Permanent Equity: A New Approach to Business Acquisitions

In the world of business acquisitions and investments, a new player is making waves with a unique approach that challenges traditional private equity models. Permanent Equity, founded by Brent Beshore, is redefining how businesses are acquired and grown, with a focus on long-term partnerships and sustainable value creation.

The Permanent Equity Difference

Unlike traditional private equity firms that often follow a "buy, lever, strip, and flip" model, Permanent Equity takes a fundamentally different approach:

• Long-Term Focus: Permanent Equity raises 30-year funds, allowing for a much longer investment horizon than typical private equity firms.
• Debt-Free Acquisitions: The company typically uses no debt in its transactions, reducing financial risk and pressure on acquired businesses.
• Indefinite Holding Period: There is no intention to sell acquired businesses, allowing for truly long-term partnerships.
• Alignment of Interests: Permanent Equity aims to create win-win situations for all stakeholders, including sellers, employees, and investors.

The Journey from Novice to Expert

Brent Beshore's journey into the world of business acquisitions is far from typical. Starting with no formal financial training, Beshore learned through experience and curiosity:

• First Acquisition: In 2009, Beshore bought his first business, admitting he "knew nothing" and even had to Google the term "due diligence".
• Learning Curve: Through hands-on experience and a willingness to learn, Beshore developed expertise in business acquisitions and operations.
• Unique Perspective: Coming from an entrepreneurial background rather than finance, Beshore approaches acquisitions with a focus on operations and long-term value creation.

Key Strategies for Value Creation

Permanent Equity employs several strategies to create value in its acquired businesses:

Talent Acquisition and Development

• Employs six full-time professional recruiters to find top talent for portfolio companies.
• Focuses on bringing in high-level executives who might not typically consider working for smaller businesses.
• Emphasizes the benefits of working with a larger organization while maintaining the autonomy of running a smaller business.

Marketing and Lead Generation

• Applies best-in-class marketing techniques to improve lead generation and business growth.
• Example: Doubled the size of an acquired pool business in 3-4 years by optimizing its website for lead generation.

Technology Implementation

• Employs a full-time director of AI to explore and implement cutting-edge technologies in portfolio companies.
• Focuses on renovating technology to support business operations, not just for the sake of having new tech.

Financial Controls and Reporting

• Upgrades financial talent and systems to improve controls and reporting in acquired companies.

The Permanent Equity Approach to Acquisitions

Permanent Equity's acquisition process is characterized by:

• Relationship Building: Spending time to develop genuine relationships with business owners before and during the acquisition process.
• Balanced Approach: Striving for a balance of "high truth and high grace" in interactions with business owners.
• Open Communication: Encouraging open discussions about hopes, fears, and potential improvements for the business.
• Collaborative Decision-Making: Involving the current business owners in decisions about changes and improvements.

Challenges and Considerations

While Permanent Equity's approach offers many benefits, it also comes with challenges:

• Resistance to Change: Some long-time business owners may be resistant to new ideas or methods.
• Competitive Market: Traditional private equity firms often offer higher multiples, making it challenging to compete on price alone.
• Limited Appeal: The long-term, partnership-focused approach may not appeal to all business owners, particularly those primarily concerned with maximizing their immediate payout.

The Future of Business Acquisitions

Permanent Equity's model represents a potential shift in how businesses are acquired and grown. By focusing on long-term partnerships, sustainable growth, and value creation for all stakeholders, this approach offers an alternative to the traditional private equity model.

For business owners considering selling their companies, the Permanent Equity model provides several key benefits:

• Legacy Preservation: The opportunity to maintain involvement in the business and ensure its long-term success.
• Risk Mitigation: By partnering with a firm that doesn't use leverage, owners can reduce the risk of their business being overburdened with debt.
• Continued Growth: Access to resources and expertise that can help the business reach its full potential.
• Cultural Continuity: Emphasis on maintaining and enhancing the existing company culture rather than dramatic overhauls.

Conclusion

Permanent Equity's approach to business acquisitions offers a compelling alternative to traditional private equity models. By focusing on long-term partnerships, sustainable growth, and value creation for all stakeholders, Permanent Equity is carving out a unique niche in the world of business investments.

For business owners looking to sell, this model provides an opportunity to ensure their legacy continues while potentially benefiting from future growth. For investors, it offers a chance to participate in long-term value creation with reduced risk.

As the business world continues to evolve, models like Permanent Equity's may become increasingly attractive to both business owners and investors seeking more sustainable and mutually beneficial approaches to acquisitions and growth.

Key Takeaways

1. Permanent Equity focuses on long-term partnerships rather than quick flips.
2. The company typically uses no debt in acquisitions, reducing financial risk.
3. Value creation strategies include talent acquisition, marketing improvements, and technology implementation.
4. The acquisition process emphasizes relationship building and collaborative decision-making.
5. This model offers benefits for business owners concerned about their legacy and long-term business success.

As the business acquisition landscape continues to evolve, approaches like Permanent Equity's may reshape how we think about buying, selling, and growing businesses in the future.

Article created from: https://www.youtube.com/watch?v=OZl9Mfwmr4k