Playing the Long Game: Building a 30-Year Private Equity Fund with Brent Beshore [Ep.131]

May 30, 2023

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Private equity is a fast-paced game. You buy a business and often only have two to five years' worth of investor capital to improve the business before you need to sell it for a profit.

This doesn’t give you a lot of time to make meaningful improvements and often results in changes that destabilize the business long term.

That’s why Brent Beshore decided to turn the concept of private equity on its head. Brent is the founder of Permanent Equity, a PE firm that invests in family-held businesses.

The twist? Brent has no intention of selling the businesses. Forget two to five years, he works with a 30-year time horizon. He also uses no debt in his acquisitions and takes zero fees or reimbursements. Instead, he splits the cash flow that the business earns, putting his firm, the investors, and the family that owns the business on equal footing.

This almost indefinite timeline, and the fact that he doesn't have a debt looming over his head, means Brent has the freedom to grow the businesses sustainably and with everyone’s best interests at heart.

In this episode, Brent joins us to share his unique take on private equity. He explains how he built his funds with longevity in mind, and why he steered away from the traditional private equity approach to debt. According to Brent,

“Buying a business with debt means you have to sacrifice cash flow every month to repay that debt. That gives you less flexibility to reinvest back in the business. Less flexibility to grow. And when things get hard, which they will, it forces you to make decisions that are not in the long-term best interest of the company.”

Brent also explains why he has chosen to be industry agnostic, focusing instead on “adolescent businesses” that offer lots of opportunities to make improvements. Finally, Brent shares advice on how entrepreneurs can replicate his success, explaining,

“There's a lot of opportunity in the private equity space. But it's gonna be a lot of hard work and a lot of stress. You need to prepare yourself for that and give yourself enough lead time to be choosy. If you're starting from a dead stop, you should give yourself three years of runway full-time to find the right business, buy it, and start to operate it.”

If you want to build a portfolio of business but are put off by the traditional private equity model, then Brent’s unconventional approach may be just what you are looking for!

Topics Discussed in This Episode:

Brent shares how he accidentally stumbled into business ownership (02:45)
The obstacles Brent faced when acquiring his initial business (09:28)
How buying that first business inspired Brent to grow his portfolio (12:13)
The story behind Brent’s unique fund structure (15:22)
The makeup of Brent’s business portfolio (20:10)
How Brent calculates the value of a business (31:01)
Brent’s due diligence process (33:51)
Why Brent chooses to purchase businesses without debt (36:07)
How Brent approaches growing a business after acquisition (39:59)
How Brent structured his team to manage such a large portfolio of businesses (43:13)
Brent’s advice on how entrepreneurs can replicate his success (48:31)

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Sit back, grab a coffee, and learn how to reap the benefits of private equity without the traditional constraints!