Brent Beshore & a new approach to private equity

Today on Givers, Doers, & Thinkers, Jeremy speaks with Permanent Equity CEO Brent Beshore about what's wrong with private equity, what good organizations have in common, and why small private companies matter. 

Brent Beshore founded Permanent Equity in 2007 and is the author of The Messy Marketplace: Selling Your Business in a World of Imperfect Buyers. He is originally from Joplin, Missouri, but now lives in Columbia, Missouri, with his wife, Dr. Erica Beshore, and three daughters. 

What is private equity, and how does it work? Jeremy and Brent delve into the basics before exploring what sets a business apart. Brent unveils Permanent Equity's distinctive investment approach, placing a strong emphasis on employee well-being, stability, and long-term ownership. They then draw parallels between small to mid-size businesses and nonprofits, humorously remarking that most are "loosely functioning disasters." Lastly, Brent underscores the shared traits of successful businesses (and nonprofits): humility and openness to feedback. 

Interested in joining the Center for Civil Society's "K to Campus: How the Education Reform Movement Can Reshape Higher Ed" conference on October 23-24 in sunny Malibu, CA? Sign up today to receive special early-bird pricing! 

We'd love to hear your thoughts, ideas, questions, and recommendations for the podcast! You can shoot Katie Janus, GDT's producer, an email anytime!

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Transcript

Speaker 1: 0:00

Welcome to Givers, Doers and Thinkers. Today we talk to Permanent Equity founder and CEO, Brent Bishor about what's wrong with private equity, what good organizations have in common, why small private companies matter and much more. Let's go. Givers, Doers and Thinkers introduces listeners to the fascinating people and important ideas at the heart of American civil society. We speak with philanthropists, reformers, social entrepreneurs, nonprofit executives, religious leaders, scholars, journalists and anyone else who will help us understand contemporary civil society's achievements and failures. My name is Jeremy Beer. Thank you for joining us. All right, Thank you for joining us. All right. Thank you for joining us for another episode of Givers, Doers and Thinkers. Today is January 30th 2024. I'm Jeremy Beer. I'm here in Phoenix, Arizona, per usual, and my guest today is Brent Beshore, who comes to us from Columbia, Missouri. Brent is someone you like immediately, simply based on how short his official bio is, Among other things, I should say you never see bios this short, especially, I feel like, in the world in which he operates. So I'll elaborate a little bit, more maybe, than his official bio does. Brent is the CEO of Permanent Equity, which he founded in 2007. He is the author of the Messy Marketplace Selling your Business in a World of Imperfect Buyers. He comes from Joplin, Missouri, and now lives in Columbia with his wife, Dr Erica Bishore, and three daughters. He plays competitive tennis and, as he puts it, bad golf. So that's something a lot of us can identify with I certainly do. And permanent equity, like private equity firms, invests in private companies. But unlike private equity, as we will hear more about, permanent equity isn't for the long haul, with no intention of selling. As the firm's website puts it. There's no 90-day plan, no harm and no assholes, so that's a pretty good motto. This podcast centers around themes related to philanthropy and civil society, of course, but obviously, in truth, private businesses contribute greatly to civil society as well, and exploring how that happens is one reason why we wanted to speak to Brent. Also wanted to talk to him because major givers are also typically investors and may want to become as intentional about their investing as they are about their giving. So, without further ado, Brent Bishore, welcome. Thanks, Jeremy, for having me on.

Speaker 1: 2:38

Am I saying your last name correctly? I guess I should check that. Absolutely, Be sure, you nailed it. As soon as I said it the first time, I was like that's the one thing. I didn't ask him. So if I'm saying his name correctly, Brent. You're a young guy. You founded this in 2007, but how old are you? I'm almost 41. Almost 41, the ripe old age of 41. So you were a very young man when you founded this company. How did that come about?

Speaker 2: 3:06

Tell us about your background and how this firm came to be. Yeah, I was getting my law degree, my MBA, at Mizzou, here in Columbia University of Missouri, and met a beautiful woman. I called her the sexy scientist for a year before I asked her out who's now my wife, and I ended up dropping out of law school and MBA to start a business that was in the marketing space. That went, I would say, okay for first time founders I mean, as you know, entrepreneurship I joke that it feels like a knife fight and I got stabbed quite a few times but I survived. And then I had a mutual acquaintance say hey, you should meet this guy.

Speaker 2: 3:45

He got left at the altar for the second time trying to sell his business. I took that to me and I should try to go buy it. Why else would you tell me that? And to make a very long story short, I ended up getting an SBA loan, bought that business and did quite well with it. I called up a friend of mine from college and I said, hey, you're like the smartest finance guy I know. I just did this thing. And he's like oh, you did a private equity deal and I literally Googled private equity at that point. So I did the deal before I knew even there was an industry called private equity. So I joke often that I'm the Forrest Gump of private equity, because I still can't quite understand how I got to where I am.

