A key highlight of a recent BTWM Virtual Webinar was special guest Ben Cohen of CNL, who offered a valuable perspective on private equity—and one simple phrase that stuck with me:
You don’t wash a rental car.
At first glance, it’s a throwaway line. But in investing, it carries real weight.
What Does It Mean?
When you rent a car, do you take it to the car wash after a weekend of driving?
The answer is probably no. You use it, you return it—but you don’t go out of your way to maintain it like you would your own vehicle. There’s no long-term attachment and no real sense of ownership.
The same idea can apply to business leadership.
When executives don’t have meaningful ownership in the companies they run, their incentives can be very different from those of long-term investors. But when management has skin in the game—when they own a meaningful piece of the business—they tend to think and act like owners. Decisions shift from short-term optics and simply maintaining their current standard of living to long-term value creation.
As Ben explained, this alignment is critical. In fact, if a management team isn’t willing to invest alongside shareholders, CNL typically won’t invest either.
Why Ownership Drives Better Outcomes
This concept extends beyond private equity. Across public markets, ownership and behavior often tell a clear story.
Executives frequently speak optimistically about the future—but actions matter more.
- Are insiders buying shares when the stock is down?
- Are directors increasing their stakes during uncertain periods?
- Do fund managers invest meaningfully in their own strategies?
These signals can reveal conviction.
If they are invested in the “car,” they not only will wash it after a road trip, but they will spend time making upgrades and giving it the care it needs.
The Bottom Line
“You don’t wash a rental car” is more than a clever phrase—it’s a reminder to look beyond headlines and listen to what behavior is telling you.
Whether evaluating a company, a fund, or an investment strategy, one question is worth asking:
Who truly owns it—and how much?
Because when ownership is real, incentives align. And when incentives align, better decisions tend to follow.