Family investors turn to old-economy businesses to avoid AI disruption

Key Points:

• Equity Group Investments (EGI), backed by the family of late billionaire Sam Zell, focuses on investing in old-economy businesses less vulnerable to AI and technological disruption, such as John Deere dealerships, a bluefin tuna fishery, and a pedestrian bridge connecting San Diego to Tijuana.
• EGI adopts a long-term investment horizon of 10-12 years, favoring asset-heavy companies that offer reliable cash flow and tax advantages, contrasting with traditional private equity firms that seek quicker buy-and-sell cycles.
• The renewal of bonus depreciation under recent tax law changes has made asset-heavy businesses more attractive by allowing full first-year deductions on qualifying assets, benefiting family offices that prioritize after-tax returns and proactive tax planning.
• Auto and equipment dealerships are particularly appealing due to their tax-advantaged income streams, resilience in parts and service businesses, and geographic moats created by franchise agreements that limit local competition.
• EGI benefits from economic uncertainty and industry stress, such as rising costs in agriculture and tariffs, enabling it to acquire distressed assets with patience for long-term value realization, as it is not pressured to deploy capital quickly like traditional PE firms.