The problem with the partnership model, he said, is that it’s highly dependent on the ideas and expertise of those people at the table with “no underlying asset value,” as he described it. Once the original partners retire, the firm loses a lot of its value, even if a new generation of investors takes over.
“But even if they can keep it going, there’s no underlying asset value. That next generation is just going to have to hand it off to the third generation,” he said. “That’s probably going to fail on the third generation. It’s going to be on Wikipedia someday: that firm existed, and then it went away.”