Broadcast Retirement Network’s Jeffrey Snyder discusses what private equity managers need to do with capital on the side lines with Kade Thomas of Emery Oak Partners.
Jeffrey Snyder, Broadcast Retirement Network
This morning on BRN, private equity must invest dry powder or risk an investor exodus. Joining me now to discuss this and a lot more, Kade Thomas is the Chief Executive Officer of Emery Oak Partners. Kade, it’s great to see you.
Thanks for joining us on the program this morning.
Kade Thomas, Emery Oak Partners
Yeah, thank you, Jeffrey. Excited to be here.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it’s great to have you. I’m very excited to talk about private equity and a recent opinion piece that you wrote for Forbes. Let’s start with some basics, though.
In your piece, you talked about dry powder, meaning, well, let me ask you what that means in the context by which you were talking about.
Kade Thomas, Emery Oak Partners
Yeah, dry powder simply means that private equity firms and investors generally have allocated capital to funds that has just gone undeployed thus far. So they have the capital to deploy. They are not deploying it.
Jeffrey Snyder, Broadcast Retirement Network
And what does that mean? I mean, we’re talking about billions of dollars. This is not like Jeff Snyder has 10 bucks.
I mean, this is billions of dollars. What is the environment today that would lead a private equity firm to have dry powder?
Kade Thomas, Emery Oak Partners
The environment is, obviously, as we’ve gone through different trends and we went through COVID and the emergence of different headline news around AI and tech, and some of them are trendier spaces. We’ve seen an allocation to private markets as people saw a lot of success in those industries as they’re kind of on their uptrend. But as those have become more and more competitive and pricing has normalized and it’s an efficient market in those trendier, more looked at industries, there’s been less places for private equity firms to efficiently deploy capital.
Jeffrey Snyder, Broadcast Retirement Network
And so what does this mean? In the article, you were talking about investors may flee if the dry powder is not invested. What does that necessarily mean?
And what types of investors are we talking about?
Kade Thomas, Emery Oak Partners
Yeah. So if you think about sort of a traditional private equity firm model, it might be a five-year fund life and the first two years might be an investment period. So if I’m a private equity chief investment officer or on the investment team, I’m looking for these opportunities to take capital that investors have committed to our firm.
And I’m trying to find places to deploy it within a relatively short time, two years, and do that efficiently for returns. When I’m going out in the market, if I’m sort of your traditional private equity firm, and I see these things that I’ve invested in the previous fund, again, that are now efficient, now I’m kind of scrambling saying, oh no, where do I put this capital? And what that means for investors is for all intents and purposes, you’ve locked up your capital.
So you’ve said, hey, private equity firm, I’m going to commit whatever it is, $10 million to you for you to go invest for me. And so you’ve basically got to set that aside. And then if that allocation does not get deployed, now you’ve essentially for two years locked up $10 million of capital that’s not being put to work.
And so that is not good for investors. It’s an opportunity cost of other places they could be placing the capital.
Jeffrey Snyder, Broadcast Retirement Network
And Kate, in terms of opportunity, let’s talk about it because I think you have some ideas on some opportunities that maybe the traditional private equity firm maybe doesn’t have on their radar screen. What are some of those opportunities that you in particular and your team see?
Kade Thomas, Emery Oak Partners
So at Emory Oak, what we’ve done is a couple of things. One, I think we’re trying to break down that traditional five-year fund life, two-year investment period where there’s just contra incentives, I think, not just for investors, but for the industries that we’re looking at. And so if you take our firm where we’ve got a primary focus in home and commercial services, I think you’ve got kind of two ends of the spectrum there.
You’ve got guys that have been in the industry for a long time. They’re sort of your smaller players and they do a great job, but their capital constrained to grow and just kind of live in their comfort zone. On the other hand, you do have some private equity activity in the space, but because of the constraint of their funds, they need to do really big deals.
They need to do them really quickly. And the incentive is to flip them in kind of three to five years. And so that causes a deterioration of the customer experience.
They’re synergizing out employees. And so I think that the real opportunity is to say the whole point of private markets generally and private equity is that you can put capital behind industries that America has been built on. The guy that keeps bugs out of your home, the guy that keeps your lawn looking nice, the guy that keeps your pool clean, that hard work and that gritty value is really what this country is built on.
And we should be promoting that and bettering those industries. And we’ve just got to, I think, realign incentives. If private equity firms are willing to take a look at those spaces and are willing to do smaller deals because they can, because their time horizon gets extended, then there’s incredible opportunity in private markets.
But it’s going to take a bit of an adjustment for firms and investors. Yeah.
Jeffrey Snyder, Broadcast Retirement Network
As being an outsider, I would imagine, I don’t have the experience that you do and expertise, but everyone’s always looking for a hundred percent of something, being willing to do the smaller deals. Those deals add up over time. They’re going to bring value to both the business, I would think, but also the investor, because you’re just creating, you’re piling on it, so to speak.
