Episode summary
$11B Investor on Risk, Relationships & Compounding
How I Invest With David Weisburd
· · 51 min · Hosts: David Weisburd · Guests: Jack Purcell
Summary
Jack Purcell argues that Ridgemont Equity Partners is built less on deal selection than on incentive design. He says the firm deliberately puts meaningful GP capital into each fund, shares economics broadly across the team, and uses a nine-member investment committee with unanimous veto rights to push decisions toward long-term, principal-first outcomes rather than a chase for volatility or outsized carry. He contrasts that with the standard 2% commitment and 20% carry model, which he says can encourage firms to swing for the fences instead of compounding steadily.
He also describes Ridgemont’s growth from fewer than 15 people at its 2010 spinout from Bank of America to nearly 70 today and more than $11 billion in AUM. The firm’s operating model is intentionally slow and relationship-driven: it spends an average of more than three years with companies before investing, sometimes over a decade, and prefers bespoke recaps and aligned founders over auction-driven full buyouts.
On the LP side, Purcell says Ridgemont treats institutional investors as long-term partners, not one-fund counterparties. He emphasizes annual in-person meetings, transparent communication in tough periods, and a commercial-excellence approach that helped the firm raise a roughly $4 billion Fund V while keeping its focus on industrials, business services, and healthcare.
Key takeaways
- Jack Purcell says Ridgemont’s edge comes from putting the GP on the same side of the table as LPs, not from chasing higher-risk outcomes.
- Purcell says Ridgemont spent on average over 3 years with each company before investing, and one founder relationship took 10.5 years.
- Purcell says more than two-thirds of the team invests in the fund and participates in carry, with one waterfall and 15 management-company shareholders.
- Purcell says Ridgemont generated a little over $2 of DPI for every dollar the industry generated by staying disciplined on deployment and monetization.
- Purcell says the firm’s 9-person IC uses a proprietary 40-point scorecard and every member has a veto, which he thinks improves portfolio construction.
Notable quotes
“incentives and alignment, those two words sort of blur together”
“we've typically been if not the largest, a top three investor in each of those funds”
“It's really sort of a long-term, do I want my capital parked with this firm, not just with this one fund”
“we spent on average over 3 years with each company before we put our money in the ground”
How the episode opens
Most people think that the best private equity firms are built on great investments. But you think that they're built on great incentives. Why is that?
I'd almost say David, incentives and alignment, those two words sort of blur together. And I don't know about in your business, but I've yet to meet an institutional limited partner that comes to our office, meets our team, and sort of says, "I really want to make a 5-year investment in one fund because I have this super I'm convicted in this idea about your business or the end market you focus on. If you think about institutional LPs, they're generally thinking about a two, three, four, or five fund commitment, right?
Our business has been around since 1993 managing institutional capital on behalf of third-party LPs since 2010. And if I think about our investors, many of them have been with us for 15, 16 years. And so, that decision really isn't a 3-to-5 year trade.
It's really sort of a long-term, do I want my capital parked with this firm, not just with this one fund? And if you think about that sort of mental mindset from institutional LPs, it means that alignment with those LP partners is really important, right? And so, for our firm, we've tried to bring almost like a call it like a principal-first mindset to running the business.
And if you look at each of the funds we've raised over time, as a GP, we've typically been if not the largest, a top three investor in each of those funds. And so, it sort of forces you to bring this LP-first, principal-first mentality. And I think that's important just to keep in mind in a business where the market average is you put 2% of the fund in as a GP and you get 20% of the upside, right?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private equity incentives
- gp economics
- alignment of interests
- fundraising and growth
- investment committee process
Companies and tickers mentioned
- BAC
- Ridgemont Equity Partners
- Bank of America
- AlphaSense
Watch the episode
Watch “$11B Investor on Risk, Relationships & Compounding” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