Speaker 1: 4:23

Were you just totally sector agnostic. You just wanted to own a business Like did you have a particular goal in mind of the kind of business, or businesses you wanted to own.

Speaker 2: 4:32

Well, that first business was tangential to my current business. The current business, when I bought the business, was an ad agency. It was in the marketing space and the way that the person put it who got us together, they said, hey, you should meet this guy, he's kind of in your industry. So I got together with him and the specialty that he was running an agency as well. The firm we bought as an agency but they had a specialty in recruitment marketing, particularly with the military, and we actually still own the business today. So long time, you know, later, 14 years later, we still own the business and it got us into a kind of a different area of marketing that I hadn't even considered. I didn't, you know, you think about the marketing agency spaces as being mostly you know billboards and TV ads and you know social media and all this stuff. There's this whole other world of recruitment marketing and specifically military marketing that we were able to get into and really love serving the customer.

Speaker 1: 5:24

So how did that become then, this private equity firm called Permanent Equity?

Speaker 2: 5:35

Yeah. So I've always been a fan of like do more of what works and less of what doesn't. And so when it went well, I immediately had to step out of my role as leading either of the businesses because I couldn't really both businesses and I was having to drive in the early days. Probably for the first six months after we bought the business I drove back and forth to St Louis, so it's about a two hour drive each way, four days a week. I told my wife that I would be home every night and I tried to stick to it. So I'd get out of bed, get up early, be in the office in St Louis by you know 730 or eight in the morning, and then I try to be back home by five in the afternoon. And so I told my wife you know she wouldn't notice any difference, and so anyway, so that that allowed me to step up and out, we started building a staff around kind of the two firms and you know when it went well, I said I wonder how many other businesses there are out there that need to be transitioned, that don't have a buyer and can't pass it along to a son or daughter or relative. And turns out it's a lot of them. In fact, roughly I mean, based on the surveys that have been done about 70% of small to medium-sized businesses don't have an exit strategy, and so most of those unfortunately shut down, and I'm sure we'll talk about this later in the podcast.

Speaker 2: 6:49

But these small businesses are the anchors of their communities. I mean, they are the people who employ a vast majority of the United States and they're the people who you buy from to get what you need wherever you live. And so I thought, man, that doesn't seem right. Couldn't we develop maybe a better model? And I'd been an operator, so I didn't come from a finance background. I mean, I've taken a finance class in my life. I can barely open up Excel. I've never worked at another firm. This is basically what I've done my entire life. And so I just came into it and I said, well, shoot, there must be more people who need what we can offer and who we could be good partners with. And so that's really what kind of set us on the path to create a brand that owned these companies, create a holding company, and then eventually we can talk about that later. But we eventually raised outside capital in a very unusual structure that allowed us to maintain our integrity. And now we're on our second fund and probably leading into our third fund here soon.

Speaker 1: 7:44

So yeah, I want to get to that actually pretty quickly. But first do tell people I don't think we should assume the audience of this podcast necessarily knows much about private equity and how it typically works. So explain how a real most private equity firms are structured, what they're looking to do and then, as a lead-in to how what you're doing is different.

Speaker 2: 8:07

Yeah, so maybe we can just kind of start at first principles. A private equity firm buys equity, so buys the stock in private companies, so that's really the only requirement to be private equity is. You're buying private equities Now traditionally. If you look at who pioneered the space, there's a book called Barbarians at the Gate KKR is a well-known large private equity firm and they developed a model called a leverage buyout model, which basically means I'm going to try to buy your company and load it up with as much debt as I can at closing, so I'm going to try to inject as little equity.

Speaker 2: 8:43

Think about it as like buying a house where you know whatever your down payment in is on the house is kind of the equivalent to the equity the private equity firm would put into a deal. And so what they're used to doing is trying to match as little equity as they can with as much debt as they can. And that debt, of course, was non-recourse, probably unlike your house. You know, if you don't pay your mortgage, not only do you lose your house, but you probably have to repay. If the bank loses money on the house, even more money on top of that. Private equity firms were able to get institutions to lend them money with no guarantee on it. So what it allows it to do is if there's a problem with the company and the company implodes, they can just write their equity down to zero and kind of pass the company off and then the winners all aggregate up right. So it's kind of a heads I win, tails you lose. The unfortunate part is that when you put a lot of debt on something, you're removing all the margin of safety out of it. So you know, like you would think about in a house, you know if you put 5% equity into a house and you have 95% debt and you have a little bit of change in income or you lose your job, there's a high likelihood you're going to have a lot of problems trying to pay your mortgage. Conversely, if you maybe buy a house that's a little bit less of a house but you're able to put 20 or 30 or 40% down, you know there's a lot more margin there to be able to work with.

