Acquisitions are a part of the American AllWaste growth strategy. Although this is a routine process for American AllWaste, acquisitions can be daunting and confusing for business owners. Sellers have a vested interest in seeing the business they have built succeed. This is an in-depth look at each step of the process.
By definition, an acquisition is the purchase of an asset. At American AllWaste, this is the process of joining two businesses.
There is flexibility in each transaction. Most acquired companies keep their name and all of their employees. Although some business owners use acquisition as an exit strategy, others maintain a role within their company or start a new career as part of the American AllWaste management team.
The process starts by finding an impressive business with a similar business model and philosophy. Next, both parties complete due diligence to validate facts and ensure that acquisition is the right decision. After closing, the process of integrating the two businesses starts. The business owner determines how much he or she will participate in integration.
The acquisition process for American AllWaste can take as little as 90 days, but the process can last a year. Some business owners prefer to move slower due to their personal timeline, and the seller sets the pace of the transaction.
How does the process start?
Leo Ounanian, the VP of Business Development, searches for businesses that would be a great fit for American AllWaste. Ounanian is familiar with the process because the wastewater company he owned is an American AllWaste acquisition.
Ounanian is a CPA and MBA with decades of experience in the wastewater industry. He understands the financial and legal aspects as well as the personal and logistical sides of acquisition that matter most to a business owner.
Business owners can also contact American AllWaste. The best individuals to talk to are Darrell Rogers, the CEO, or Leo Ounanian, the VP of Business Development.
The first step of the acquisition process is pre-diligence. This is when the business owner and Ounanian share high-level data about both companies. There are non-disclosure agreements in place to protect everyone’s interest. Every step of the way, American AllWaste works to protect the privacy of the business owner. Times for and modes of communication are set by the business owner. Other employees are only spoken to with permission from the business owner.
At this stage, there is zero obligation for the business owner to move forward in the selling process.
Pre-diligence is far from idle conversation. American AllWaste does not engage in pre-diligence with a company unless that business is a serious option for acquisition. To date, 100% of the businesses that start the pre-diligence process join the American AllWaste family.
Acquisitions are a serious part of the American AllWaste growth strategy. The company knows what kind of businesses would fit into the family. As CFO Robert Schima says, “We don’t want to waste the seller’s time.”
At the end of pre-diligence, the business owner receives a letter of intent. In addition to showing American AllWaste’s intentions to proceed, this letter gives the business owner an offer pending the results of due diligence. Signing the letter of intent puts a legal onus on both parties to complete due diligence within the agreed-upon time frame. After the seller signs the letter, the due diligence process begins.
Due diligence allows both parties to confirm facts and discover new ones. Both parties share and analyze legal and financial documents. This stage involves exploring the logistical aspects of transferring permits and property. American AllWaste works to discover any potential roadblocks and find methods for overcoming them.
Due diligence happens in two steps. The first step focuses on financials. Phase one of this step involves the quality of earnings and quality of asset diligence. This involves the discovery of data to support revenue figures and confirm the company’s financial health. This is the lengthiest part of due diligence, but clean financial records hasten the process. Phase two of this step centers on asset diligence. This involves determining the value of all assets, and ensuring that the business owner has the right to sell those assets.
The second step of due diligence centers on legal diligence, which consists of a thorough analysis of all contracts, permits, and vendor agreements the company has.
The business owner provides access to financial information and legal documents. Due diligence is not a one-sided process. The business owner has the right to ask for similar information from American AllWaste. American AllWaste has a team of financial and legal professionals to discover and interpret data. Business owners can involve their own team of professionals to help them throughout the process.
If both parties find the information discovered in due diligence to be acceptable, closing happens. (Signing closing documents is the sole part of the process that obligate a seller to sell. Prior to that, a seller can back out at any time for any reason without penalty.)
After signing closing documents, an official transfer of ownership and funds happens. At American AllWaste, most transactions are cash transactions with some equity rollover.
Next, comes the long-term step of integration. This is when the existing company becomes a member of the American AllWaste family. A business owner who chooses to can participate in this step.
Sellers who choose to continue working with their company can expect to receive capital and human resources from American AllWaste that will propel their business forward. Sellers who choose to leave their company can rest assured that they will be able to watch their business grow in the years to come.
Is my business a good fit?
The prospect of acquisition can cause some trepidation for business owners. Many great business owners mistakenly conclude that their business is not worth acquiring.
American AllWaste has clear standards. The company focuses on non-hazardous wastewater streams and prefers acquisitions with recurring business models and clean financials.
American AllWaste CFO Robert Schima explains, “It needs to be a business that has a good business model that fits well with ours in terms of what they do, the types of customers they serve, and the types of waste streams that they handle.
Integrity is a big part of it. We don’t call our people in the trucks ‘drivers.’ We call them service technicians because we pride ourselves on the service side of things. They [potential acquisitions] need to have high integrity on behalf of their customers.”
Is your business growth stifled by a lack of resources? Are you ready for the next step of your career? Start the conversation with American AllWaste today.