E421: Jack Purcell — Building an $11B Private Equity Firm

What if the biggest edge in private equity isn’t finding better deals, but designing better incentives? In this episode, I sit down with Jack Purcell, Managing Partner at Ridgemont Equity Partners, to unpack how alignment helped turn a Bank of America spinout with fewer than 15 people into a private equity firm managing more than $11 billion. Jack explains why Ridgemont invests significant GP capital alongside its LPs, why more than two-thirds of the team participates economically in its funds, and how a nine-person unanimous investment committee uses a proprietary 40-point scorecard to evaluate deals. Highlights:

• Why traditional GP economics can create the wrong incentives.
• How Ridgemont grew from fewer than 15 people to nearly 70.
• Why more than two-thirds of the team invests in the funds and participates in carry.
• The nine-person investment committee where every member has a veto.
• Why Ridgemont spends an average of three years with companies before investing.
• How one founder relationship took 10.5 years before becoming an investment.
• Why Ridgemont generated more than $2 of DPI for every $1 generated by the industry in recent years.
• How a $4 billion Fund V stays focused on three core sectors instead of chasing novelty.
• Why Jack personally visits every institutional investor partner each year.
• The lesson Jack learned from being too conservative after the Global Financial Crisis.

Guest Bio:

Jack Purcell is Managing Partner at Ridgemont Equity Partners, where he helps lead the firm and focuses on investments across business and technology services and industrial growth. Ridgemont traces its history to 1993 and has managed third-party institutional capital since its 2010 spinout from Bank of America.

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Sponsor:

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Stay Connected with Jack Purcell:

Website: https://www.ridgemontep.com/team/jack-purcell/

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Disclaimer:

This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Pierce. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) Why Incentives Matter More Than Great Investments (3:25) How Ridgemont Built an $11B Private Equity Firm (7:57) Why Most Firms Get Succession Wrong (12:29) The Incentive Model Most PE Firms Won’t Copy (17:50) Why Ridgemont Waits Years Before Investing (24:22) The Hidden Advantage That Wins Competitive Deals (30:58) The Communication Mistake GPs Make in a Crisis (34:21) Why Chasing the Hottest Sector Usually Backfires (38:48) Inside a Nine-Person Investment Committee With Veto Power (45:43) The Investing Mistake Jack Would Fix From 2010