Ep 495 Inside the Mind of an Acquirer: Brent Beshore on the Private Equity Trap and Being Long-Term Greedy

·56 min·5 clips

Brent Beshore reveals why his firm avoids debt and holds companies for decades, unlike private equity's 'buy, lever, strip and flip' model.

This episode of Built to Sell Radio features host John Warrillow interviewing Brent Beshore, founder of Permanent Equity, an investment firm with a 30-year fund structure. Beshore, a former entrepreneur, explains his firm's philosophy of buying and holding businesses indefinitely without using debt. He contrasts this with traditional private equity's "buy, lever, strip, and flip" model, which he argues creates stress and misalignment. Beshore details that Permanent Equity typically acquires businesses generating between $3.5 million and $20 million in free cash flow, often paying around five times that amount. He uses a hypothetical example of buying a $1 million cash flow business for $5 million, yielding a 20% starting cash return. The firm uses no fees and only gets paid by taking a percentage of free cash flow distributed to investors, after those investors receive the first 8% raw return. Beshore says his firm's returns have outperformed the S&P 500 and placed in the top 1% of private equity, despite using no leverage. He recounts buying an aerospace business in 2019 without debt, which allowed it to reinvest aggressively during COVID and grow sevenfold in five years. A key insight is Beshore's belief that families build dynastic wealth through cash flow and reinvestment, not through leverage and quick flips. He emphasizes crafting "win-win" deals by having sellers and leadership teams retain significant equity, often 30%, to ensure long-term alignment. Beshore admits a weakness in his model is the lack of upfront fees to fund operations, which requires self-funding from their balance sheet. He shares turning down a $4 million cash flow business making cell tower technology because his firm couldn't assess its long-term viability or add value. The conversation is educational and conversational, with Warrillow playing devil's advocate by citing private equity expert Adam Coffey's contrasting views. This episode would appeal to business owners considering a sale who value legacy and long-term partnerships over a maximized, quick exit. Listeners solely interested in high-leverage, short-term financial engineering might find the model less compelling.

As heard by us

A sober case for patient ownership and long-term dealmaking.

Brent Beshore argues that selling a company well is less about getting to signature than about shaping a deal that can hold up over time. John keeps the focus on the practical side of that claim, asking why Permanent Equity avoids debt, how roll equity changes a seller's…

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Hear the acquirer explain why the best deal may be the slowest one.

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