Speaker 2: 10:00

Well, it works the same way with businesses and in private equity. And so we early on, you know, as operators these businesses said I can't imagine the stress. It's so stressful to run a private business. I mean, you know it is trying to do everything you can just to survive right, and layering in debt on top of that really again takes all the comfort out of it any comfort that you would have and adds just a tremendous layer of stress on it. I couldn't imagine running a business that had a bunch of debt laden on it, and so from the early days we said, hey, that's not something we really want to do. We want to make sure these companies that we get involved with don't use debt or use it responsibly to grow the business, to grow the balance sheet, to maybe open up a new location or to buy more inventory to service the customer, but not just so that I can pay off somebody and put a bunch of debt at close.

Speaker 2: 10:50

The other model that traditional private equity uses is to flip it to somebody else within a fairly short period of time. I mean some private equity deals will be resold within six months to a year of them purchasing it. I'd say the average duration the last time I looked was three and a half or four years. So if you think about it, from the time that you meet them, the private equity firms, the time they're going to resell your business, I mean it's not that long. I have a friend in private equity and he says, hey, I'm going to own this business for no more than four years. You have four board meetings a year. That's 16 times to impress me, like, don't screw it up, right? It's not a high relational model, it's not a long-term model. And the way we think about it is it's impossible to make good long-term decisions with short-term horizon, right?

Speaker 1: 11:34

I mean there's just no way In fact, they're not really set up to make long-term decisions, right? I mean, no one's even incentivized it.

Speaker 2: 11:41

Yeah, and if you think about it, I mean you go from having a family that built this business and you know, usually these families have no debt on the business and they're thinking about this business for generations. And then private equity comes in and says look, and, by the way, private equity is incredibly intelligent people, they are very smart, they know things that the average small business owner does not know. So can we just call they are very skilled at what they do. The challenge is and, by the way and there are lots of great people who work in private equity who don't harm, people who are thoughtful, who are kind but overall as an industry, when I think about the incentives, the incentives are all off. So I don't want an incentive to be more short-term oriented. I don't want an incentive to try to cut as much cost as I can and sort of lean down the business, like I want.

Speaker 2: 12:27

We actually want to come in and increase benefits. We want to increase the happiness and the livelihood, like I actually have this vision of potentially and I don't think we're there yet but when you work with permanent equity, we actually help your marriage and we help your friendships. We want you to be just a better, higher functioning human out there in the world. We want you to be healthier. So that is the opposite, I think, of the mentality that we call the buy, lever, strip and flip model of traditional private equity, so permanent equity. We typically have no time horizon. We have really long-dated capital I think the longest in private equity history. So we're buying with no intention of selling the business, we're not using any debt, we love to keep the leadership in place.

Speaker 1: 13:10

We're not trying to strip the company down and we're trying to partner for the long term and treat everyone really well, was this a concept that was around, that you read about somewhere and became familiar with and said, yeah, that's what I would like to help build out as an alternative to the traditional private equity model? Or did you make this?

Speaker 2: 13:28

up, brent. Yeah, I didn't know what I was doing. I still feel like most days I don't still know what I'm doing. But yeah, I mean, you know the whole imposter syndrome. I'm like, oh man, that's me, but I'm actually an imposter and yeah, so I.

Speaker 2: 13:43

It just was first principles, thinking it was just if I was a seller of a business, if I was an executive of a business that was purchased, what would I want and what I'd want is what private equity doesn't offer and what permanent equity does offer. I would want a group of people who I could trust, who did what they said they were going to do, who provided capital that was long-term, that was secure, that the rug couldn't get pulled out from underneath us. I'd want them to take a very long view and time horizon on the business I'd love us to build together. I'd love to share in economics, as that business was built on the way up and we try to be kind and generous. I don't, I don't. You know, this is not complicated. I feel like that most people just get it wrong, like you make more money together if you do it together, and the only way you can do it together is if it's a win-win for all the parties, and so when we think about win-win, we can also talk about this.

Speaker 2: 14:36

Many people think of win-win between a buyer and a seller. Those are only two of the stakeholders in a transaction. There are the executives, which are kind of a different stakeholder group. Sometimes there's overlap between the ownership and the executives, but not always. You have the employees, so not the people who are leading, but just the sort of middle management all the way down to the line workers. You have the communities in which they sit, you have the suppliers and you have the customers. Maybe you even have a regulator involved, and so you need, in order for the business to be sustainable long term and for everyone to win, everyone has to win or it's not sustainable. So we really try to think holistically. It's kind of like sitting around a poker table and you're trying to look at everyone's cards and trying to say OK, we want to make this scenario work for everyone who's at the table.

Speaker 1: 15:21

What's the downside of? I would imagine that many owners of small and medium-sized businesses are more attracted to what you're doing than what the typical private equity firm is doing. But if you are looking for some kind of exit, that isn't just like winding down your business but actually getting something for it. It's a trade-off, a lower sort of valuation or a lower multiple with your model versus a traditional private equity model.

