Fund Evaluation Group (FEG), one of the largest independent, full-service investment consulting firms in the U.S.1, was sold to its employees by means of an employee stock ownership plan (ESOP) last Friday. All current managing principals will remain fully engaged in the business, and are excited to more broadly distribute the equity ownership among firm employees.
“We always have been proud that FEG is independent and 100-percent employee owned,” Scott B. Harsh, President and CEO of FEG, said. “That is what has enabled us to stay focused on the needs of our clients, and strive to always put them first. With this change, not only do we stay 100-percent employee owned, 100 percent of our employees have the opportunity to own the firm.”
Founded in 1988 as a consultant to pension plans, FEG expanded its business significantly over time, and now offers institutional investors such as universities, foundations, independent schools, religious organizations and healthcare systems the full spectrum of services from traditional investment consulting to outsourced chief investment officer (OCIO) services. In addition, the firm provides proprietary money manager and capital markets research to financial intermediaries, family offices, insurance companies and banks.
Over time, FEG has grown its national presence by opening satellite offices in regions it has deemed strategically important. First, FEG established an office in Indianapolis, and last year, FEG formalized its long-standing business in Texas and the south by opening a Dallas office with the acquisition of Larry Thompson & Associates.
As the company nears its 30-year anniversary in 2018, Harsh is proud of how the company has evolved and added new capabilities to meet client needs. “This transition establishes a long-term, sustainable structure to take FEG forward, and to ensure that every employee can participate collectively in our success,” he said. “We’ve always succeeded when our clients have succeeded. The ESOP structure allows us to share that success and continued growth at all levels of the firm.
“We think empowering every employee as an owner and value creator will be a powerful motivator and continue to maintain a positive feedback loop for both our employees and our clients.”
“I’m very grateful to Scott and the leadership team for making this happen,” Nolan M. Bean, a managing principal and head of institutional investments, said. “A value-sharing arrangement like this really allows us to lock in the talent we have worked hard to attract and retain. It will help us maintain our positive growth trajectory in the industry and help ensure we can continue to serve our clients well into the future.”
For their part, employees of FEG couldn’t be more excited about the transaction. “I came to FEG, because it had a great, vibrant culture centered around doing what’s best for our clients,” Paul S. Keating, manager of fund operations, said. “As a millennial, and a new parent, being able to own a part of FEG and build that equity over time is just incredible. It wasn’t something that I knew was being considered, but now that leadership has made it happen, I think it’s great for my family and me.”
Christina N. Drake, senior institutional client development associate, agrees. “One of the reasons I joined FEG last year was the firm’s entrepreneurial culture. It seemed like everybody at FEG felt like they’re an owner of the company—that they have a responsibility to help our clients succeed,” she said. “Now, my colleagues and I actually are owners. This has affirmed my decision to join FEG, as I think our independence really differentiates us in the industry. Formalizing that differentiator and locking in our culture through an ESOP is an exciting evolution.”
In an ESOP, which is a qualified retirement plan, the company stock is technically purchased by a trust, and then allocated to employees on an annual basis.
Financial details of the transaction will remain private.
About Fund Evaluation Group, LLC: Fund Evaluation Group, LLC (FEG) provides investment consulting, portfolio management, and research services to clients nationwide. Established in 1988, the independently-owned firm has approximately $61 billion in total client assets under advisement.1 FEG service lines include FEG Consulting, which provides traditional, nondiscretionary investment consulting services to institutions; FEG Managed Solutions, which provides outsourced CIO and discretionary portfolio management services for institutions and financial intermediaries; and FEG Research Services, which provides traditional and alternative strategies’ investment manager research, due diligence and monitoring. For more information, visit www.feg.com.
1 As of March 31, 2017. Assets under Advisement shown above include discretionary and non-discretionary assets of FEG and its affiliated entities. The assets shown are typically non-discretionary. For non-discretionary accounts, we advise and make recommendations on investments, but may not have authority to execute or facilitate trades on behalf of all portions of client assets. Some asset values may not be readily available at the most recent quarter end, therefore the previous quarter's values were used for this calculation. The values may be higher or lower, depending on the current market conditions. Of the $61 billion AUA, assets under management (AUM) are $6.9 billion, which are $3.6bn discretionary AUM and $3.3bn non-discretionary AUM. For full disclosures, visit www.feg.com/disclosures