Jim Bernhard had a profound impact on La. business landscape | Business News

When Jim Bernhard sold The Shaw Group to CB&I in 2013, some thought he might retire.

Then nearing 60, Bernhard had grown his company from a small Baton Rouge-based pipe fabrication company into a publicly traded powerhouse with 25,000 employees, $6 billion in annual revenues and a global footprint in industrial infrastructure, energy and disaster mitigation services.

Already one of the wealthiest and most successful businessmen in Louisiana, it wouldn’t have been unreasonable if he had opted to kick back in his retirement — or pursue a second act in politics, where he was an influential Democratic Party donor.

Instead, Bernard assembled a team of his top executives from Shaw and went on to build Bernhard Capital Partners. The private equity firm, with $5.5 billion under management, is now the largest between Houston and Atlanta and one of the fastest growing in the country.

Over the past decade, the firm has launched five funds, raising money from large institutional investors and amassing a portfolio of 21 companies. Today, Bernhard Capital’s companies have 20,000 employees, nearly as many as The Shaw Group did at its peak.

In the wake of Bernhard’s death on Nov. 16, those who knew and worked with him have been reflecting on the size and scope of what he created during a career that spanned nearly five decades. To build a company of The Shaw Group’s stature would be a feat for anyone to accomplish in their lifetime.

Bernhard essentially did it twice.

“He was a big-picture guy,” said Lenny Lemoine, President and CEO of The Lemoine Company, a Baton Rouge-based construction firm that Bernhard Capital acquired in 2019 and has since tripled in size. “What some of us consider large scale was, to Jim, just what it should be.”

Growth and expansion

The story of how Bernhard built The Shaw Group is well known. He founded the company as a pipe and steel fabricator in 1986 and it quickly grew, expanding into construction and, eventually, energy services. In the 1990s, he took the company public, branching into new geographic markets and sectors like disaster management and nuclear power.

Among its 30 acquisitions over the years were IT Group, Stone & Webster, and Westinghouse Electric Corp.

When he sold the company for $3 billion in cash and stock, CB&I paid a 70% premium relative to the company’s stock price, which, at the time, was one of the largest premiums ever paid for a public company, records show.

Less well known is what Bernhard Capital does and how significant its impact is, notably in Louisiana, where 10 of its portfolio companies are based and 18 others have a presence. Together, they include nearly 7,000 Louisiana-based employees.

Bernhard Capital started out a little more than a decade ago with an initial investment fund and four companies — Epic Piping, a pipe fabricator; ATC Associates, an environmental consulting firm; Bernhard, LLC, a commercial construction and engineering firm; and, Brown and Root, formed when Bernhard Capital acquired Wink Engineering and the industrial services group from Houston-based KBR.

The fund exceeded its initial $750 million target and its four companies began to grow exponentially. Bernhard LLC, in 2016, acquired four more companies, including the firm founded by Jim Bernhard’s grandfather in 1919, Bernhard Mechanical. The new, larger company provided a variety of energy-related services, as well as mechanical and electrical construction and maintenance for clients that included state office buildings, hospitals and LSU. (Bernhard Capital sold Bernhard in 2021, which has since rebranded as ENFRA.)

Bernhard Capital launched more funds and raised more money. It acquired local architecture and construction companies, like Grace Design and Lemoine, both of which have since expanded into new services and markets.

More recently, it has branched into regulated utilities. It now owns seven natural gas, water and wastewater utilities, with another utility deal in New Mexico pending regulatory approval. Among its holdings is Delta Utilities, which purchased Entergy’s natural gas business earlier this year and now operates from corporate offices in downtown New Orleans, serving 800,000 customers and employing nearly 900 workers.

“We’re a national company,” said Jeff Jenkins, who got his start under Bernhard at Shaw and co-founded Bernhard Capital with him. “Obviously, we are concentrated across the south but our footprint is national.”

Big picture perspective

Doing deals as a private equity firm better suited Bernhard than running a publicly traded company. At Shaw, he famously disliked the short-term focus on quarterly earnings, the investor calls and the tiresome questions about every decision.

At Bernhard Capital, he could take a longer-term approach.

“Being private, it is not about quarterly earnings and revenues but building great companies to last forever,” Jenkins said. 

Granted, private equity firms are just as focused on creating returns for their investors as are publicly traded companies; they just do it differently. And Bernhard Capital has proven adept at it. Over the past decade, it has “exited” or sold six of its companies, most recently Brown & Root, with a seventh recently announced.

Though the size of the exits are not public, PitchBook has ranked its funds among the best performing in the country in total returns, which have averaged 20% net returns.

‘Whole different way of thinking’

Those who knew and worked with Bernhard say one of the reasons he was so successful was that he understood businesses much better than most.

“He was one of the smartest guys I ever met,” said Jerry Hebert, CEO of Grace Design Studios, the Baton Rouge-based architecture and design firm that Bernhard Capital acquired in 2022 and subsequently quintupled in size.

Hebert remembers that in 2017, he called Bernhard, whom he knew only casually at the time, seeking to “pick his brain” about growing the firm. They met for lunch at the City Club in Baton Rouge and Bernhard spent more than an hour giving Hebert advice.

“By the time we were done, I realized he thought a whole different way,” Hebert said. “We were trying to make a living. He was trying to grow companies.”

Five years later, Bernhard Capital offered to buy a majority share in the firm. In the years since, Grace Design has acquired seven more firms around the country and now has 24 offices with 480 employees.

“He was focused on making our business the best it could be,” Hebert said.

Lemoine, who watched Bernhard diversify and grow his Baton Rouge-based construction company from $400 million in revenues in 2019 to about $1.2 billion today, said another reason for Bernhard’s success was his “relentless drive to keep pushing.”

“Most people had no clue of just how ambitious and how fearless he was,” Lemoine said.

While domineering — intimidating, to some — with a big personality, Bernhard knew where not to tread, and how to let the companies he bought and built continue doing what made them attractive in the first place. He was an executive, not a micromanager, a mentor with sound advice.

“He had a great sense of where he could influence something,” Lemoine said. “He would sit back and watch you, but when you needed his touch, he loved helping think about putting organizations together.”

Leaving a legacy

Bernhard’s death, local business leaders say, leaves a void in a Louisiana economic landscape that has lost several corporate headquarters and, by extension, their executives in recent years. But Bernhard Capital’s Jenkins said its companies will continue growing.

“We are just getting started,” he said. “We are only 12 years old. We have an amazing team that has been together since the beginning.”

The firm’s latest fund has a $2 billion target, its largest yet, records filed with the Securities and Exchange Commission show.

Bernhard Capital is small compared to national heavyweights like Blackstone, which has more than $1 trillion under management. But it has established itself as a “middle market” player, roughly defined as firms with between $6 billion and $10 billion under management — with a focus on energy services and infrastructure.

“We build great companies in the middle market and the larger PE firms take them to the next level,” Jenkins said.

As Bernhard Capital continues to do that, those who worked with Bernhard said his legacy will live on in the deals, the investments and the jobs they create.

“He focused a lot of time and effort on the state,” Hebert said. “He could have gone anywhere. He stayed here to try to make it better for the people who lived here. That will live on for a long time.”