Podcast Summary: How I Invest with David Weisburd

Episode 269: The $350M 30-Year Fund Model

Guest: Brent Beshore, Founder & CEO, Permanent Equity
Air Date: December 24, 2025

Main Theme & Purpose

This episode dives deep into Permanent Equity’s unique fund structure: a $350 million long-duration private equity fund with a 30-year horizon, no management fees, minimal debt use, and a focus on alignment with both investors and portfolio companies. Brent Beshore explains the reasoning, the mechanics, and the philosophy behind building enduring value, eschewing traditional private equity tactics in favor of compounding growth and lasting relationships.

Key Discussion Points & Insights

1. Permanent Equity’s Structure and Contrarian Model

• Brent describes Permanent Equity as the "opposite of private equity":
  • Unlike traditional PE’s short hold periods, aggressive debt use, and predetermined exits, Permanent Equity aims to own businesses indefinitely, introduces little to no transactional debt, and prioritizes compounding over flipping.
  • “We have the best LPs in the world. They give us their capital for 30 years and so that allows us to buy with no intention of selling the business.” (B, 00:53)
• Compounding:
  • Two forms discussed—steady annual growth (e.g., 12% yields a 2x in six years) and true exponential compounding, where growth rates accelerate by removing “lids” in small companies.
  • “That business is about 7x larger now than it was then because we were able to... release all those lids that we saw in the business all at once.” (B, 02:43)

2. Handling a 30-Year Fund Life

• Convincing Institutions:
  • About 50% LP base are institutions; Brent argues these should have the longest time horizon and benefit from regular cash distributions, which actually exceed what’s typical in private equity.
  • “30 years sounds like a long time horizon, but there’s a lot of cash in the interim. And historically we’ve actually returned cash back to investors faster than traditional private equity.” (B, 04:19)

3. Fee Structure: No Management Fees

• No Fees, Only Carry:
  • Permanent Equity charges no management or portfolio fees—profit comes solely from deal proceeds split with LPs.
  • “We don’t eat unless they eat... no fees of any kind, no reimbursements of any kind... If we do not very well, we work for free and actually lose money in the process.” (B, 04:45 & 05:07)
• Effect on Team & Recruiting:
  • All employees, not just partners, participate quarterly in cash distributions, aligning incentives and offering more immediate upside than classic carried interest.
  • “We’re paying out to our staff quarterly. Everyone’s sharing in that immediacy of it.” (B, 06:42)

4. Debt Aversion and Its Rationale

• Brent’s Approach:
  • Minimal to no debt on acquisitions. Debt can be used post-close for working capital, but most portfolio companies are highly cash generative, and debt’s risks usually outweigh rewards at their scale ($5-15M free cash flow).
  • “If you’re buying...a pool builder in a highly cyclical market...being able to be very responsible if not not using debt I think is a very good strategy.” (B, 08:07)
• Handling Downturns:
  • Debt-free approach allowed quick, opportunistic action during COVID, e.g., growing aerospace business without constraint.
  • “When the airline market goes down 70%...everyone else is using all their time to negotiate with banks. We weren’t doing that... We were highly focused on improving the business.” (B, 08:54)

5. Cyclical Opportunities & Macroeconomics

• On Black Swan Events:
  • “Really kind of generational opportunities about once every seven to 10 years.” (B, 09:54)
  • Expresses skepticism whether the U.S. political and regulatory system will allow another truly severe downturn given government interventions.
  • “I don’t know what it would take for us to have sort of…blood in the streets moment…Not sure if the government will ever allow that to happen again.” (B, 11:25)

6. Winning Deals Without the Highest Bid

• Positioning in Sales Processes:
  • Permanent Equity can’t pay the very top price but offers sponsors and sellers legacy, continuity, community employment, and long-term relationships.
  • “If you care deeply about the business and the legacy and what happens next, that seems like a reasonable trade. But for most people, most people don’t care. And that’s okay.” (B, 15:36)

7. Operator Selection: Island of Misfit Toys

• Culture Fit—The Cell Phone Test:
  • Portfolio spans many industries (aerospace, manufacturing, matchmaking, military recruitment), but the common thread is the people behind them.
  • Works only with leaders where team feels genuine enjoyment of the relationship.
  • “Life’s too short to work with people that you don’t want to work with. …We want people who are playful and lighthearted and don’t take themselves too seriously.” (B, 18:49)
  • Avoids operators who are transactional, ego-driven, or closed-off to feedback.