Speaker 2: 15:47

I would say is we're paying in the ballpark of what other people are paying, or we wouldn't be able to get deals done. We're rarely I would say never but we're rarely the highest bidder. So if your only advantage in how you're going to win at an auction is you pay the highest price, then it comes at a cost of something else. So if the model is just we're just going to pay the highest price, then it comes at a cost of something else. So if the model is just we're just going to pay the highest price, that's how we're going to win, then you're probably going to strip everything else out, you're probably going to be short-term oriented, you're probably going to lever it up as much as you can. And so look, I'll be honest, for 85% of businesses out there, or sellers out there, all they care about is how is the biggest check that I can get it closed? And look, if that's what you want, there is a whole ocean of people out there who that's their model and they will. Just, you know they're competing in an auction. It's just straight price and that's great.

Speaker 2: 16:37

You know, if we say to anybody who brings us an opportunity, we always say hey, is money the primary motivator for the transaction, do they care at all about who buys the business? And so what we like to say is we buy businesses from people who care what happens next. If you don't care what happens next, we don't want to buy the business from you almost at any price, because you probably ran the business like you don't care Right. So we want to create a positive selection bias after closing for people who care deeply about who buys the business. Their employees are highly engaged and they feel well-treated. Their suppliers feel well-treated. Their customers love them right, because they methodically and slowly built the business over a long period of time with that sort of ethos. And so those are the people we're trying to partner with, which is a smaller percentage of the overall sort of universe of sellers.

Speaker 1: 17:31

Seems like it's not micro, though I mean it seems like that's got to be a non-negligible, at least in my dealings with owners, often founders, of these smaller businesses. In some cases, one reason why there are smaller businesses is because they haven't cut every throat on their way to the top for growth, right, that they have had parameters, that they've put around their business practices and what they're willing to do and what they're not willing to do. So it doesn't seem to me that that's got to be a big enough palm for you to find efficient oh yeah, I mean our business is doing well.

Speaker 1: 17:59

We love the people we've been able to partner with the concepts. You've been doing this now for some years. Have you seen it imitated now? And absolutely yeah, yeah, yeah, we love it. Yeah, talk about that. How is it? How is that changing what the world of private equity looks like?

Speaker 2: 18:16

Yeah Well, so when we first started talking about these concepts in kind of 2004, 2005, I mean, look, I'm an idiot. But a lot of people called me an idiot, you know, and I was like you're not wrong, I'm. I mean, compared to what you're doing, you're right, I didn't. You know I don't have a degree from Penn and you know I haven't, I don't have 12 years of experience in in, you know, investment, banking and private equity, and you know I don't know everything you know right. All I can tell you is that I sat in the seat of somebody who operated a business and I can tell you what I would have wanted. And so, when we think about just generally, what the market is and who's out there, we want to select for those people and we care deeply about them.

Speaker 2: 18:59

And so, when we think about the ways of the industry, I would love to have the industry be changed, and I think it is slowly changing. So there's probably I don't know probably 150 people that have told me they're going to try to start something similar to permanent equity, and there's probably been five to eight who have actually done it. It's really hard, like I always say. I mean, we put our whole playbooks online, like you can go on our website and you can read exactly how we do what we do. It's simple, it's just very difficult, and so we're open to um. We're open to people adopting our model. We'd love that. We think that it would be better for the industry. Is there a?

Speaker 1: 19:40

plentiful supply of both deals and investors, or is there a lot of like investor education that has to happen before you have enough potential investors in permanent equity? Or is it something else, just the sheer just operating? You know, 15 companies. That's the hard part about it.

Speaker 2: 19:59

Yeah, it's all hard. I mean, you know, I used to joke if it weren't for the employees and the clients, then this business would be easy, right? I mean like everything's hard, right, you know, people are messy and difficult and you know, when you put a bunch of messy people in a room, no matter what the situation is, it's going to be. Well, it'd be messy. And so, yeah, I mean, there's a plentiful amount of investors out there. There's a plentiful amount of companies out there. There's a plentiful amount of investors out there. There's a plentiful amount of companies out there. There's an incredible lack of skill in this segment of the market. So you'll often see private equity people from upmarket trying to come down into this area of the market and they're used to working with consummate professionals, executives, upmarket. They know what they're doing. They're coming in and asking very thoughtful questions and what about this strategy? What about that strategy? That's not how you do well in our segment of the market. How you do well in our segment of the market is getting your hands dirty. You're dealing with stressed out people who are trying their hardest. You got to climb down into it.

Speaker 2: 20:59

I mean, I always joke that investors come in and they're like have you ever thought about this grand idea? And the answer is always, of course, like who's going to do the work right? And so what we try to do is we try to resource them. And again, it helps because we came. You know everyone on our staff. We don't hire people out of private equity. No one on our staff comes out of private equity, and so everyone's an operator on our staff. Literally every single employee that we have has operated a business at some point on our staff. It's like a prerequisite for coming on, because you just don't know, unless you've operated a business, you don't know what's important, what's not, what things that seem important actually aren't and things that aren't that important actually are.

