Boston, MA – Capstone Headwaters released its Waste & Recycling December Update today, reporting that despite overall deal volume declines, private equity buyers, accounting for nearly 50% of transaction volume, as well as major public strategic buyers (28% of deal volume) have continued or resumed M&A to bolster geographic reach and market share while achieving operational synergies. The defensibility of the industry has fostered an influx of private equity firms who view tremendous add-on consolidation in a resilient sector that displays ample up-side to stimulate growth among platform investments.
“Strong tailwinds combined with a fundamentally sound essential service platform continue to make the Waste & Recycling sector an attractive investment opportunity,” commented Doug Usifer, Managing Director at Capstone Headwaters. “The sector saw COVID-19 impact, and has bounced back nicely, setting the stage for a productive 2021.”
As an essential industry, Waste & Recycling is poised to weather the storm, despite the prospect of rising coronavirus cases across the U.S. The industry has remained resilient notwithstanding headwinds such as staffing limitations, volume shifts, and social distancing requirements which deeply impacted operations. Industry participants with diverse revenue streams across a manifold of industries and customer bases are expected to retain defensibility and continue to see steady performance amid virus-induced uncertainty.
Following the announcement of blockbuster acquisition of Advanced Disposal by Waste Management for ~$4.6 billion in April 2019, the industry became further concentrated among six strategics. Rapid consolidation in the past few years has resulted in public strategic buyers allocating substantial capital toward acquisitions of regionally-focused operators to increase market share. As competition tightens among these dominant public companies, smaller, regional leaders will be poised to attract M&A interest.
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