Tackling it all

How did you join Lime Rock?
I joined Lime Rock at its inception in 1998 and was hired to be the firm's CFO and general counsel. I had been friends with Jonathan Farber from college, and had known John Reynolds, the other founder, for quite some time. Before Lime Rock, I was at Lehman Brothers' M&A group, then left to go to a startup investment manager, where a lot of the issues we addressed were similar to those in private equity. Lime Rock asked me to join because of the combination of law and corporate finance in my background, and because I had experience at a similar type of firm.

How has your role evolved at Lime Rock?
My role, I think, has stayed very similar, which is I'm responsible for everything at the firm other than finding the deals and monitoring them and selling them. Everything else comes across my desk.

The main way things have changed is, when I started, I could do everything myself. As we have grown to the point where we have four funds and four offices in three countries, we have had to hire people in specific, specialized roles to help.

At this point, we have mostly hired people on the finance and accounting side, but we also recently hired someone inhouse to manage our IT issues. We also recently raised [oil and gas properties fund] Lime Rock Resources, which is the beginning of a new fund family for us, and we' re hiring a lot of people for that effort. Because we' re growing so rapidly in headcount, we have also hired a human resources expert.

When I started, I also reviewed every legal document and all the revisions in detail. It has gotten to the point where there are too many of those for me to do that anymore, so the deal team has taken a more active role. I mainly review the documents and provide input to the deal teams on what they need to make sure is in legal documents.

What was your involvement with launching Lime Rock Resources?
Because a lot of new legal and financial issues came up with that type of fund – which acquires oil and gas properties rather than companies – I have been very involved from the very beginning, trying to make sure we get those issues right. For example, tax-exempt investors have issues with investing directly into oil and gas partnerships, so we had to structure their investments such that they would take the form of a royalty interest, which is passive and therefore not UBTI-taxable for them.

What other issues must you address that are particular to the energy industry and to the cross-border nature of Lime Rock's activities?
There are quite a number of issues specific to the energy industry. Oil and gas accounting has its own set of rules and regulations, and the way that flows up through fund accounting – which also has its own set of rules and regulations – is fairly interesting. The place where you see it most is with non-US investors that are dealing with ECI and FIRPTA issues.

In terms of cross-border issues, a lot of countries – including the US, Canada, and the UK – have enacted special regimes that apply to the taxation of foreign investors in energy-related companies. Just as we have to deal with it on behalf of non-US investors for our investments in the US, we also wrestle with how our US investors are taxed when we invest elsewhere.

How involved are you in Lime Rock's investment decisions and portfolio companies?
I, along with all of our managing directors, sit on Lime Rock's investment committee, which has a unanimous vote requirement. I had served on the boards of several of our companies, although at this point, I'm winding down on those involvements because it is getting to be too busy at the home office.