Kade Thomas, Emery Oak Partners
That’s right, Jeffrey. I think one of the important concepts is in private equity, a lot of times what’s occurring is you end up playing a multiple arbitrage game. So I’m looking to go buy as many businesses as I can if I’m a traditional private equity firm at four to six times EBITDA.
And when I put all those things together, integrate them very quickly, I can flip them for 10 to 12 times EBITDA a few years later. But really what you’ve done is you’ve synergized out the people that those businesses were built on. And what you’re trying to do so much so quickly, it really is a deterioration of the end customer.
Instead of just looking at the P&L of the company, what are you actually trying to accomplish in this industry? You’re trying to deliver a service to an end customer that has worked hard for their money and wants to pay you for the service. And we can’t lose that core principle.
And I think that’s why these companies really are the diamonds in the rough. If you can have a slightly longer term horizon and focus on that entrepreneurial spirit, that great service delivery, you’re going to then have happy customers that will combine your acquisition growth with organic growth because they actually like the service that you’re providing. And ultimately, that’s building an incredible business that has extreme value for investors that have sponsored you to go do that.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it’s interesting to hear you talk. And as you know, we were talking before in the virtual green room, of course, the alignment of long term. Most retirement investors are long term investors.
They’re working there. And what you’re describing to me, at least in your philosophy, is this long term approach to identifying where to invest. And that seems to align very well.
In terms of the capital raise, traditionally, I would think endowments, foundations, pensions have been sources of capital for private equity firms. Are there others that maybe I’m not aware of, that we’re not aware of where you might be looking to raise capital for investment into some of these smaller midsize companies that you’re talking about this morning?
Kade Thomas, Emery Oak Partners
There are. Yeah. I mean, I think the people that tend to like what we’re doing, a lot of the endowments and foundations, you know, obviously, incredible investors, really, really smart.
You know, they have to do things at a certain scale, right? They manage so much money that looking at slightly smaller allocations is really challenging for them. For us, I think, we want to align ourselves from the story and the thesis and the strategy and truly the grit that we’re delivering.
We want to align ourselves with investors that kind of think the same way, that have worked really hard for their money and want someone that’s not only going to protect it, but ultimately deliver outsized returns potentially because of a slightly differentiated approach. And so we find ourselves from an investor perspective, working a lot with high net worth individuals, with RAAs and with family offices. Those are kind of the core investors that have really you know, helped us, you know, be able to go accomplish what we’re looking to accomplish.
Jeffrey Snyder, Broadcast Retirement Network
And last question for you, because I could talk to you for hours and maybe we’ll bring you back to talk more. You know, as an investor, you know, a typical investor like myself who invests in public markets, I’m used to getting quarterly statements. I’m used to getting disclosure into the portfolio.
Someone that’s an investor into private equity, you don’t have to tell me exactly what you provide at your firm, but what can I expect? How are the disclosures maybe a little bit different than I might experience as an investor in public markets?
Kade Thomas, Emery Oak Partners
Yeah, I would say there’s kind of two facets to that, right? If you’re a public market investor, you can log into a portal on a daily basis and kind of see exactly what the price of an individual stock that you’re invested in or, you know, mutual fund, right? You know exactly where that stands every day.
I think the best way to think about private market investing is there’s not a mark to market price every day, right? But what you can do is you can really understand how the business is going, right? And so on a quarterly basis, you’re getting the same type of reporting where we’re saying, hey, you know, here’s how we’re performing, you know, compared to budget in these companies.
Here’s how that’s trending for your investment. And so you’re getting the same level of transparency. It just looks a little different, right?
You’re getting financial statements of the companies that we’re invested in. You’re getting, you know, a little more tactical information about what’s going on. How are we growing these businesses?
What’s working? What are the challenges we’re facing? And ultimately, I think what’s exciting is it’s a bit more tangible for people, right?
Because you’re talking about, you know, sort of the real businesses every day. I think when you log in and look at Apple’s stock price, the average investor is not exactly sure why it went up or down and how to really interpret that. But you can understand, hey, the pest control business that I invested in, they’re up 10% this month.
I know that’s a good thing, right? And so, you know, I would say you get the same level of disclosure, you get the same level of reporting, but you get some tactical and tangible information and kind of storytelling about what’s really going on in the business.
Jeffrey Snyder, Broadcast Retirement Network
Okay, very fascinating. Thank you so much for joining us. And look, I look forward to having you back on the program again very soon.
Kade Thomas, Emery Oak Partners
Yeah, thank you for welcoming me, Jeffrey. It was awesome. Thank you.
This story was originally published by TheStreet on Dec 23, 2025, where it first appeared in the Retirement section. Add TheStreet as a Preferred Source by clicking here.