8. Dealing With People Problems and Difficult Situations

• Approach to Challenges:
  • Gives grace for human messiness, but consistent pattern of negative behavior leads to leadership changes or divestments.
  • “If we get to a point…where there’s a consistent pattern of behavior…Once it crosses that bridge, then either they need to go or we need to go.” (B, 23:24)
• LP Relations:
  • LPs are kept closely informed and trust Brent to make people decisions. Letters disclose challenges transparently.
  • “We’ve developed…trust with our LPs that they know that we’re going to try to do our best. And…we’ll own up to our mistakes.” (B, 25:02)
• Profit Maximization vs. Sustainability:
  • Sustainability and manager wellbeing trump extracting the last bit of profit per deal.
  • “If the manager burns out in year 12…that’s going to be a much inferior outcome versus…being there for another 30 years.” (A, 26:06)
  • “Shame and fear will drive you to about 95%…the only thing that will drive you to nearly 100%…is to genuinely care and love for people.” (B, 26:34)

9. Reflections and Lessons Learned

• Counterintuitive Success of Outside Capital:
  • Brent expected nightmares with LPs but found productive, supportive relationships.
  • “Everyone told me not to raise outside capital…We’ve experienced very little of [the negatives]…I’ve been shocked at how good the partnership’s gone.” (B, 28:12)
• Timeless Advice to Younger Self:
  • Early mistakes: chasing what was cheap, not necessarily high-quality. Now focuses on businesses with sustainability, uniqueness, and strong relationships even at higher prices.
  • “The incremental difference between paying maybe four times for something and six and a half times for something… yields you a business that’s double the quality or more.” (B, 31:04)

Notable Quotes & Memorable Moments

• “We don’t eat unless they eat…no fees of any kind, no reimbursements of any kind…Zero. Except for as we return cash back to investors, there’s a split on that.”
  (Brent, 04:45-05:07)
• “Life’s too short to work with people that you don’t want to work with.”
  (Brent, 18:25)
• “You can’t make good long-term decisions with that type of short-term capital.”
  (Brent, 09:08)
• “The smartest LPs in the world know…if you genuinely care for people and take a long-term view, that’s where your greatest returns are going to be. Not grinding on somebody to work another five hours a week...”
  (Brent, 27:32)
• “The biggest unexpected thing for me was everyone told me not to raise outside capital…We’ve experienced very little of that, and I mean at it for almost 10 years now.”
  (Brent, 28:15)
• “The incremental difference between paying maybe four times for something and six and a half times for something…yields you a business that’s double the quality or more.”
  (Brent, 31:04)

Timestamps for Important Segments

• Fund Structure & Philosophy: 00:17 – 01:32
• Compounding and Growth: 01:32 – 03:17
• Getting Institutional Investors Comfortable: 03:17 – 04:39
• Fee Model Innovation: 04:39 – 06:31
• Debt Avoidance: 07:05 – 09:44
• Market Cycles & Government Intervention: 09:44 – 12:28
• Deal Winning & Legacy: 12:52 – 16:02
• Portfolio Culture Fit & Cell Phone Test: 17:31 – 18:49
• Handling People Issues: 21:31 – 24:46
• LP Relations & Long-term Return Philosophy: 24:51 – 28:05
• Biggest Surprises & Advice: 28:05 – 32:19

Overall Tone & Takeaways

The episode is candid, reflective, and leans heavily towards the philosophical underpinnings of investing for the ultra-long term. Brent speaks with humility and humor (“We pay in rainbows and promises.”), while also being direct about the pitfalls of short-term thinking, poor relationships, and strictly profit-driven strategies. The conversation is instructive for both GPs and LPs considering alternative private market asset structures and for operators thinking about business legacy and stewardship.