Bringing Private Equity Home: Broadwater Capital · Fargo INC!
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Bringing Private Equity Home: Broadwater Capital
Broadwater Capital buys equity in established Greater Midwest businesses instead of lending money, built by founder Erik Barner to bring institutional private equity expertise back home to North Dakota.
In shortBroadwater Capital, founded in 2021 by Erik Barner in Fargo, buys equity stakes in established Greater Midwest businesses with $20M–$100M in revenue, positioning itself as a regionally rooted alternative to out-of-market private equity firms.
3 things to know
1Broadwater targets lower middle market companies with $20M–$100M in revenue or $2M–$10M in EBITDA, preferring closely held firms across a 14-state Greater Midwest footprint.
2The firm buys equity rather than lending, typically seeking a majority position while leaving sellers meaningful rollover equity, such as a roughly two-thirds/one-third ownership split.
350 South Capital, Northern Trust's alternative-investment manager, publicly announced an investment in Broadwater in July 2025 and is described as an anchor investor in its first fund.
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Bringing Private Equity Home
Broadwater Capital enters the picture when an established, profitable business reaches an inflection point.
The company may be preparing for succession, pursuing an acquisition, expanding into new markets, or investing in the people, systems, and technology needed for its next stage of growth. Broadwater provides the capital and strategic support to help make that transition possible.
Broadwater's target is the lower middle market, established businesses with roughly $20 million to $100 million in revenue or $2 million to $10 million in earnings before interest, taxes, depreciation, and amortization, commonly called EBITDA. The firm prefers closely held companies with strong leadership teams, primarily in the Greater Midwest.
"We're typically the first outside capital that goes into a business that's not a bank," Founder & Managing Partner Erik Barner said.
A Different Kind of Partner
Banks lend money. Broadwater buys equity.
The firm generally prefers a majority position, although its investment mandate allows for minority investments and a variety of transaction structures. Barner's ideal arrangement often leaves the former majority owner with meaningful "rollover equity," perhaps Broadwater owning roughly two-thirds of the business and the seller retaining one-third.
The logic is alignment. The founder can take some money off the table while remaining invested in what comes next. If the business grows, both sides participate in that growth.
But the structure is also a consequential decision. A majority sale changes control. Broadwater is not simply supplying money; it is becoming an owner.
Barner emphasizes that the firm is not there to run a company day to day. The management team remains responsible for operating the business. Broadwater's role begins with traditional investment work, reviewing financial information, analyzing the market, identifying risks, and asking questions, but the goal is not to deliver a report and disappear.
"We try to make it super collaborative," Barner said. "We have questions here, we think there's risk here, and we think there's a lot of opportunity here. Then it's really a collaboration with the management team."
Broadwater's shorthand for that work is people, process, and technology. Depending on the company, that could mean recruiting leaders, creating more formal training, improving financial reporting, installing an enterprise resource planning system, evaluating an acquisition or finding technology that helps employees move faster.
Broadwater's strategy is rooted in geography as much as it is in finance.
The firm focuses on established companies across a 14-state Greater Midwest footprint that includes North Dakota, Minnesota, South Dakota, Iowa, Nebraska, Montana, Wyoming, Colorado, Wisconsin, Michigan, Illinois, Indiana, Kansas, and Missouri.
The thesis is simple. The region has no shortage of durable companies, but many of those businesses are far from the major financial centers where private equity capital is concentrated.
To Barner, that distance is not measured only in miles. An investor based in New York, Los Angeles, or Chicago may understand a company's financial statements and still miss the local labor market, culture, customer relationships, or succession dynamics that shape the business.
Recruiting in Fargo is different from recruiting in Detroit Lakes, Omaha, or Wahpeton. Certain communities have unusually strong pools of manufacturing, agriculture, or logistics talent. Broadwater believes that understanding those differences can make it a better partner.
Barner grew up in North Dakota and spent about 15 years building his investment career in Minneapolis, Chicago, and Fargo. His previous roles included positions at Piper Jaffray, Norwest Mezzanine Partners, Institutional Capital, and Gen7 Investments. He earned a finance degree from the University of St. Thomas and an MBA from Columbia Business School, where he participated in its Value Investing Program.
