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L.E. Simmons
The corporate offices of Houston-based L.E. Simmons & Associates, Inc. (the general partner to SCF Partners, L.P.), are located on the 66th floor of the Texas Commerce Tower, the tallest building in the United States outside New York and Chicago. Height is not the building's only Texas-sized distinction; to help stabilize it against Houston's tempestuous weather, excavation for the tower's foundation was completed to a depth of 63 feet, twice that of the Empire State Building's underpinnings. It is a fitting headquarters for L.E. Simmons, the firm's founder and quietly confident president, who has achieved lofty financial success in his professional career while remaining firmly grounded in solid business wisdom.
The second oldest of four brothers who grew up in rural Kaysville, Utah - all of whom went on to earn MBAs at Harvard - Simmons credits his father, who rose from the position of bank teller to become chairman of Zions Bancorporation in Salt Lake City, with teaching him that ethical standards are an intrinsic part of doing business. "He measures his performance in terms of doing the right thing and accomplishing goals rather than by financial success," Simmons says.
After HBS, Simmons, who also attended the University of Utah and the London School of Economics, spent two years at First Chicago establishing a corporate finance department that focused on the offshore oil and gas industry. He subsequently moved to Houston with his brother Matt (MBA '67) to establish Simmons & Company, an investment banking firm specializing in the oil field service industry. "It's a fascinating industry that encompasses all the businesses that manufacture a product or provide a service that is used by oil companies to find, drill, and transport hydrocarbons," he explains. "Most of the money that oil companies spend flows through these businesses."
Riding out the sometimes stomach-churning ups-and-downs of the oil business, for fifteen years L.E. and Matt Simmons have been an influential force in the oil fields. A recent Houston Chronicle article credits them with "playing a major role" in shaping the $50Ð$100-billion-a-year oil field service industry.
But in 1987, L.E. decided that he wanted to change direction: "I wanted to go beyond the investment banking aspects of the business and to try my hand at equity ownership," he notes. "The late 1980s seemed like a good time to invest in this industry because it was depressed, yet the long-term fundamentals were sound."
By all indications, Simmons's gamble has paid off. SCF Partners, the private equity fund his firm manages, has achieved net returns to its partners in excess of 30 percent per annum. And, in spite of the recent boom in service stocks, he still claims to "spend more time thinking about how to minimize risk than about how to make more money."
Twenty-five years into his career, Simmons finds his priorities essentially unchanged. "I still place a high value on finding balance: in work, family life, community activities, and personal development," he says. In recent years, however, he has cut back on evening business commitments to allow himself more time with his wife and two young children.
If either of his children were to decide to follow in his footsteps, the business advice Simmons would offer them sounds almost like something his own father might have recommended: "Pick your partners carefully, be patient, and realize that your reputation, not your balance sheet, is your most important asset."
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