Brent Beshore is the Founder and CEO of Permanent Equity, a firm that invests with no intention of selling in family-held companies. With a current capital base in excess of $300 million, the firm’s current portfolio includes companies in aerospace, niche construction, manufacturing and distribution, consumer products, recruitment, and niche professional services.
Brent is also the author of The Messy Marketplace: Selling Your Business in a World of Imperfect Buyers. He lives in Columbia, Missouri with his wife and three daughters.
Brent Beshore, the Founder and CEO of Permanent Equity, is John Corcoran’s guest in this episode of the Smart Business Revolution Podcast where they talk about investing in small family-owned businesses. Brent explains what he looks for when investing in such companies, his strategies for overcoming post-acquisition challenges, and how his company’s three-decade lock period works. Stay tuned.
Here’s a Glimpse of What You’ll Hear:
- How Brent Beshore dropped out of law school to go into business
- What gave Brent the confidence to buy a military recruitment firm — and what he learned from the experience
- Brent talks about his portfolio of companies and some of the challenges he faced post-acquisition
- What does Brent look for when investing, and how does he make the acquisitions a win-win for both parties?
- Why Brent raises money from investors and puts them in a three-decade lock period
- What Brent does to infuse humor and authenticity in his $300M fund business and the strategies he uses to attract and acquire good talent
- The peers Brent respects and how to get in touch with him
Resources Mentioned In This Episode
- Permanent Equity
- The Orbit
- Brent Beshore on LinkedIn
- Brent Beshore on Twitter
- The Messy Marketplace: Selling Your Business in a World of Imperfect Buyers by Brent Beshore
- Michael Arrieta on LinkedIn
- Garden City Companies
- Selective Search
- Patrick O’Shaughnessy on LinkedIn
- Invest Like the Best with Patrick O’Shaughnessy
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Welcome to the revolution, the Smart Business Revolution Podcast, where we ask today’s most successful entrepreneurs to share the tools and strategies they use to build relationships and connections to grow their revenue. Now, your host for the revolution, John Corcoran.
John Corcoran 0:40
All right, welcome everyone. John Corcoran here. I’m the host of this show. Every week I talk with interesting CEOs, founders and entrepreneurs of all kinds of companies ranging from Netflix to Kinkos, YPO, EO, Activision Blizzard, LendingTree, go check out our archives, lots of great episodes for you there. And I’m also the Co-founder of Rise25, where we help connect b2b business owners to their ideal prospects. And today’s guests, he was actually introduced to me by a couple of different past guests. So Michael Arietta of Garden City Companies, go check out joingardencity.com, he introduced me to today’s guests, and also Nathaniel Broughton, who was another past guest of mine, who also had connections to our guests.
So Brent Beshore is his name. He’s the Founder and CEO of Permanent Equity, which really is an interesting company because they actually acquire family companies and they want to hold them for the long term, which, you know, I live here in Silicon Valley, or near Silicon Valley, in the bay area where it’s really this mentality of buy, grow, sell. And so it really goes against the grain. So I thought it’d be really interesting to talk to him about it. It’s so so Permanent Equity, the name of the company, they are based in Missouri, they have 350 million of long term committed capital. He also lives in Columbia, Missouri, with his wife and three daughters. Of course, this episode is brought to you by Rise25 Media, where we help businesses in the b2b space to get clients referrals and strategic partnerships with done for you podcast and content marketing. If you have any questions about it, or you want to learn more, go to rise25media.com or email us at [email protected]. All right, Brent, such a pleasure to have you on here. And you know, looking at your background here, and it’s such a normal path and traditional trajectory, right? You go and get your degree in politics and poverty studies. And then you become you go run a private equity firm, of course, right like cliched right now, I’m joking, of course, but you kind of have a little bit of winding path, I guess you could say so you like I went to law school, but smart guy, you’re like, forget this, you’re getting a JD MBA, like, I’ve seen enough. I’m gonna go start a company. So take me back to that moment in time, where you make this really dramatic life decision to drop out of this program that you’re three years into, to start a company.
Brent Beshore 2:53
Yeah. Well, John, thanks so much for having me on. And yeah, I often joke that I’m the Forrest Gump of private equity. So yes, to say it was a line, a winding long journey has been an understatement. Yeah, I was getting my law degree, my MBA and I had too much to drink one night to be honest and agreed to help start a business. And that set me down a path to start another business and then as close to accidentally as you possibly can I accidentally bought a business and did well with it.
John Corcoran 3:21
How do you accidentally buy a business? How does that happen?
