantastic. Well, we will get bergerfinancialgroup.com linked up in the show notes. Anywhere else somebody should be following along with you and the team?

Nick Asmus:

No, I think that's great. Check out our website. You can check us out on social media and all the usual outlets as well.

Mike Langford:

Perfect. Well, thank you very much. Great seeing you guys. Thanks.

Scott Wetzel:

Thanks, Mike. Thanks, Nick. Appreciate it.

Nick Asmus:

Thanks, Mike. Thanks, Scott.

Mike Langford:

Thank you very much for joining us today. It was fantastic having you with us. Huge thanks to Nick Asmus for his generosity. It's not every day that you get a CEO of a $2 billion plus RAA to come on the show and share such high quality insights on how he and his team have gone about growing their business via M&A. Absolutely amazing stuff. Thank you, Nick.

Now, before we let you go, if you haven't done so already, please do make sure you subscribe to the Advisor Financing Forum podcast on your platform of choice. We are working on a ton of great content and you aren't going to want to miss any of it. Lastly, make sure you swing by skyview.com to learn more about your options for financing. To facilitate your plans to buy or sell an RAA or independent advisory firm, the SkyView team is there to help. Okay, that's it for us today. We'll see you next time on the Advisor Financing Forum Podcast. See you. Bye.