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Merger and acquisition deals down in 2015

Merger and acquisition (M&A) activity in the waste sector fell during 2015 in terms of both volume and the value of deals, according to Grant Thornton.

The financial adviser logged 38 waste sector deals announced or completed last year, down from 45 in 2014 (see graph).

Mike Read, head of waste and resource management, said activity remained steady but had been at consistently low levels since 2010.

“The subdued M&A environment in the … sector is largely a consequence of reduced appetite from the big trade players, which do not have the funds or the desire to consolidate pure waste management services portfolios that do not have a clear value add.

“Instead, these businesses are focused on strategic acquisitions that meet specific needs outlined in their business plans which support future aspirations to expand their offering to a wide range of resource management services.”

The largest deal completed in 2015 was the acquisition of IT recycler RD Trading by Arrow Electronics early in the first quarter of the year

1000 mike read grant thornton

1000 mike read grant thornton

Read, pictured, said the rise of the circular economy (CE) meant that recycling businesses, especially those offering specialist services, were increasingly attractive to investors.

“Whether that growth will happen next year or further down the line remains to be seen, as the market continues to get to grips with what is required and what can realistically be delivered,” he said.

“The impending EU referendum casts a temporary question mark over the implementation timeline for CE measures which cannot be resolved until the votes are cast.”

An increase in interest from private equity and venture capital communities is noted.

“Financial investor interest in the waste management sector is growing in the niche sectors which offer opportunities for growth and higher margins and are less impacted by core waste management services, which are about volume and lower margins.”

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