Brent Beshore 3:24
That’s a great question. I still asked myself, to some degree, that today, I had a mutual friend who said, Hey, you should meet this guy. He’s been left at the altar for the second time. And I took that to mean, I tried to eyes business, because why else would you tell me him left to the altar for the second time, and he
John Corcoran 3:38
didn’t wait, he’d been literally left at the altar, like getting married, or in a business context,
Brent Beshore 3:42
in a business context. He tried to sell the business twice. And he’d been figuratively left at the altar, you know, gotten close to closing twice and, and couldn’t get the deal across the finish line. And so anyway, I met the guy and I don’t know, I look about 25. Now I looked about 14 Then and, you know, told the guy when to try to buy his business. And he laughed at me, which is an appropriate response. I probably would have laughed at myself too. And he said, Have you ever bought anything before? And I said, No, sir. And he goes, would you have a union come up with the money and I was like, I think the SBA. And anyway, it
John Corcoran 4:15
was a conviction. You know, it was
Brent Beshore 4:17
one of the things was it was a hot mess. I still am. But so anyway, so we, you know, we talked about the business, we talked about pricing, and we’re pretty far apart. And so he said, Hey, no, thank you, this isn’t going to work out and I said, No problem. And for seven months, I didn’t hear from him, and went along, you know, operating that business. I was an entrepreneur operator of, you know, some marketing companies. And then out of the blue, I remember I got a call one day and he said, Hey, I’m exhausted. The business is in great shape. We just renewed our largest account, like I want out. So I’ll give it to you for the price you asked for. But you have to close all cash 60 days from now. And so I said yes. And it’s kind of one of those moments where you you know, the big client says yes, Do you get to the elevator and then say, oh my gosh, what did I just do very much that feeling and had to call in every favor and work my tail off and have the team, you know, work our tails off to close it, and so close it with an SBA loan and did well with the business. And it really opened up my eyes to this whole world of people like him who operate, and their entire net worth is tied up in these family companies. And when they go to retire, what happens? And there really wasn’t a clear answer, then. And it certainly has become a hotter space now, but it’s still pretty much the Wild Wild West, there’s a lot of games, let’s put it that way they get played in that area. And so it’s really hard. Most businesses that size are, are really non transferable. We call it Owner mode. And all the value of the business is tied up in the relationships, the skill set of the owner. And so anyway, that was my first foray. And honestly, I’ve always been a fan of doing more of what works and less than what doesn’t. And it worked. And so I wonder, you know, how many other people were out there in a similar position? And could we serve them? Well, and that’s been my career.
John Corcoran 6:10
So this first company that was the media cross business, if it was a military recruitment firm, you partnered with the military and you did recruiting for the military? Had you been in the military at this point? I had not. Have you done recruiting at this point? I have not. And you hadn’t bought a business? Alright, so I had not what gave you the conviction that you’d be able to pull this off? I mean, if it was me, I’d be scared witless that I you know, what happens if I drive this thing into the ground? Oh, and how do I know I can do this thing? How do I know that? I I want to do this thing.
Brent Beshore 6:44
Yeah, I mean, I’ve always had a really rare special combination of arrogance and incompetence that’s really led my career. And so no, I mean, honestly I had all those convictions. I gotta say, I mean, I, the way we structure the deal, and the way that the contracts worked, you know, there was a way for me to lose some money, but But you know, pretty much if I could keep it on the rails, you know, I felt pretty confident that that we could do the work. And, you know, it’s a recruitment business, but it was recruitment marketing, for the most part. And so I was in a marketing based business already. It was not the same. But it was similar, similar enough to kind of rhyme. And so but honestly, I mean, I was getting married around that time. And I told her, my wife asked me, she goes, so what if this doesn’t work out? And I was like, Well, let’s not think about that. Because that’d be bad. And I mean, honest to God, the truth is that I would have declared bankruptcy.
John Corcoran 7:37
What’s the worst that could happen, right?
Brent Beshore 7:39
Yeah, no, I mean, it would have been, it would have been bad. And my career would have been totally different. Yeah, I mean, look at anybody who comes on your show, and doesn’t attribute any success, they’ve had to a significant dose of luck is probably lying.
John Corcoran 7:51
And talk to me about the seller, did the seller stick around and for a while and help you figure out how to run the business?
Brent Beshore 7:59
Yeah. So he stuck around for a while, he really was excited about being a painter, you want to be a professional artist. And so that was his plan. I want to sell this, I want to be a professional artist, and he still is a professional artist today and is doing well, from what I can tell.
John Corcoran 8:15
And what did you learn about acquiring businesses from that experience that taught you how to acquire a business? That is one that you can continue to run, that isn’t completely revolving around the owner? And that can continue on beyond the owner?
Brent Beshore 8:36
Yeah, well, how did I learn? I think he’s learned by screwing up and Google, I mean, to be honest, I remember, or especially early on, I still do this, maybe to some degree today. But early on, you know, I’ve been on calls with lawyers or accountants or whatever, in due diligence on the deal, and they throw something out there. And I would just be furiously googling what the term was to try to figure out if I could, if I could hang. And so you know, you just pick up things along the way. You know, I’d say, you know, we figured out early on that most businesses are small, and so we should try to find small businesses, right? Because I mean, it depends on which purchase you’re sitting on from some small businesses like the local bagel shop, right. And some people consider, you know, a 1000 person company, a small business, right, comparatively, when I say small business, I, you know, I kind of mean businesses that are, it’s a, it’s not just a job, right? So there’s a legitimate company there. The owner may work in the business and often does, but the business is bigger than just them. And so these businesses, you know, typically on the lower end are going to be kind of starting around 250 $350,000 A year free cash flow. And today, we buy businesses quite a bit larger than that. So we’re buying businesses between three and 8 million kinds of three and 10 million in free cash flow. So that’s profit, right, not just revenue. And so, you know, when I think of, you know, on the smaller end of that are, you know, people call those like micro businesses or, you know, people who operate in that area Micro private equity. And so, yeah, we learned that, that we like businesses that have a little more heft to them, we like businesses that are a little more advanced that have, you know, created something or do something for their customers that’s differentiated. And they have a little niche that they can defend in the marketplace, for whatever reason. And so, it’s often difficult, though, until you look at the business to figure out if that’s the case or not. And we’re always trying to, when we see the deals, we’re always trying to figure out, Okay, what’s the thing that makes them special that makes them durable, that would allow us to transition them and it certainly can’t all be tied up in the goodwill of the owner,
John Corcoran 10:37
Give us some examples of the types of businesses that you’ve acquired.