The market for solid waste management is vast. In 2023, participants earned more than $75B across collection, processing, and disposal activities—not including further revenue from “supporting” products and services (e.g., technology, consumables, equipment, etc.). Stax works with investors who are pursuing a range of strategies in this space. Our experience has provided us with insights for the overall market and value chain for waste management/recycling, as well as a framework for approaching the investment opportunity landscape.
Many would argue that waste management is a mature market–perhaps too mature to harbor significant investment opportunity. Leading players (Waste Management, Republic) have long since consolidated the activity chain…
The market for solid waste management is vast. In 2023, participants earned more than $75B across collection, processing, and disposal activities—not including further revenue from “supporting” products and services (e.g., technology, consumables, equipment, etc.). Stax works with investors who are pursuing a range of strategies in this space. Our experience has provided us with insights for the overall market and value chain for waste management/recycling, as well as a framework for approaching the investment opportunity landscape.
Many would argue that waste management is a mature market–perhaps too mature to harbor significant investment opportunity. Leading players (Waste Management, Republic) have long since consolidated the activity chain…
…and actual waste generation is steadily growing in the low single digits. Moreover, overall recovery rates (i.e., the percentage of volume that is recycled) have remained stubbornly unchanged for nearly two decades.
Nonetheless, private equity interest in the waste management space remains elevated, and we continue to see the development of new platforms. Notable recent acquisitions include buyouts completed by Kinderhook, Macquarie, Warren Equity Partners, and Tide Rock Holdings.
Investor interest is driven in part by the sheer size of the market. Even a modest amount of fragmentation in a market this large implies the presence of numerous investable assets. In addition, the breadth of the waste management value chain presents a surprising range of investment angles which often fly under the radar:
The “core” value chain is composed of three basic activities:
When investors think of waste management, often they envision the geographic roll-up and vertical integration strategies which are prominent in the “core” value chain.
However, diverse business models found in upstream products and services offer other ways to play. For example, Stax has supported investor interest in assets ranging from manufacturers of collection truck lift arms to vendors of waste collection route optimization software. These “support” businesses benefit from exposure to a recession-resistant sector and favorable competitive dynamics.
While some of these assets are positioned for stable single digit growth—in line with underlying waste volumes—others are out in front of significant trends that are driving outsized demand for their offerings. A few examples include:
Some of the more successful investment strategies Stax has supported in the space include these upstream businesses—whether they are mature, steady growers or assets benefiting from rapid adoption trends. We have also seen successes within the core value chain—particularly for collection, processing, and disposal assets focused on specialist waste streams and/or narrow geographies. We categorize these strategies into three overarching themes:
Overview: Assets that focus on more conscribed segments such as a specific region, specific waster stream, or other specific market segments.
Reasons to believe:
Examples:
Overview: Slower organic growth assets which focus on supporting or enablement services, solutions, or infrastructure for the waste management industry.
Reasons to believe:
Examples:
Overview: Assets that have offerings aligned to emerging technologies and trends such as zero waste, gas recapture/environmental health, and automation.
Reasons to believe:
Examples:
We believe the solid waste management industry continues to present substantial, attractive opportunities to investors despite a relatively consolidated environment and limited growth in waste generation. Our team at Stax is experienced in a variety of industries, including Business Services and Industrials, with specializations across niche subsectors. To learn more about our expertise, or if you’re interested in investing with Stax, visit www.stax.com or click here to contact us directly.
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