Cresset Asset Management, a multi-family office and private investment firm based in Chicago, has agreed to merge with Minnesota-based Meristem Family Wealth, leaders of both firms told Forbes. Meristem managed $5.4 billion in assets at the end of 2021, and Cresset will have more than $27 billion in assets under management when the combination is complete. Terms of the deal were not disclosed.
Founded in 2017 by private equity veterans Avy Stein and Eric Becker to manage their own families’ money, Cresset has grown to serve more than 1,100 high net worth clients. The firm manages public and private investments, does estate and tax planning for families and has networking events for its clients with guest speakers like billionaire Ray Dalio and actor Matthew McConaughey.
After acquiring Meristem, Cresset will also own Meristem Trust Company, a South Dakota-based subsidiary formed in 2015. For Cresset’s ultra-high net worth clients, Meristem Trust may turn out to be a very valuable addition. South Dakota’s lax tax laws make it the destination of choice for wealthy Americans from across the country to protect their money in secret. Billionaire Ed Bosarge said in a deposition during a bitter divorce battle that he had $800 million in appraised assets in South Dakota trusts, Forbes reported in 2020, and the state has become a popular venue for techniques like “trust decanting,” or transferring assets from an irrevocable trust to a new trust with different terms and beneficiaries. Until now, Cresset outsourced its trust services.
“We’re very selective in the combinations that we do to make sure that they’re additive. With Meristem, there are a couple things they do that we don’t,” Stein tells Forbes. “There are a number of independent trust companies that are quite good, but it’s not quite the same level and same care that you can provide when it’s your own trust company.”
Meristem was founded as Advisors Financial Services by CEO Charlie Maxwell in 1999 and renamed in 2003. Most of its assets as of the end of 2021 came from 388 high net worth families, and it has offices in Florida and Arizona in addition to its presence in Minnesota and South Dakota.
Stein and Maxwell met about a year and a half ago and started having serious discussions about merging last fall. The pair decided their firms were a good fit – both Meristem’s trust business and its insurance review capabilities were services Cresset didn’t offer in-house, and Cresset can offer Meristem’s clients bill pay and tax compilation services that were previously outsourced. Stein and Maxwell say this year’s market downturn had no effect on the terms of the deal.
Meristem’s 42 employees will all join Cresset, and its clients will be able to keep their existing team of financial advisors. Maxwell says he was impressed with Cresset’s organic growth through digital marketing and the networking opportunities his clients will now have access to.
“We were able to strongly affirm to our clients that very little would change in terms of the relationship management,” says Maxwell. “I liked the fact we were both Midwest-rooted firms, I liked the experience that Avy and Eric brought from outside the industry and when I shared our value proposition of wanting to build the firm that we want for our own families, it’s consistent in that alignment.”
For Cresset, the partnership is the fast-growing firm’s second major M&A deal after it absorbed Atlanta-based Berman Capital Advisors, which managed $4.7 billion, last September. About two-thirds of its asset growth has been organic from appreciation and new clients coming to the firm directly. Earlier this year, JPMorgan reached an agreement to dismiss a lawsuit against the firm, whose co-chairman Doug Regan was an executive at JPMorgan until 2017, after Cresset hired away at least 10 advisors from the bank. With Meristem’s team coming aboard it will have more than 300 employees in 15 offices nationwide.
“The epiphany for me is as we’ve approached the size that we are, we are able to be a much more significant player with managers,” Stein says. “If you’re investing money with someone, you’re going to be able to drive better terms or get a better opportunity to co-invest in unique things they may drive, and that’s true on both the public and the private side.”