Your trash & recycling business is more than just your job or your career. It's your life, your legacy - the result of years of mental, physical, and emotional labor. Your business is a part of who you are and why you get up in the morning.
But there comes a time for every business owner when it's time to make a change. Maybe it's retirement or maybe the business is ready to go to the next level and you need outside help. Knowing when and how to sell your trash & recycling business is difficult. As with any difficult business decision, there are many factors to consider carefully. The decision will come down to questions like:
There are also questions that are specific to the trash & recycling industry - like are there headwinds or tailwinds in the trash & recycling industry, and do buyers find the trash & recycling attractive?
The answers to questions like these will guide you in selling your business and having a good outcome. It's a mix of personal, business, and market factors. You want to look back and feel happy with the decision you made. When you decide to sell your business, you can't un-do it. If you're ready to think through your exit strategy - let's dig into these key questions and how they apply to your trash & recycling business.
Every business - even within the trash & recycling industry - is different, and every business owner is different. There are many personal reasons you might want to sell your business or part of your business. Reasons range from:
These personal reasons are just that: personal. They vary from business owner to business owner and are always influenced by many factors, including family members, friends, and employees. They are important to consider as you think through your next steps and whether you're ready to sell. You want to do what's best for your business, but you also want to do what's best for you personally and for your family. You are in control, and you can decide when the timing is right. You should also think through what you would want to do after you sell your trash & recycling business - would you want to stay on board in some capacity or simply transition out of the business and the trash & recycling industry?
You might be ready to sell - but is your business? It's important to determine whether your business is well-positioned to take to the market. You want it to be appealing to trash & recycling industry buyers and investors to increase the valuation and improve the odds of getting a deal done. Here are a few important considerations:
By getting your business ready to sell, you're positioning yourself for success in the deal process, and you're creating value. If your business isn't ready to sell and you go to market anyway - you're destroying value. You may not have a choice, but if you have a choice, you only want to sell when your business is ready.
In some situations, business owners feel like their company can do more with additional capital or resources. You've done the math and know exactly how to capitalize on a growing market, but you aren't ready or able to make that jump yourself. For example, the next evolution of your business may require more funding than you're willing to invest or borrow from a lender.
If your business needs new partners to fuel growth, you should spend some time putting together the business case to help investors see your vision. How much capital do you need? How would you use that capital? How much growth would their investment generate? What other resources do you need? You might want to open a new branch location. You might want to hire new employees or invest in new equipment. Whatever your expansion requires, it's important to put together a clear plan with defined metrics for success.
It's also important to think through what your personal role would be in the next phase of growth. Would you want to remain in charge - or would you like to transition to a new executive to grow the business, which might be important if the next phase of growth requires a skillset beyond your capabilities or interests. New ownership or investors can help inject new capital and new energy into your business, but you want to be able to point them in the right direction. A carefully thought-out plan will make it easier to attract investors and align everyone.
There are many different types of business buyers who might be interested in the trash & recycling industry, and they all approach deals differently. Here are a few common ones to familiarize yourself with:
Each of these types of buyers has different investment objectives, timelines, and strategies. Some strategic acquirers, for example, may want to re-brand your business on Day 1. Does that matter to you? Some Private equity firms may ask you to "roll over" equity into their deal, meaning you still have money invested in the business under their control. Does that appeal to you as a way to get a "2nd bite at the apple" and benefit from their investment or do you see that as un-appealing? Family offices tend to have longer investment time horizons and hold times with a slower pace - do you think that benefits your business or not?
With each type of buyer, you'll have to consider your priorities and what you're looking to get out of the deal. Here's a framework and exercise that might be helpful. Rank these in order of importance to you:
Here's a scenario to help clarify: the highest offer you get is from a buyer who you think won't be a good fit for your trash & recycling business. Do you take the offer, or do you take a lower amount from a buyer who you think is a better fit and would protect your legacy better?
As you start talking with potential acquirers, you can interview them as much as they're interviewing you. Ask them about their approach - what would they plan on doing on Day 1? Ask them about how they typically structure their deals, and what role business owners usually play post-acquisition. The more questions you ask, the more you'll understand the way they look at your business, and if you're ready for them to buy your business.
You should also ask to spend some time together in-person with the buyers. Get to know them as people. See for yourself how they operate, what they care about and prioritize, and how they approach other people. Are they respectful to the wait staff at the restaurant or jerks? Do they get the most expensive bottle of wine or drink a local beer? What is their definition of personal success?
Finding the right buyer comes down to a key question: are they a good match for you and your company?
When you're thinking about selling your trash & recycling business, valuation is top of mind, and for good reason - for many business owners, the majority of their net worth is tied up in the value of their businesses. How much your business is worth is a difficult question to answer – because the truth is that the value of a business depends on a large number of variables that are changing constantly. Many business owners say that they'd be ready to sell "for the right price," but what does that mean?
Let's start by defining the "valuation" of your business. For our purposes, it’s not what the business is worth to you – because of the lifestyle it gives you, the company car, the perks, or the cash it generates for you, or the prestige. It’s also not what you think the business could sell for based on something you heard at an industry conference or what someone told you while you played golf at the country club. Too many owners make the mistake of thinking they can sell their business for the same multiple or valuation that someone else got for their business. This is a dangerous assumption that often leads to disappointment when confronted with reality: every business is different and valuations vary significantly, even within the same industry. Don’t fall into the “country club” valuation trap.
So what is the definition of "valuation" then? There are technical definitions of “fair market value” that are sometimes used by accountants, financial professionals, the IRS, and valuation experts. These more technical valuations can be calculated using several different complex methodologies. These methodologies include income-based approaches, market-based approaches, and asset-based approaches, which all generally involve analyzing financial statements, conducting market research, assessing comparable transactions, and determining appropriate valuation multiples. Even these more technical approaches to valuation are still very subjective. Let’s keep it simple: let’s think of value as what someone else will pay for your business right now.
