BEYOND THE DEAL: What Comes Next for Energy Entrepreneurs? – Reece Tomlinson

By Reece Tomlinson, Founder and CEO of RWT Capital

Canada’s energy industry was built by entrepreneurs.

Across Western Canada, thousands of oilfield service, technology, manufacturing, construction and energy businesses began with little more than an idea, a handful of employees and a founder willing to work harder than almost everyone around them.

For many, that determination paid off. Companies grew, employees were hired, customers became long-term relationships and businesses that started around a kitchen table or in a small shop became valuable enterprises.

But successful energy entrepreneurs eventually have to confront another question, What happens when the business no longer needs to be the centre of your life?

Through my work with entrepreneurs navigating mergers, acquisitions and the eventual sale of privately held companies, I have found that one of the greatest challenges facing successful founders isn’t necessarily building the company.

It is figuring out how to eventually step away from it.

I compare entrepreneurship to climbing onto the back of a bull.

“You wanted the ride badly, and then you find it is a very hard thing to get off of.”

For many founders in the energy industry, that analogy will sound familiar.

The Traits That Build Great Companies Can Make Them Difficult to Leave

Energy entrepreneurship isn’t a nine-to-five pursuit.

Building an oilfield services company, energy technology business or industrial operation often requires years of early mornings, late nights, travel, capital risk and relentless attention to customers and operations.

Those habits become deeply ingrained.

The very characteristics that help entrepreneurs survive commodity downturns, difficult financing environments and unpredictable markets can ultimately make stepping away extraordinarily difficult.

Founders usually have good reasons for working the way they do. They may have wanted to create financial security for their families, provide opportunities for their children or accomplish something significant.

Those are meaningful achievements.

But successful founders eventually have to reconsider what success means.

“Intentionality lives in the present tense, not the past.”

That becomes particularly important when the company reaches a point where the founder has choices.

When the Founder Still Does Everything

I recall working with one entrepreneur whose business was generating a substantial annual EBITDA.

By most conventional measures, he had built a successful company.

Yet he was still working six days a week, had not taken a vacation in years and remained involved in the company from morning until night.

Versions of that story exist throughout the energy industry.

Owners remain responsible for major customer relationships, approve purchases, negotiate contracts and manage senior employees. They know the equipment, customers and business better than anyone.

Sometimes that involvement is necessary. But sometimes it continues simply because that is how the entrepreneur has operated for decades.

The business eventually becomes more than something they own.

It becomes part of their identity.

Is the Business Your Life — or Part of Your Life?

There is an important distinction:

“The business as the intention, or the business as part of the intention to an exceptional life and legacy.”

That distinction is increasingly relevant as Canada’s energy sector goes through another period of generational transition.

Many privately owned energy service businesses were created during earlier development cycles. Their founders are now reaching a point where succession, recapitalization, partnerships or outright sales become part of the conversation.

A successful transaction may represent the financial culmination of decades of work.

But it can also create something equally valuable.  Time and Choice.

And that can be surprisingly uncomfortable.

Why Selling Can Be More Emotional Than Financial

Entrepreneurs often spend years thinking about what their business might be worth.

Far fewer spend the same amount of time thinking about what they will actually do once they sell it.

I recently asked a founder what he planned to do following a sale. He struggled to provide an answer.

That uncertainty can make life after a transaction feel more intimidating than exciting.

For energy entrepreneurs, the challenge may be even greater because industry relationships often stretch back decades. Customers become friends. Employees can feel like extended family. Industry associations, conferences and business relationships create a community.

Selling therefore isn’t simply disposing of an asset.

It can mean stepping away from a professional ecosystem that has defined much of a person’s adult life.

That is why preparing for an exit should involve more than tax planning, valuation and transaction structure.

There also needs to be a plan for the founder.

From Building a Company to Building a Legacy

Years ago, my mentor Warren Rustand encouraged people to think about success across four areas: family, business, self, and community or spiritual life.

For entrepreneurs who have spent decades prioritizing their companies, selling can create an opportunity to rebalance those areas.

That could mean travel, family, health, community involvement, mentoring younger entrepreneurs, investing in emerging businesses, philanthropy or serving on boards.

Legacy shouldn’t simply be viewed as something that happens at the end of a career.

“Legacy is not a monument. Legacy is a verb.”

It is created through everyday decisions about where time, energy and attention are directed.

The Opportunity on the Other Side of the Deal

I have seen founders use the freedom created by a successful transaction in dramatically different ways.

Some travel extensively with their spouses. Others rediscover outdoor pursuits, friendships or hobbies that received little attention while they were building their businesses. Still others focus heavily on being parents and grandparents.

The activity itself isn’t really the point. The point is having the freedom to decide.

For Canada’s energy entrepreneurs, that may be one of the most important parts of succession planning that rarely appears on a spreadsheet.

You may have spent decades designing, financing and building a successful company.

Eventually, it is worth investing the same amount of thought into designing what comes next.

Because a successful business exit shouldn’t simply answer the question: What is my company worth?

It should also help answer a much bigger one:  What do I want the rest of my life to be worth?

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RWT Capital is a leading independent investment banking firm in Western Canada, with offices in Calgary and Kelowna. RWT partners with entrepreneurs, business owners, executives, and Private Equity to achieve above market performance through tailored investment banking solutions built on trust, expertise, and discretion for transactions valued between $5M and + $200M.  Visit RWT Capital

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