Speaker 2: 21:35

And so what we want to do is we want to pair people who have the skills to be able to support these businesses with people who desperately need the help. And you know we think of it as lids. So there's like an everything tastes like chicken layer to these businesses. You know we own 15 businesses across manufacturing, construction, aerospace, business, services. I mean it's a very wide range. Right Last year we bought a children's clothing brand and we bought the nation's leading designer manufacturer of amusement park rides right Same year. So I mean really wide variety. I can tell you that amongst all those businesses, they need the same stuff Sales, marketing, technology, accounting, finance, hr support, recruiting, all these things. You know it's the. Everything tastes like chicken layer, and so what we're trying to do is we're trying to help people who are incredibly skilled at their business become skilled at the business of business.

Speaker 1: 22:27

Very good way of putting it. There's it certainly. For me, it absolutely resonates with what you find in the nonprofit sector as well, which are just businesses that have a different tax status and have a very mission forward way of going about their business. But there is a everything tastes like chicken layer. I like that way of putting it. But everything tastes like chicken layer. I like that way of putting it. The same the problems across at least the smaller and medium-sized entities tend to be very much the same, which is useful because you can bring resources to bear in helping those kinds of businesses. It's scalable how you can help those sorts of entities. So that does ring a bell.

Speaker 1: 23:07

Let's go to a break. We'll be right back with Brent Beshore, founder and CEO of Permanent Equity. Hey there, listener. I want to invite you to our 2024 Givers, doers and Thinkers Conference in sunny Malibu, california. This is our fourth annual conference and it's called K to Campus how the Education Reform Movement Can Reshape Higher Ed. The conference is a great opportunity to gather with donors, nonprofit leaders and scholars many of them you will recognize as guests on this podcast to discuss some of the most pressing issues in the realm of education. Our featured speakers and expert panelists will address K-12 school choice, the importance of donor intent when making gifts to colleges and universities, and many other topics. We are now offering special early bird registration to our podcast listeners for the 2024 conference. For a limited time, use code EARLYBIRD to register and receive a 50% discount.

Speaker 1: 24:09

That's pretty good. A special link will be listed in the podcast notes. We hope to see you in Malibu. All right, we are back talking to Brent B Shore, founder and CEO of Permanent Equity, also author of the Messy Marketplace, which I will ask him about here before we go. We were just talking about the ways in which small and medium sized businesses across a variety of sectors are all alike. You have a phrase you are not all alike. I share certain similarities. You have a phrase that you use that I am a hundred percent going to be stealing from you I'll try to credit you when I can which is all businesses are loosely functioning disasters. That's a fantastic phrase that had to have been born sort of in the heat of a grinding week, I would imagine.

Speaker 2: 25:01

Yes it was. Yeah, I, somebody was asking me I think it was probably an investor was talking to me about you know well these businesses, this or that, and I was like, hey, can I just stop you there? I was like these businesses are loosely functioning disasters, and some happen to make money. Right, like that's the way I think about the small to medium sized business world and I would say the non-for-profit world is the exact same thing. Right, it's just a different revenue model.

Speaker 1: 25:26

And it should make everybody feel better. Actually, though, to hear that, right, if you're an operator in a business right now, whether a nonprofit or for profit business like everybody is you, you're not unique in the sort of dysfunction and challenges, and how hard it is, it's that's. That's across the board, so I want to say that it's actually a way of making people feel better, not worse, but feel better about what they're doing. So, having said all that, though, you touched on this a little bit, but I'd like you to go, if you don't mind, dive a little bit deeper. How do these businesses you're looking at the ones you haven't bought as well as the ones you have how do they contribute small and medium sized businesses to the health of society?

Speaker 2: 26:14

And maybe you can even say how are those contributions a day-to-day, week-to-week basis to?

Speaker 1: 26:28

the average.

Speaker 2: 26:28

American. You're going to eat at a small business. You're going to shop at a small business. You're going to request the services.

Speaker 2: 26:35

Something breaks in your house, the plumbing, the HVAC those are small businesses that you're going to be working with, everything from the regional farmer or maybe the landscaper that's installing something at your house, you know, to the person who makes the drains on the street, to the person who's manufacturing the light posts.

Speaker 2: 26:56

I mean, these are all small companies and I think most people maybe don't realize that. It's a little bit kind of like the farming system where you know we keep the how we really get meat and how get meat and where vegetables are really grown, maybe hidden. Most people maybe don't understand that almost everything they're coming in contact with, they look around, was created by a small company. And let's remember too, all small business, all big businesses, started as small businesses too. So there's no way to get around small businesses being the backbone of this economy and, in terms of the communities that they're in, they are the ones, if you look, that are contributing back to the community. So, yes, some corporations are also contributing, but for the most part, if you look at the largest philanthropic givers, for the most part. They're going to be small small to medium-sized business owners and executives and those are the people who are deeply embedded in their communities and care deeply about them.

