Key Takeaways

  • Tracy Britt Cool and Brian Humphrey built Kanbrick with a 15-plus year horizon to target mid-market businesses producing $5 million to $50 million in earnings, stepping into a segment Berkshire Hathaway outgrew.
  • In its investment in JM Test, Kanbrick quadrupled earnings within three years, returned 100% of original capital to its investors through cash distributions, and kept an equity stake above 70%.
  • The vehicle pairs patient equity with an executive community of 4,000 operators, giving family and founder sellers an alternative to repeated private equity auctions.
  • Private equity funds routinely sacrifice returns by exiting businesses compounding at 20% or higher, trading known performers for unfamiliar targets with higher risk profiles.

The Real Cost of the Three-Year Flip

Traditional private equity runs on a rigid clock. Funds raise capital, deploy it over three to five years, and immediately prepare assets for sale to lock in an internal rate of return. That cadence works for financial engineering, but it disrupts operations. Britt Cool observed this friction firsthand while leading Pampered Chef and studying Berkshire Hathaway acquisitions like Benjamin Moore.

Sellers in the $5 million to $50 million earnings range feel this friction most. When a founder sells to a traditional buyout shop, the company typically faces a new buyer, a new board, and a rewritten strategy every 36 months. Britt Cool structured Kanbrick specifically to break that cycle: “Owners who say, 'Look, I'm concerned with the three to four-year treadmill of private equity,' it gives them comfort that their business isn't going to be bought and sold and bought and sold.”

Returning Capital Without Selling the Winner

The standard defense for short holding periods is returning capital to limited partners. Yet selling winners creates an immediate problem: reinvestment risk. When a sponsor sells a top asset, it pays transaction fees, absorbs tax drag, and has to deploy the proceeds into an unproven asset.

Britt Cool points directly to the arithmetic flaw in forced exits: “Too many firms exit businesses too soon. When you have a great business that's compounding at 20%+ a year, you'd rather continue to hold that and compound it, than try to go find a business you know less well, that has more risks, that you have to go invest in.”

Kanbrick proved the alternative with JM Test. Over three years of ownership, Kanbrick quadrupled the company's earnings. Instead of launching a secondary sale process to realize paper gains, the firm returned the initial capital to investors through organic earnings distributions. Kanbrick retained its 70%-plus ownership stake, allowing the business to continue compounding without interruption.

Investor Selection Drives Deal Flow

A long-term vehicle only works if the limited partners accept the timeline. Kanbrick established a 15-plus year horizon specifically to filter its LP base before writing checks. As Britt Cool explains, “The benefit of that is it self-selects investors who are long-term oriented, which has been official. It's unique for owners.”

That capital base creates an immediate acquisition advantage. Many family-owned companies refuse to participate in broad banker-led auctions because they want to protect company culture and avoid rapid flips. By offering permanent-style capital combined with an active support network of 4,000 executives, Kanbrick secures access to proprietary transactions that traditional buyout funds struggle to win on price alone.

Why It Matters

Kanbrick's model signals growing friction between closed-end fund structures and high-quality founder-owned businesses. By proving that cash distributions from growing assets can return initial equity without a sale, long-horizon holding companies expose the cost of the standard three-year flip. For LPs, this shifts the focus from rapid IRR realization toward absolute compounding in resilient mid-market cash generators.