Global Success: Oil Field Services Carve Out and Start UpJim Crenshaw, a leader with experience and the right values achieved cultural cohesion and teamwork amidst market turmoil and employee skepticism that yielded one of the most profitable ventures (return on investment) to-date for a large Private Equity group.
A large multinational Oil Field Services company agreed to sell a product line segment to private equity firm creating a new company. The product line had operations in 33 countries and included equipment, personnel, contracts and bases. The product line had been under-capitalized and under-invested for many years, and the business was marginally profitable. Personnel where not motivated, operational service quality was marginal and customer perception was poor. The challenge was to create growth in an under-served market and restore a strong service delivery reputation in the global market place.
OBSTACLES AND OPPORTUNITY
A competing Multinational Oil Field Service company viewed this sale as an opportunity to knock out a #2 competitor. They saw equipment conditions that were deplorable after years of under investment in maintenance and upkeep; personnel who were disheartened no longer being employed by a large multinational with career paths and stability. In addition, pricing on competitive bids were undercut by our global competitor. Key personnel were being poached at an increasing rate. Customer acceptance of this new company was shaky at best.
Our business was service delivery of a specific expertise and required knowledgeable operators, engineers and sales personnel. We had a global footprint of bases, personnel and current contracts in 33 countries. We brought a singular focus to a key product line and service instead of being one of many services offered. These were key opportunities to be leveraged.
Our board and private equity partners understood the Oil & Gas services industry. Once an assessment of the obstacles and challenges was clear, funding and business plans were agreed on. We needed to quickly implement a clear strategy that would leverage and motivate our work force and capture the attention of our current and potential clients while addressing the immediate short term breakdowns in the business foundation. This strategy focus was on our Human Capital, Organizational Development, leadership style and creation of a High Performance Culture. Each with clear ties to our performance deliverables.
The footprint of 33 bases globally was viewed as a springboard to launch global expansion of several adjacent technologies and services. Three key acquisitions were made of two local technologies, and one small global player. We immediately began to market and implement these technologies across the global footprint. We promoted key field operators into supervisory and management positions in sales, operations and support functions. Strong training programs were developed to coach and mentor these newly promoted employees. Incentive programs were developed and driven down to field level employees. Strategy was communicated through town hall meetings and an aggressive travel agenda creating face to face time with employees and senior management. Most importantly, a new mission description of our place in the Oil Field service value chain was created and a desired company culture was defined by the organization. These values were built into our reward and recognition HR systems and defined our communications strategy.
Employee churn improved dramatically by becoming the employer of choice in this industry segment. Pride returned to the work place and employees felt they had direct ownership in the business execution. We saw peer to peer accountability become the norm in daily operations. Our employees and culture became the competitive advantage.
Growth and financial results were strong aided by the three acquisitions. Financial achievements were beyond expectations as a result of leverage across the global footprint. Market share along with our country presence grew from 33 to 52 countries; all occurring within 18 months. With less than $200 million invested the company was valued and sold at more than $600 million after 18 months.
This remains one of the most profitable ventures (return on investment) to-date by this large PE group.
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