Speaker 1: 27:54

And part because they're tightly or closely held. You might say that the decision-making process around giving, I'm sure, tends to be less bureaucratic for a small or medium-sized business. Has your work at Permanent Equity, have you developed your own thoughts about giving philanthropically, not only just necessarily for these companies that you're looking at investing in or you have invested in, but just for yourself? How has that evolved for you?

Speaker 2: 28:19

Yeah. So the answer is yes. I feel like that. I'm not great at how we give, like I think it takes time and, to be honest, my wife and I are still on this journey. We are I haven't talked about a lot about this publicly Part of this like this weird humility.

Speaker 2: 28:36

You know I don't want to, I don't ever feel like it's bragging, but you know we are.

Speaker 2: 28:41

So we're believers, we follow Jesus and you know we believe we're stewards of the resources he's given us, and so, whether it's in the companies, in the organization, in the companies that we manage, or the resources that we are able to be given, we just want to be good stewards of those, and so, as we've been given more, we certainly have it's been an exciting thing for us to pursue what we really want to support.

Speaker 2: 29:07

I mean, there's an ocean of amazing things out there and I feel like that we are called, we have a special kind of mission to help those in need, sort of the poorest of the poor, and so we focus a lot of our giving on mercy, and so, as we have, one of the goals that we have as a, as a couple, is to give an increasing percentage every year of our of our resources away, so not sort of in dollar amount but in in sort of percentage.

Speaker 2: 29:35

We think that's a uh, uh, yeah, as a portion that we give, and so we're we're pretty close to uh, I mean, I think we're. Our goal is to start giving 50% away on an annual basis and sort of the maximum allowable that we can from a tax perspective. We're not there yet but we're on our way and that's really opened up a lot of doors to see people's lives changed and we're really grateful for the people we get to partner with. So we have call it nine or 10 organizations that we feel great about. We know inside and out that we want to use our time and our talents to lever against the financial resources that we're giving as well to help grow and shape those organizations and try to help them help the most people they can.

Speaker 1: 30:20

Are those organizations savvy enough to be asking you for more than just your treasure, but for it to be having you take a look at their operations and leadership and using what you've learned from the permanent equity world to help them get stronger as companies?

Speaker 2: 30:35

Yeah, I mean I would say some of them you know a lot of. That's just a function of trust you know there's. You know being wealthy doesn't make you smart. And being wealthy, even if even if you gain it through a, you know, through a business somehow doesn't make you smart. And being wealthy, even if you gain it through a business, somehow doesn't mean you should speak into a lot of the not-for-profit world.

Speaker 2: 30:52

And so I try to say I'm happy to try to be helpful. However I can. We always offer up beyond financial resources. I'm happy. If you think that I've got an ability to speak into it, that's great. But by no means are we trying to say, hey, in order to take our resources financially, that you need to bring us on the board or do something like that. In fact, there's only one board of directors that I serve on and I'm happy to. I'm not a very good board member. To be honest. I don't love being on boards. I'm kind of a chaos monkey, so I tend to disrupt boards that I'm on, and so I work much better in concert with the leader of the organization or the senior executives, and it sounds like you're a very good advisory board member, brad, but not the governing board, perhaps.

Speaker 2: 31:39

Yeah, I don't do well with advisory boards either, so anyway, but no, I try to be helpful as much as I can. The best companies you've invested in.

Speaker 1: 31:47

what do they have in common, or what is it? When you see it now, you're like, yeah, that's what we're looking for, that's it.

Speaker 2: 31:54

Yeah, I mean I think the best companies are built by the most successful people and I would say, whether it's in business or not, in a business context I've seen the people who I like to bet on are the ones who take the best feedback. It takes a lot of humility to hear hard things right. I mean everyone wants to say, hey, what you're doing is great, you're doing great, there's nothing I would want to change. Right, being in most people and, by the way, I suffer from this too Don't give, don't give off the vibe that they're really open to hearing feedback. And I think, as a colleague, as a friend, it's sometimes hard. I mean I talked about this with a friend the other day but I said I've stopped for the most part lying through commission, but I certainly lie a lot through omission. I just don't have the courage often to tell somebody the truth, even if it's the truth in love, which I hope it is. I stopped short of telling them the full truth. That would be incredibly beneficial, I think, to their lives, largely because I don't want to go through the battle. It's not my life to live and I don't want to go through the battle of what that would look like and most people are not open to hearing feedback. And so, whether it's for me personally or the CEOs in our companies or whatever, it might be that the people I've seen just make incredible progress and, by the way, incredible progress personally, professionally, in their marriages with their kids are people who can humble themselves and say, hey look, I'm secure enough to be able to hear that maybe I'm not perfect. And it doesn't mean you just take wholesale whatever somebody says to you and say, oh well, now I'm going to change and go in this direction, or that I mean that's madness. But what it does mean is that you're going to genuinely hear what they have to say, maybe ask some clarifying questions, not be defensive, no matter how harsh the criticism is, no matter how unfair or how off base you think it is. I mean it's great for somebody to say, hey, I hear you, I, this is what I'm hearing you say. You know, can I ask you a couple of clarifying questions? Okay, I still don't, I still don't agree with you, but I'll think on it. Right, but that's rarely how it happens.

