Report highlights waste M&A deals, trends of 2020

Capstone Headwaters, Boston, published its December 2020 Waste & Recycling Update Dec. 16. The report recaps waste and environmental services mergers and acquisitions completed in 2020, buying trends, COVID-19 impacts on the sector and the financial performance of public companies, as well as provides an overarching industry outlook.

Report highlights include:

• Private equity buyers accounted for nearly 50 percent of year-to-date deal activity as the defensibility of the industry has fostered an influx of firms that view tremendous add-on consolidation with ample upside to stimulate growth among platform investments.
• Major public strategic buyers (who accounted for 28 percent of deal volume) have continued or resumed M&A to bolster geographic reach and market share while achieving operational synergies.
• 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.

According to Capstone Headwaters, “As competition tightens among public companies, smaller, regional leaders will be poised to attract M&A interest. 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.”

Forecasting how the industry is trending, Doug Usifer, managing director at Capstone and one of the report’s authors, says business fundamentals look strong and portend continued growth heading into 2021.

“Strong tailwinds combined with a fundamentally sound essential service platform continue to make the waste and recycling sector an attractive investment opportunity,” Usifer says. “The sector saw COVID-19 impact and has bounced back nicely, setting the stage for a productive 2021.”

The full report is available online.