The best way to get a valuation of your business, is to have a buyer make you a real offer. Short of that, you can look for indicators in the market and advisors to help you at least get a potential valuation range.
Understanding acquisition activity in the trash & recycling industry and in your local market can also help give you a sense for if valuations are trending higher or lower. Right now, for example, Private Equity buyers are very active and becoming more active, driving up valuations in many of their target industries. Many advisors are expecting to see another uptick in investment as well as private equity mergers and acquisitions in the near future. This type of activity in the marketplace creates higher valuations due to competition for deals and great exit opportunities for business owners.
At DealPoint, we know what it's like to sell your business. That's because, as business owners ourselves, we've done it before. Our deal advisors know what it takes to get a deal done. It's a time-consuming process that can be a stressful, emotional roller-coaster from initial buyer meetings through due diligence. You want to be able to look back and not only be happy with the decision you made - but also with the decision-making process.
We'd be happy to help you how we can with this process. Most importantly, as a buy-side broker, we want to help you find the right buyer for your trash & recycling business. Email us to get more info. Info@DealPoint.com
We also thought it might be useful to include a "State of the Trash & Recycling Industry" snapshot for your reference as you're thinking about selling your trash & recycling business.
The Trash & Recycling industry plays a critical role in managing waste and promoting environmental sustainability. With increasing global awareness of environmental issues and the need for effective waste management solutions, this industry is essential to both public health and ecological conservation. Trash & Recycling businesses range from large-scale waste management companies to specialized recycling firms, each contributing to reducing landfill use and enhancing resource recovery. This report provides a comprehensive overview of the current state of the Trash & Recycling industry, explores the key drivers of growth, M&A trends, and valuation considerations, and discusses why now may be an opportune time to sell a Trash & Recycling business.
Several factors are propelling the growth and expansion of the Trash & Recycling industry:
Increasing Environmental Awareness: Rising public and governmental concern over environmental issues, such as climate change and pollution, drives demand for effective waste management and recycling solutions.
Regulatory Requirements: Stringent regulations and policies aimed at reducing waste and promoting recycling compel businesses and municipalities to invest in sustainable waste management practices.
Technological Advancements: Innovations in waste processing technologies, such as automated sorting systems and advanced recycling methods, enhance efficiency and expand capabilities within the industry.
Urbanization and Population Growth: As urban populations grow, the volume of waste generated increases, necessitating robust waste management and recycling infrastructure to handle the higher demand.
Circular Economy Initiatives: The push towards a circular economy, where products and materials are reused and recycled to minimize waste, creates opportunities for businesses focused on resource recovery and sustainable practices.
The Trash & Recycling industry is experiencing significant M&A activity, driven by various strategic and financial motivations:
Industry Consolidation: Larger companies are acquiring smaller firms to expand their service areas, diversify their operations, and achieve economies of scale, leading to increased consolidation in the industry.
Private Equity Investment: Private equity firms are attracted to the industry’s stable cash flows and growth potential, investing in both established companies and emerging players to capitalize on market opportunities.
Strategic Acquisitions: Companies are pursuing acquisitions to gain access to new technologies, enhance their recycling capabilities, or enter new geographic markets, aligning with their long-term strategic goals.
Sustainability Focus: M&A activities often target firms with strong environmental credentials and sustainable practices, as these are increasingly valued by investors and customers alike.
Cross-Border Expansion: Global players are looking to acquire or merge with local firms to expand their footprint internationally and tap into growing markets with high waste management needs.
Valuing companies in the Trash & Recycling industry involves analyzing several critical factors:
Revenue Streams: Companies with diverse and recurring revenue streams, such as long-term contracts with municipalities or corporate clients, are valued higher due to predictable and stable income.
Operational Efficiency: Firms that have invested in advanced waste processing technologies and efficient operations tend to have higher valuations, reflecting their ability to manage costs and increase profitability.
Regulatory Compliance: A strong track record of compliance with environmental regulations and safety standards enhances valuation by mitigating risks associated with legal liabilities and operational disruptions.
Market Position and Scale: Companies with a significant market share, extensive service coverage, or specialized capabilities (e.g., hazardous waste handling) command premium valuations due to their competitive advantages.
Sustainability Practices: Firms that demonstrate commitment to sustainability and circular economy principles are increasingly attractive to investors, as these practices align with broader environmental and social governance (ESG) trends.
Several factors suggest that now could be an advantageous time to sell a Trash & Recycling business:
High Demand for Waste Management Solutions: The ongoing need for effective waste management and recycling services ensures a robust demand for companies in this sector, attracting potential buyers.
Active M&A Landscape: The industry’s current consolidation trends and strong interest from private equity firms and strategic buyers provide ample opportunities for favorable exits and competitive deal terms.
Focus on Sustainability: Growing emphasis on sustainability and circular economy initiatives increases the attractiveness of businesses with strong environmental credentials, leading to premium valuations.
Technological Advancements: Companies that have adopted advanced technologies and efficient processes are in high demand, offering buyers enhanced capabilities and competitive edges.
Stable and Recurring Revenue Models: The predictable cash flows from long-term contracts and diverse revenue streams appeal to investors looking for reliable and scalable income sources.
The Trash & Recycling industry is positioned for sustained growth, driven by increasing environmental awareness, regulatory pressures, and advancements in technology. The dynamic M&A environment, coupled with strong demand for sustainable waste management solutions, makes this an opportune time for owners to consider selling their Trash & Recycling business. Understanding the industry’s growth drivers, M&A trends, and valuation considerations is crucial for maximizing business value in this essential and evolving sector.