Speaker 2: 34:04

Oftentimes, feedback is given and the person gets their feelings hurt or they start shoving back Right and and immediately. As soon as you do that, the the walls up on both sides. You're not going to hear what they have to say. The other person's defensive Um and so I've just seen it repeatedly through my career. I mean most careers die by suicide, not by homicide, like most people would be with. Their careers would be triple, if not 10 X, what they are, if they would just genuinely humble themselves and and listen to what the world's telling them. What people are telling them is how they could view themselves. You found any?

Speaker 1: 34:42

way to get the walls to go down so that feedback can be heard a little bit better.

Speaker 2: 34:47

Yeah, yeah, I mean, the only way I know to do is to to make sure the person knows that you're for them and with them, and you know if you have any hint that somebody is not for you, that they're not happy when you're happy, that they're not excited about your successes, that they're not willing to mourn with you when you're mourning. It's really hard to hear feedback from them. Now, I think that's still a skill that somebody should cultivate, is to hear meaningful feedback from somebody who you don't like and don't think likes you, because I think that's still a kernel of truth usually in that feedback. But for the most part, the way I found it is telling somebody hey, if I'm going to deliver hard feedback, I'm going to say, hey, I care about you, I care about you being the best version of you. I want you to know this because it's for your good.

Speaker 2: 35:35

I'm not doing it to make myself feel better. I'm not doing it because I'm somehow superior, to make sure there's no elevation that's going on with the person who's giving feedback, because oftentimes feedback is really just condescension and disguise, and that is not the way to give feedback. So I often try to say, hey, I'm only giving this feedback, because I too have this issue or I've suffered this way and people were kind enough to give me the feedback. You can take it or leave it. It's your life to live. That seems to go over better.

Speaker 1: 36:08

Let me shift a little bit here as we sort of steer, of steer this thing toward, toward a close. But what would you say? What are the questions, the right questions, or especially the questions that people don't tend to think about? If you're a business owner or a family and you're starting to look around for a partner, either either for a full sale or for a growth sort of situation, what are the questions people don't ask often that they should?

Speaker 2: 36:36

Yeah, I mean, I think you first have to know what you want. I think the most frustrating thing for us is when we talk to a seller and we say, hey, look, we're very flexible, we do this for a living. We've got people who are all over the spectrum in terms of what they want for the future. You tell us what you want, we'll tell you if we can get there Right. And they say, well, I don't know. You tell me what you can give me. I'm like we can give you almost anything within you know, within reason. If you tell us you want to leave the day after closing, okay, we'll work with you on that. If you want to tell us you want to work with us for the next 10 years, great, we'll work with you on that.

Speaker 2: 37:12

Like you tell us, you know, the question we ask is if you could wave the magic wand, what would what would the situation look like, what would the transaction look like? What would life look like after the transaction? And most sellers can't answer that question. And so if they can't answer that question, then we can't be as helpful as because what we're trying to do is we're trying to put together this incredible jigsaw puzzle, right, if you think about a deal, there's roughly 400 things you have to agree on, broadly speaking, between a buyer and a seller 400 things. I can't tell you what 400 of those 400 things are really important to you, and I can tell you which ones are important to us, depending on the context, but it's going to take forever to work through those questions, and we're not going to design a very good deal if you don't know what you want.

Speaker 2: 37:58

So the first question I would ask if I was a seller is what do I want? And make sure I can articulate it very clearly and have sort of substantial logic behind each one of the key points. So you know hypothetically, let's say, you know you own a business, that's you know making three or four million dollars a year, and you say okay, look, I want all cash up front. I don't care about earning anything, I don't want a seller note, I don't want any deferred, you know compensation at all. I want all my cash up front. I want to walk out day one. Okay, that's fine. What that's going to communicate to a buyer, though, is that you somehow see risks that they probably don't. If you're not willing to risk share at all, then you're going to see risks that they're probably not aware of. And if you say, oh no, the business is in great shape, I think it's going to make tons of money for the next 50 years, Buyers can be very skeptical of that. But we have people who sort of engage in that and they say I want all cash up front, I want to leave the day of closing right.

Speaker 2: 38:56

And then we find out down the road that it was coached, that some advisor or intermediary said oh, this is what you tell people, this is what you want, because no buyer can be trusted. And then we say to them but wait a minute, like what? If you could be trusted, would you want to continue your career? Would you want to? You know, would you want to be the chairman of the board, would you? And they're like yeah, of course I love these people, these are my people, I would love to be involved. And yeah, I mean and we always tell people, by the way, you will make more money if you don't sell your business than if you do. That's very counterintuitive. You will always make more money not selling your business, because it requires you to take the risk, it requires you to work in the business. So what we try to counsel people is you know, make sure you know what you want, and then let's talk about what that means.

