Guest: Brent Beshore, Founder of Permanent Equity

🚀 Key Takeaways & Insights:

1. Brent Beshore’s Journey:

• Brent began his career as a founder and transitioned into buying companies.
• Launched Permanent Equity, raising $50 million for his first fund to acquire small businesses.
• Later, raised an additional $250 million, now managing a portfolio of 16 companies with $350 million in annual revenue and $50 million in free cash flow.
• Industries include children’s clothing, military recruitment, manufacturing, construction, and business services.

2. The ‘Golden Geese’ Concept:

• Brent uses the term ‘Golden Geese’ to describe businesses that consistently generate cash flow.
• His first major acquisition was MediaCross, a military recruitment firm, which remains highly profitable.
• The company operates on fixed government contracts, offering predictability and stability.
• He shared how he ‘accidentally’ bought this business at 24, using an SBA loan and learning on the go.

3. Investment Strategy – Simple & Effective:

• Permanent Equity targets durable, low-change industries with high predictability.
• Their investment model avoids traditional private equity methods:
  • No management fees or reimbursements.
  • No debt usage, focusing on all-cash deals.
  • Long-term capital commitment (30-year initial term).
  • 40% participation in free cash flow returns without upfront capital returns required.
• Brent’s no-debt philosophy allowed them to thrive during downturns, such as the aerospace business growth (7x) during COVID.

4. Lessons on Acquisitions:

• MediaCross: Bought with almost no cash down by leveraging accounts receivable as collateral.
• Pool Business: A strategic acquisition after years of building relationships.
• Fencing Business: Now the largest in his portfolio in terms of revenue and profit.

5. Mindset & Philosophy:

• Advocates for ‘Just-In-Time Learning,’ where you learn as you need to rather than over-preparing.
• Values humility, seeing it as recognizing reality as it is.
• Believes all businesses are ‘loosely functioning disasters,’ acknowledging the inherent messiness of business operations.

6. People Are Key to Success:

• Emphasizes leadership quality in small businesses.
• Evaluates leaders using personality tests such as Myers-Briggs, DISC, Enneagram, and Habit Story.
• Strongly believes in testing and understanding personality to predict behaviors and fit.

7. Advice for Aspiring Entrepreneurs:

• Buying a business requires understanding personal and financial constraints.
• Different business types suit different personalities and lifestyles.
• Encourages small business owners to avoid debt and focus on cash flow.

8. Fascinating Anecdotes:

• He once learned the concept of ‘due diligence’ by Googling it during his first deal.
• His early successes were partly due to luck, a fact he openly acknowledges.
• Brent described a near-failure experience where he had to borrow from the seller to keep the acquired business afloat.

💡 Memorable Quotes:

• “Stacking golden geese like a rapper stacks cash.”
• “Success is founded on a constant state of discontent, interrupted by brief satisfaction.”
• “Humility is acknowledging reality for what it is.”

🎯 Final Thoughts:

Brent Beshore’s unconventional approach to private equity—focusing on patience, zero debt, and a people-first philosophy—sets him apart in the industry. His journey from a young entrepreneur to managing hundreds of millions in revenue is filled with practical lessons for both novice and seasoned business leaders. Whether you aim to buy a business, improve leadership skills, or understand private equity, his insights provide a valuable guide.

For more insights, check out Brent’s blog and his engaging annual letters!