McKinsey's $20 billion business changes hands, Neuberger Berman takes over MIO alternative investments

Consulting giant McKinsey has agreed to transfer control of its approximately $20 billion investment business to investment management company Neuberger Berman. For decades, this business has managed the wealth of current and former McKinsey partners through complex hedge funds and alternative investment strategies.

This deal marks a significant expansion for Neuberger Berman and opens a new chapter for McKinsey, a consulting giant renowned for serving blue-chip companies and governments. For about a year, McKinsey has been evaluating various options for its fund management business, MIO Partners. Reportedly, McKinsey hired advisors in January 2025 to initiate a strategic review of MIO, and was considering a possible sale.

Under the terms of the transaction, MIO’s financial advisory business and about 280 employees are expected to be integrated into Neuberger Berman and will operate as a department under the company. The deal is subject to regulatory approval and is expected to be completed in 2026. The two companies have not disclosed the financial details of the transaction.

Pooneh Baghai, Senior Partner and Board Member at McKinsey, stated that in light of MIO's significant growth and product expansion, McKinsey believes it is no longer appropriate to own such a large investment and advisory business, especially since the unit is far from the company's core expertise and strategic priorities.

Transaction Does Not Include Passive Index Fund Business

MIO manages total assets of $26 billion. The $20 billion assets taken over by Neuberger Berman in this deal are mainly allocated to alternative investment strategies, i.e. the flagship special situations strategy, aimed at outperforming benchmark indices through selected investments in stocks, bonds, and other assets. MIO's assets also include about $6 billion in passive index fund investments, which are not included in this transaction.

According to MIO’s website, the institution uses macro trading strategies, dealing in asset classes such as sovereign debt, commodities, forex, equity indexes, and credit indexes. Regulatory filings show it invests heavily in externally managed funds.

Neuberger Berman currently manages $563 billion in assets. CEO George Walker said they may consider offering MIO’s core strategy to new clients in the future. Walker noted one growth area for MIO could be a further increase in private asset allocation.

Business Operated Independently for Decades

MIO’s history dates back to the mid-1980s, and in 2000 it became the independent manager for McKinsey’s wealthy executives. While MIO has an independent board and management, it has always operated as a McKinsey subsidiary. Its assets include the retirement funds of McKinsey partners, as well as the wealth of a broad network of alumni and their families.

Bob Sternfels, McKinsey’s Global Managing Partner, stated that Neuberger Berman’s track record in investment and wealth management, as well as its partner culture, convinced them that Neuberger Berman is the right long-term steward for MIO. Walker said the two companies have a strong cultural fit, both being private, employee-owned firms focused on serving clients’ long-term interests.

In the deal, Ardea Partners served as advisor to McKinsey, Simpson Thacher & Bartlett provided legal counsel. Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Neuberger Berman.

Previously Subject to Review Over Potential Conflicts of Interest

Reportedly, the MIO business has for many years been scrutinized for potential conflicts of interest with McKinsey’s consulting work.

In 2021, McKinsey agreed to pay $18 million to settle allegations with the U.S. Securities and Exchange Commission (SEC) regarding its failure to maintain and enforce proper procedures to prevent misuse of material nonpublic information. The SEC alleged that partners responsible for MIO’s investment decisions could access confidential information about client financial performance, transactions, and financing plans.

A McKinsey spokesperson stated that there is a strict firewall between McKinsey and MIO, and MIO has further strengthened its policies and procedures. Importantly, the SEC’s order did not confirm any misuse of confidential or material nonpublic information by MIO or McKinsey.

MIO subsequently reformed its governance structure, stating that its operations are “intentionally separated” from the consulting arm. MIO no longer invests in individual stocks or bonds of any public or private companies.

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