Speaker 1: 39:38

That's really good, brent, thank you. Tell us about. There's two events you're involved with that I've heard about through the grapevine. I don't even know the relationship with these events to permanent equity. Maybe you can clarify that here. But one's called main street summit. I believe one's called Capital Camp. Tell people about those and if they can be involved, how they could, if wanted to, how they could get involved.

Speaker 2: 39:55

Yeah, well, thanks for asking. So I founded both those events. You know, I had this idea that content is the only way to scale conversation. So what we're doing right now you and I are chatting, and hopefully lots of people are going to listen to this right, events are the only way to scale a relationship. So, if you think about how to get a lot of people together and form meaningful relationships, the design of the event is really important, and events are an amazing way to meet a lot of people and develop those relationships.

Speaker 2: 40:24

So I had been asked to go as we already got notoriety in the industry to a number of finance events and they were terrible. I mean, I don't know how else to say it. They were just absolutely awful Rubber chicken lunches, bad coffee. Everyone's in blue blazers slinging business cards, panel discussions. Up there, it's a snooze fest. It's awful. No one was enjoying themselves. I wasn't enjoying myself and I called up a partner of mine. This is in 2018. And I said there has to be a better way. I mean, this is the entrepreneurial spirit, right? Like I don't consider myself a finance guy. I'm not a private equity guy. I mean probably not even an investor. Like I'm an entrepreneur, like, I love creating things that you know, permanent equity is just an expression of the creation in the area that I love. And so I called him and I said, hey, there's gotta be a better way. What if we designed the event that we would want to attend? And he said I'm in, and so that's Capital Camp. That's how we created Capital Camp.

Speaker 2: 41:13

So we're on our fifth iteration now of Capital Camp and it's roughly 400 investors, all professional investors from around the world. We had 16 or 17 countries represent this last year Tremendously successful, lots of capital in the room. And I get to be the Willy Wonka of that event for, you know, a three-day period, all the things that I would ever want to be a part of. So we've got, you know, crazy hot air balloons and helicopters and incredible chefs. The joke is I'm running a food and wine festival and my partner's running an investing conference. You know SEAL Team 6 does all the security for it there's. You know you get to choose your own adventure. You get to, you know, go trail running with one of the top runners in the world, or you can learn shooting from, like I said, a Navy SEAL. Or you can learn how to fillet a halibut with one of the top chefs in the country. So it's just kind of this incredible blowout event. If you're a professional investor and you're listening to this, go through the website. There's a wait list, but would love to have you get on there.

Speaker 2: 42:19

Main Street Summit is kind of the opposite end, so it is business owners, operators and investors. We wanted to create a big 10 event, so Capital Camp's roughly 400 people. First year of Main Street Summit was this last year and it was 1,000 people. This this year we're hoping it's close to 2000 people. This next year it's a festival, so we're running seven, eight stages at the same time.

Speaker 2: 42:37

Think of it as like a movie festival, but instead of sitting down and watching a movie, you're doing something, some conversation or listening to some presentation on something business related Across industries. We had oil and gas, we had aerospace, we had construction, manufacturing, everything and different levels of content. So are you sort of a newbie to the industry? Are you trying to just kind of get your feet wet or are you deep in the industry? So we have kind of 101, 201, 301 level content and then just a huge party. I mean it's just so much fun. There's all kinds of activities to do we take over downtown Columbia, missouri. Yeah, I love it. I mean my aspirations for Capital Camp's kind of topped out in what it is. My aspirations for Main Street Summit are that it becomes eventually like the South by Southwest of the business world. That's fantastic.

Speaker 1: 43:20

Well, sounds great. I'll have to go sometime and I'm sure people would love to have you there, we'd love to go as well. Where can people go to learn more about permanent equities? At permanentequ equitycom. That's easy. Main street summit. Main street summitcom Capital, campcom Capital campcom, good URLs, excellent, and you can buy Brent's book the messy marketplace, selling your business in a world of imperfect buyers Amazon, barnes and Noble everywhere else, I believe.

Speaker 2: 43:52

And are you on X? I am on. Are we calling it X these days? I'm on Twitter. Yeah, I'm on the Twitter. I'm on Twitter. I'm on LinkedIn yeah, I'm easy to find.

Speaker 1: 43:59

I'm not on it At Brent Beshore on Twitter slash X, that's B-E-S-H-O-R-E. All right. Well, thank you so much, brent, for being with us, sharing your wisdom and insights. Really appreciate it Really appreciate you having me on from Send your requests to our producer, katie Janus, at kjanusatamphilcom, that's K-J-A-N-U-S at amphilcom.