In 2000, Charlie McIlvaine and his brother, Andy McIlvaine, bought Coen Oil, an amalgam of business lines that included fueling, market and service companies, with a history dating back to 1923. And much like the business, where the brothers started from is much different than where they — and it — are today.
Charlie, while part owner, wasn’t a full-time part of it the business from the start. His professional roots were in investment banking and private equity. Similarly, his brother, a lawyer, took on a role with Coen when it became clear he wanted a change of professional scenery.
Andy worked in the business, figuring out things from the inside, while Charlie advised from the outside, checking in with his brother and Coen Oil during his commute from his New York City office to his Connecticut home.
“I used the 50-minute car ride, because that’s a New York commute, to talk to him and get updated on what happened that day, that week, maybe that month,” Charlie says.
As Charlie and Andy made acquisitions and grew the business organically into a sizable company, the results justified Charlie joining Coen Oil full time as chairman and CEO in 2014 to focus on its continued development.
“Effectively, we were doing for our own account what we’re doing for Avista (Capital Partners),” Charlie says. “At Avista, we’re investing other people’s money in different businesses and having them grow and scale. For Coen, we’re investing our own capital, having them grow and scale, taking I think what was a pretty good use or application of my experiences in investment banking and private equity and applying it to our own portfolio companies.”
The parallels between operating a business and working essentially outside of one in investment banking and private equity, he says, is the search for the “what” and the “why,” trying to identify the underlying causes of successes and challenges, then applying strategies and tactics to unlock the full potential of a business. But while the two share parallels, the experience is analogous to, on the one side, being a doctor helping someone deliver a baby, and, on the other, becoming a parent.
“We created that business. It didn’t just happen,” Charlie says. “And then we built it up to the point where someone else saw value in it and we transacted with a buyer. We saw it literally through the lifecycle from beginning to monetization.”
Darwinian development
While sitting in the adviser seat and sitting in the CEO chair is apples vs. oranges, Charlie has tapped into his professional acumen to grow and shape the business through acquisitions and divestitures into something new.
Coen Oil contained within it Coen Energy, a wholesale energy business the brothers bought at the start that originally sold fuels — historically and mainly home heating oil. They initially evolved that aspect of the business to have a different consumer and commercial set, scaling up a field service organization to service drillers in the Marcellus and Utica plays. It also contained Coen Transport, a business that had over 100 vehicles hauling fuel to residential and commercial clients, including convenience stores.
Although convenience stores today might be the forward and visible mark of Coen, they weren’t under the original business. Historically, Coen Oil had among its customers local retail service stations to which it sold fuel, tires and other car-related products in what is called a “dealer model.” as compared to a direct operations model.
“It was a pretty large footprint,” Charlie says. “It was one of the largest dealer networks east of the Mississippi at one point. Given our heritage, we are the oldest BP Amoco jobber in the nation. And like any business with a long tenure, we needed to adapt in a Darwinian manner.”
The brothers saw an opportunity there. And from that business model, they began to morph it into something bigger, more encompassing.
“Instead of having people we would put into a location — either we owned the location and we rented to them or we got them into a location, supported their rent and sold them the tires, batteries, accessories and fuels — we wound up taking over those locations and started running them ourselves,” he says. “That then blossomed into a direct-own business, which is what we are today.”
Along with its real estate vertical, which holds 60 commercial properties, and Coen Tire, a retail tire business, Coen Oil grew to include five complementary verticals in the company, created out of that initial business bought in 2000.
“And across those verticals, we made tactical and select acquisitions to grow them,” Charlie says. “We looked at people, process and technology to install each of those to make them better at what they do. And that’s what took the business from the time we bought it until the time I started full time to evolve to where we’re able to get scale within these different verticals. Once we got the verticals there, we started executing and trying to grow it further.”
Since then, they’ve divested the Coen Energy and Coen Transport businesses of Coen Oil, selling them off in 2017. The following year, Coen acquired CoGo’s Co., a c-store business that brought 38 locations under its control, giving it a footprint in Pennsylvania, Ohio and West Virginia, and a new market identity.
“We acquired the base business in 2000,” Charlie says. “We made acquisitions in 2002. We started doing the direct operations model in 2010, not that long ago on a relative basis. We acquired two small chains in addition to single-site stores. We established prototypes. We divested sites. We divested Coen Energy and Transport. We also then acquired CoGo’s. And here we are today, a 60-plus store chain. Along the way, we put in a new ERP system, new processes, new leaders. We revamped our image, and today, this is what we look like.”
Scaling the business
At the head of the now-three-vertical business — c-stores, land and tires — Charlie focuses largely on strategy and some operational aspects, while Andy focuses more on the real estate and fuel aspects. Together, the McIlvaines aren’t looking to rely on Coen’s former glory. Instead, they see the business as a 98-year-old startup.
As they look to scale by adding locations, Charlie, true to both his and his reinvented company’s nature, is going to build through M&A. So far, acquisitional success has begotten acquisitional success, and that’s put Coen not just on the radar screens of sellers but also of buyers.
“Ultimately, you need a buyer and a seller,” Charlie says. “We need a buyer for some of our stores that are no longer fitting our portfolio. We need a seller that’s someone who might make sense to be in our portfolio. And I think once we get in a room, tell our story, show our successes and proceed to those next steps, we actually have a pretty good track record in that regard.”
The ultimate vision is for Coen, operating with the help of more than 700 employees, to be the convenience chain with the highest customer loyalty in its market by virtue of its food service and retail environment. And the way the brothers are going to get it there is to impress and satisfy guests at every visit, and make their lives simpler.
Executing on that is a day-in, day-out task that hinges on hundreds of individual decision. If someone drops their coffee after they paid for it, for instance, team members should get them another cup so they walk out with a smile.
“Whatever it is, we have to make those decisions on an everyday and every instance basis,” Charlie says.
Another part of realizing that vision is a rebranding — stores in its current footprint go by Coen, Ruff Creek Markets and CoGo’s — and refacing of all of its c-store businesses so they present as one voice. Charlie says Coen also needs to continue to roll out its food service program to give customers a consistent experience from store to store.
The brothers are extremely focused on taking Coen’s collective assets and bringing them into one image, having them talk with one voice loud enough that the market takes notice of the company that’s been strategically reborn and recreated over the past two decades. The effort will be a success when Coen is “in people’s frontal lobe,” as Charlie puts it. The brothers will leverage the company’s nimbleness and its growing number of locations, but they have to do it, he says, with a certain mentality.
“If we looked at this through a 100-year-old family company, owner/operator controlled-lens, good luck,” he says. “We need to be hungry. We need to be embracing change. We need to be driving toward our goal every day and at a quicker pace.”
He says the brothers think of themselves as being behind.
“So we need to run. And that means we can’t be complacent,” he says. “We need to learn from our mistakes and others’ mistakes. We need to make good capital decisions, good people decisions. We need to put the best-of-class processes and technology into place,” all things that they have been doing.
“For the last few years, we’ve been boiling the ocean,” he says. “We’ve been changing so much and then adding growth on top of that. We’re now coming through that to where we can have a much greater, more deliberate tactical focus. It’s a very cool time in our company in that regard.”
TAKEAWAYS
- Be willing to shed old ideas of who you are.
- Your personal strengths are the strengths of the business.
- Stay hungry.
