Understanding the dynamics of working with private-equity owned businesses versus public or family-owned businesses is key to entrepreneurial success, said Energy Workforce Advisory Board Member Gabriel Rio, President & CEO, Milestone Environmental Services, during a leadership forum on Wednesday.
The forum, sponsored by the Emerging Executives Committee, was moderated by Committee Chair Chris Berrie, Caterpillar Oil & Gas, and sponsored by strategic partners Chevron, NexTier and SLB.
Rio talked about his career path, which began with a chemical engineering degree from the University of Texas and eventually led him to start his own company backed by a private equity firm. He discussed his experience working for McKinsey & Company, where he gained exposure to large oil and gas companies, and then working for UBS Investment Bank as an equity analyst, where he learned about finance and financial modeling. He then joined a small private equity firm where he was put into every different facet of the business to fix accounting, management, the sales process and operations.
“We bought businesses that were fundamentally broken, but had good strategic assets that we felt we could do something with. And over the course of five or six years, we took that business from a company with good bones that was kind of broken and earning about $3 million a year to earning about $25 million a year.”Gabriel Rio, President & CEO, Milestone Environmental Services
Working with private equity can be an interesting case study, especially when it comes to understanding how investors think about businesses, Rio said. Private equity investors typically buy businesses that are not traded on public markets, and they often take controlling positions in the companies they invest in. Unlike public companies that are focused on quarter-to-quarter performance, private equity investors are more focused on building something over a period of three to five years, building value and then selling the whole business.
However, being bought by a public company after being under private equity ownership can result in culture shock. Suddenly, the focus shifts from moving fast and breaking things to making quarterly numbers and predictability, Rio said.
“By stepping outside of your comfort zone, taking calculated risks and being adaptable to change, you can unlock new opportunities.”Gabriel Rio, President & CEO, Milestone Environmental Services
“I’ve always kind of viewed risk-taking throughout my career as everybody has a different risk tolerance. I always want to take just enough risk to make myself a little bit uncomfortable.”
Private equity is a different world compared to public companies, Rio said.
“It’s important to narrow down the aperture and focus on what the goal is over a mid-term timeframe. It’s about developing a longer-term focus, and it requires a mix of understanding the fundamental operations of the business, the value proposition and a little bit of finance along the way.”
Milestone: From Waste to Sustainability
Starting from scratch in 2016, Milestone began with a mission to offer sustainable solutions to help E&P operators in Texas dispose of waste in an environmentally friendly way. From building their first slurry injection facility during a downturn to leading in oilfield waste management services in the three biggest plays in the U.S. — Permian Basin, Eagle Ford and Haynesville — the company has grown to be a significant player in the industry. And it’s all happened while maintaining a strong focus on sustainability.
“There’s a lot of companies that have made big net-zero commitments,” Rio said. “Some of them have a clear idea how to get there, some of them don’t. We’re trying to do our part to lead our customers in the right direction.”
Susan Dudley, Administrative Assistant, writes about energy workforce development and more. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.