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What if a private equity (PE) firm never had to sell a single company it bought? What if it charged zero management fees? What if it gave itself 30 years instead of 5 to generate returns – and still delivered a 29% cash-on-cash Internal Rate of Return (IRR)?

That's Permanent Equity, a Columbia, Missouri-based firm founded by Brent Beshore. They invest out of 30-year committed funds, use little to no debt, and only get paid when investors receive cash distributions above a hurdle rate.

Before I break down how they built it and why it works, let me be upfront: Permanent Equity didn't just inspire the way I think about building Lynnfield; Brent Beshore influenced how I think about building in public. He's one of the few people in this space who shares not just the model, but the reasoning, the mistakes, and the real thinking behind it all. That’s the standard I'm trying to hold this newsletter to. 

I hope my writing helps you all in the way that Brent’s writing helped me.

Brent Beshore started the way most people in this space do: he launched a few businesses, one went poorly, one went better, and then someone introduced him to a company for sale. He bought it with a Small Business Administration (SBA) loan. It generated cash, he repaid the loan early, and reinvested into more acquisitions. Five years later, he had five companies and a small team to find, diligence, and operate them. 

He wasn't looking for outside capital. Traditional PE fund structures – 10-year funds, 2% management fees, 20% carry – conflicted with everything about how he operated. They create forced buying and forced selling. They incentivize moving upmarket and encourage leverage. None of that fit with what he wanted to do.

Then Patrick O'Shaughnessy of the Invest Like the Best podcast flew to Columbia, Missouri, sat with Beshore, and asked one question: "What would it take for you to accept outside capital? You design the structure, and we'll let you know if we can invest."

That question changed everything.

The result was Fund I in 2017 ($50M, 30-year term, 10-year investment period) and Fund II in 2019 (~$248M, 27-year term). Their current capital base exceeds $300M. 

Three questions define any fund: How long to invest the capital? How long before you must return it? What do you charge?

Traditional PE answers: 3-5 years to deploy, 10 years to return, 2% management fee plus 20% carry. Permanent Equity's answers: 10 years to deploy, 30 years to return, and zero fees unless they're distributing cash returns above a hurdle rate.

No management fees. No deal fees. No financing fees. No portfolio company fees. 

At Permanent Equity, carry is only triggered on actual cash distributions – not paper gains, not marked-up valuations on a spreadsheet. They distribute cash to investors roughly twice a year. When there's nothing to distribute, they take nothing.

They also rarely use debt. Most PE firms lever acquisitions 3-5x to amplify equity returns. Permanent Equity invests primarily with equity, which reduces risk, preserves operational flexibility, and lets the underlying businesses compound on their own merits.

The 30-year structure means there is no forced exit. If a company is compounding, they keep compounding. The biggest drag on PE returns isn't bad investments – it's selling good companies too early.

The 2020 stress test is the clearest proof point. During COVID, most available deals were distressed. Permanent Equity made zero new investments and felt zero pressure to do so. A traditional fund charging 2% on committed capital would have felt urgency to deploy regardless. The structure did exactly what it was designed to do.

The firm was originally called "Adventur.es" – a name Beshore wisely rebranded to Permanent Equity, which captures the thesis perfectly.

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Permanent Equity’s buy box is specific: primarily family-owned businesses, durable value propositions, high relative margins, fast cash conversion and minimal maintenance capital expenditures (CapEx).

Their investment criteria targets growing businesses with $2-15M in net profits and 15%+ annual growth, or mature businesses with $3-25M+ in net profits. US headquarters only. Majority positions exclusively.

The portfolio – consisting of 16 businesses – spans aerospace and defense, construction, manufacturing, consumer products, business services, ad tech, and consumer services – companies like Ace Fence, Brian's Cabinets, Pacific Air Industries, Craig Frames, Chance Rides (amusement rides), and Rylee + Cru (children's clothing).

Boring businesses. Durable businesses.

Across the portfolio: 900+ full-time employees and approximately $400M in annual revenue. They've built shared services covering recruiting, marketing, technology, finance, and working capital management – a central support layer that makes each portfolio company stronger without requiring each to build those capabilities independently.

The returns are not theoretical. As of early 2023, Permanent Equity had invested $133.4M and received back $65.9M in actual cash distributions – a 29.1% cash-on-cash IRR since 2015. In 2023 alone, their 16 portfolio companies distributed more than $35M back to investors while reinvesting millions more.

At Lynnfield, we acquire cash-flowing businesses in the $500K-$5M EBITDA range and offer co-investment opportunities to qualified investors. Join our investor list to receive deal flow as we evaluate new acquisitions.

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Permanent Equity validates something conventional wisdom still struggles to accept: you can generate institutional-grade returns buying and holding boring small businesses, using no leverage, and never selling. 29.1% cash-on-cash IRR. $300M+ in committed capital. 16 companies.

Traditional 2-and-20 creates perverse incentives – a General Partner (GP) earning 2% on committed capital from day one gets paid whether or not investors make money. Permanent Equity's model flips this: the GP only gets paid when LPs receive real cash above the hurdle. 

The operational approach mirrors what we're building. Permanent Equity started as operators, not deal-makers. They built a team to support portfolio companies – not to originate more deals. The companies build, and investors share in the cash flow.

The scale is aspirational. The principles are immediate. You don't need $300M to apply them: buy with discipline, avoid debt, hold permanently, compound pre-tax and pre-fee, build shared services, align incentives with investors.

This is the standard Lynnfield aspires to.

Thanks for reading!

Permanent Equity is further down the road than we are, and they're a model worth studying. Patient capital and operational excellence can outperform financial engineering – and they've got a decade of real distributions to prove it.

If you want to go deeper, start with Permanent Equity’s piece on ‘How Permanent Funds Work’ and Brent Beshore's annual letters. They're some of the best writing in the space

Talk soon,
Param

P.S: In case you’re joining us late, you can check out the previous editions of this newsletter here.