By the time he founded Broadwater in 2021, he had seen private equity firms invest in North Dakota for years. What he had not seen was a North Dakota-based institutional firm built to partner with those businesses over time.
The investors were elsewhere. If the investment succeeded, the returns and much of the accumulated expertise went elsewhere, too.
"I saw an opportunity for a partner to be here for business owners," Barner said, "and hopefully help grow North Dakota-based businesses with a North Dakota-based equity partner."
Fargo, then, is not merely Broadwater's address. It is part of the investment thesis.
Barner also saw a workforce opportunity. Finance professionals from the region often had to leave to receive institutional training. Those who wanted to return did not have many established platforms to come home to.
He wanted to create a firm where someone could build that career without leaving, or have somewhere credible to return after gaining experience elsewhere.
"It's something that I hope far outlasts me," he said.
From One Person to a Fund
When Broadwater began in 2021, it was essentially Barner and Joe Janey, who worked virtually with him while attending graduate school.
The firm now has seven team members covering investing, business development, investor relations, operations, and administration. The group includes professionals with experience at organizations such as PwC, Stone Arch Capital, Thrivent Financial, and Hennepin Partners.
Barner said the team was intentionally built before the portfolio became large. Asset management is a relatively small-people business, but he wanted Broadwater to have enough infrastructure to evaluate opportunities carefully and support companies after transactions closed.
The Team at Broadwater
Scott Loe — Partner
Brett Stier — Director of Business Development & Investor Relations
Josie Perhus — Firm Operations Manager
Joe Janey — Associate
Cara Christenson — Executive Assistant
Michael Barry — Investment Analyst
A major step came through 50 South Capital, Northern Trust's alternative-investment manager and the general partner of the North Dakota Growth Fund. The Growth Fund publicly announced an investment in Broadwater in July 2025; Barner described 50 South as an anchor investor in Broadwater's first fund.
Barner expects the completed fund to contain approximately eight or nine portfolio companies. At the time of the interview, Broadwater had completed its first acquisition and had a second under a letter of intent.
The businesses will likely differ in what they make or sell. Broadwater's role in each is intended to provide capital, help sharpen the strategy, and support the management team as the company attempts to reach a new level.
The Kind of Business Broadwater Likes
Broadwater's first platform investment offers a useful illustration of that strategy.
Drilling Mud Direct, or DMD, is a Colorado-based distributor founded in 2002 by Clint Pitman. The company supplies bentonite, drilling-fluid additives, equipment, and related services used in horizontal directional drilling, pipeline infrastructure, and civil construction. It also operates a nationwide stock-point network that helps contractors obtain essential products closer to their job sites.
We're typically the first outside capital that goes into a business that's not a bank.
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DMD occupies what investors sometimes call a "picks and shovels" position. Rather than owning the data center, utility, or pipeline, it supplies essential products to the companies building the infrastructure around them.
As data centers and other large infrastructure projects expand, more fiber, power, and utility connections must be installed underground. Horizontal directional drilling allows contractors to complete much of that work without excavating a continuous open trench. DMD supplies the fluids, additives, parts, and technical support those contractors need.
Barner also sees room for "bolt-on" acquisitions, buying smaller, complementary businesses and integrating them into the DMD platform.
What attracted Broadwater was not any one metric. Barner describes investment selection as pattern matching across several questions.
Are these people Broadwater wants to partner with? Is the industry durable? Does the company have a defensible position? Is the growth opportunity real? Can Broadwater contribute something beyond capital?
In DMD, he saw a founder who had built valuable supplier relationships, logistics advantages, and customer trust, but who believed the next wave of demand would require more infrastructure than the business had on its own.
That is the kind of growth problem Broadwater wants.
"Solving for growth problems, if you call them problems, is just super exciting," Barner said.
A Repeatable Playbook
Broadwater is not completely industry agnostic.
Its stated target sectors include agribusiness, business services, consumer products, distribution, light industrials, manufacturing and technology.
The common thread is not the product being sold. It is the opportunity to help an established company professionalize without stripping away what made it successful.
On the people side, that can mean leadership development, clearer roles, assessments, formal training, or succession planning.
