What’s Driving the Waste and Recycling Industry’s M&A Activity

There is a growing list of willing sellers in the waste and recycling industry.
March 23, 2024
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Acquisition spending in the waste and recycling industry remained high in 2023.

Collective M&A spending by the sector’s U.S. publicly traded companies approached $10.5 billion over the past 2 years, per Waste Dive. This doesn’t include M&A activity by privately owned companies, which are often times owned by large private equity or infrastructure investor groups that tend to be highly acquisitive.

So, what is driving the uptick in deal volume?

While waste companies produce relatively predictable top-line revenue due to multi-year customer contracts, they typically experience volatility with talent and equipment.

On the talent side, waste and recycling firms must recruit and retain a lead mechanic and good drivers. The supply of drivers is limited since many prefer less physically demanding positions in adjacent industries like deliveries (e.g., driving for Uber Eats) and construction. Many have also complained about the industry’s lack of fair wages, benefits, and workers’ rights.

On the equipment side, waste and recycling firms struggle to source enough waste haulers as many vehicles in the fleet break down due to age or need alterations to meet regulatory requirements. For example, waste and recycling firms are working with manufacturers to switch off compressed natural gas and diesel vehicles to electric to meet California’s 100% zero-emission 2042 mandate. With that comes an increase in foreseeable costs due to the charging infrastructure and technology advancements required to meet the regulatory deadlines.

Rather than deal with these challenges, many independent waste and recycling firms view it as an opportune time to sell to larger players with the financial and operational rigor to return profits in the space.

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