On process, it can mean better reporting, repeatable workflows, a stronger operating cadence, or disciplined integration after an acquisition.
On technology, it can mean replacing manual work, improving customer insight, or installing systems that give leaders better information.
Barner believes smaller businesses chronically underinvest in that last category.
"The world is changing so fast with the advent of AI," he said. "Use of technology for smaller businesses is almost always underutilized."
His advice is not simply to buy software. A company needs an internal champion, usually an owner or senior leader, who can identify worthwhile applications, test tools, and drive adoption. Without that person, even inexpensive technology can become shelfware.
Broadwater's AI Toolkit
Broadwater itself uses tools including Notion, Claude, and Blueflame AI.
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Claude — Anthropic's general-purpose AI assistant can analyze large amounts of text and work with lengthy, complex documents. Broadwater uses Claude for tasks including legal and contract review, financial analysis, and industry research. The platform can help teams summarize materials, identify important provisions, compare information, and produce a starting point for deeper review.
BlueFlame AI logo with blue flame icon and bold blue text on black background.
Blueflame AI — Built specifically for private equity, investment banking, and other investment firms, Blueflame helps deal teams conduct research, examine diligence materials, and organize information surrounding potential investments. The platform is designed to reduce the manual work between an initial opportunity review and a final investment recommendation.
Neubrick magazine? Not sure. The image shows a bold black and white capital letter N inside a rounded square.
Notion AI — Notion combines company documents, project information, databases, and internal knowledge in one workspace. Its AI features can search that information, summarize documents, generate action items, assist with writing, and turn stored material into more usable insights. Broadwater uses Notion as part of its internal information and workflow infrastructure.
Barner said the firm applies AI to contract and legal-document review, financial analysis, and industry research.
The larger point is not the brand names. It is the speed and scale those tools can create.
When Barner began his career in 2007, many research and analysis assignments required a recent graduate to spend hours working through spreadsheets, documents, and industry information. Some of that work can now be completed in a fraction of the time.
"For us, we're able to get through a lot more information in a really sophisticated manner, really quickly and at very minimal cost," Barner said.
The technology does not make investment judgment unnecessary. It changes where people spend their time, and increases the amount of information they can consider before making a decision.
Barner believes the same opportunity exists in nearly every industry. Some tools will reduce costs. Others will help companies sell more, understand customers better or create services that previously would have been too expensive to deliver.
But adoption will not happen automatically.
"You largely need a point person or point people to implement it effectively and have widespread adoption across the company," he said.
Cityscape with a tall brick building, smaller structures, and a street scene under a cloudy sky.
It's something that I hope far outlasts me.
What Business Owners Should Do Before Calling
For owners considering private equity, Barner's advice is basic but consequential.
First, organize the information.
"The cleaner your information is, and by cleaner, I mean organized and well presented, the easier it is for us to consume it and give feedback quickly," he said.
Second, know why you want a partner.
Maybe the issue is succession. Maybe a founder wants liquidity after spending decades with most of their net worth tied up in the company. Maybe the business wants to acquire a competitor, open another location, install a major software system, or recruit a management team capable of running a much larger organization.
The answer does not need to be complicated, but it needs to be real.
"Why are you here?" Barner said. "What can we do to solve what you're trying to solve for?"
Before Talking to an Equity Partner
Is your information organized? An investor will need accurate financial statements, operating information, and supporting records. Clear, well-presented information allows an investment firm to evaluate the business more efficiently and provide useful feedback sooner.
Why do you want a partner? Capital should solve a defined need. That might include completing an acquisition, entering a new market, installing a major software system, preparing for succession, or allowing an owner to take some personal liquidity while remaining involved.
Disorganized records can slow diligence, create uncertainty, and make it harder for an investor to distinguish a fixable process problem from a deeper business risk.
Broadwater is especially interested when the answer involves growth. That does not mean private equity is the right choice for every company. Owners must be comfortable exchanging part of their ownership, and potentially control, for capital, support, and a partner in major decisions.
The most productive conversations begin when everyone is direct about that trade.
Editor of Fargo INC! — covering the founders, companies, and ideas shaping business in Fargo-Moorhead. Eleven years in, still no opinions, no politics, all business.
