What Does American AllWaste Look for in an Acquisition?

American AllWaste is a growing leader in the non-hazardous liquid waste industry. In addition to organic growth, through earning new business, the company also grows through acquisition.

American AllWaste works with wastewater business owners who want to sell their business. The company searches for vertically integrated operators that handle non-hazardous liquid waste transportation and disposal. 

American AllWaste CEO Darrell Rogers describes ideal candidates for acquisitions as “well-run firms in attractive geographies that have good operations and accounting structure.” What are some of the unique criteria that make a company desirable?

Scale of Operations

AllWaste is a growth platform targeting the non-hazardous liquid waste industry. AllWaste provides service to municipal, commercial and industrial clients seeking solutions for the handling and proper disposal of liquid waste streams, maintenance and repair of infrastructure and periodic statutory testing. Through organic growth and strategic acquisitions AllWaste anticipates expanding its regional footprint while maintaining best-in-class service to our customers.

American AllWaste considers the number of wastewater streams that a company handles. While more streams offer more opportunity for revenue and growth, a few streams with great service quality are better than many streams serviced with inferior quality. The company prefers vertically integrated operators that specialize in both transportation and disposal.

The number of customers, employees, and capital are useful in determining a business’ scope of operations. Although there are no defined metrics, an acquisition should be large enough to make growth feasible.

Business age is also considered. In the past, some acquisitions have been less than ten years old. Others have been more than thirty years old.

“We like the longtime legacy businesses but we’re not going to reject a newer company if they are a well-run company that provides quality service and that has a meaningful place in their market,” Rogers explains.

Quality of Operations

American AllWaste values customers, so service quality is a key criterion for acquisition. From sales representatives to technicians, all members of the company strive to make the lives of their customers better.

Customer retention rates are one metric for service quality. High customer turnover rates are often a sign of unsatisfactory service. While it is possible for a business to replace dissatisfied customers with new ones, American AllWaste values businesses with long-term customers.

Rogers understands that cheap rates are no substitute for great service. Any business seeking to join the American AllWaste family must have a reputation for acting with integrity towards customers.

Marketplace Positioning

American AllWaste values positive opinions from customers, regulators, and the community. The company wants to acquire businesses that have a good reputation.

Satisfied customers, often reflected by good reviews, are a plus. Beyond customers, opinions within the community about the company should be positive.

In the wastewater industry, there is no future without customers. Long-term contracts are only used at the request of a customer. Since the majority of customers opt-out of contracts, each interaction has the potential of being the last one.

American AllWaste places high esteem on employee feedback. The company wants to see that a new member of the American AllWaste family will fit well with this value. Satisfied employees are essential to growth, and American AllWaste keeps employees of acquired businesses.

Employees who have remained with American AllWaste for decades are common. American AllWastes strives to demonstrate that human capital is the most valuable asset.

For example, there are no truck drivers at American AllWaste. Technicians do far more than drive trucks. They stand on the frontlines, using their expertise to give customers the kind of service that makes them stay with the company.

Regulatory history also makes up part of a company’s reputation. Wastewater regulation is stringent, and non-compliance can lead to closure. An ideal acquisition should have a history of compliance. Blemishes on that record are not deal-breakers, but there has to be a willingness to work towards compliance.

Positioning also involves sales. What percentage of the available customers in the marketplace does the business service? Do numbers support the business being the first, second, or third choice for customers, or do customers choose competitors more often? American AllWaste wants to acquire companies that are growing towards leading their marketplace.

How to Prepare for Acquisition

While negotiation can change the terms of an acquisition, the one part of the process that cannot change is the past. A non-hazardous liquid waste business owner who is considering selling, whether it be next month or next year, should always work on certain aspects of their business.

Years of clean financial statements are necessary to determine the financial health and outlook of a company. Regular monitoring can ensure that employees involved in finance are following basic financial conventions. An acquirable business should be able to produce balance sheets, profit and loss statements, and other financial records.

Regulatory compliance history requires regular work by all employees to ensure that standards are being followed or exceeded. When there are compliance issues, business owners must work to rectify them. Although they can be overcome, regulatory issues are one of the key delays that prevent some acquisitions from happening on schedule.

To accomplish the job, a business in the wastewater industry needs working equipment. There is no substitute for a truck to get technicians to the job, or the proper pump to get the job done. American AllWaste needs to see that potential acquisitions have a history of repairing and maintaining equipment, even if capital constraints are a current challenge. This is representative of the proactive management style that American AllWaste values.

Business owners interested in acquisition should prioritize their employees. American AllWaste values positive employee feedback, and employee turnover rates matter during the acquisition process. Great service cannot happen without great people who are enthusiastic about their job.

What if my Business Does not Meet the Standards?

Every business has unique facets. The criteria mentioned in this article describe the ideal acquisition candidate. A business that may not meet all the criteria may exceed the standards in some other area. Business owners interested in an acquisition by American AllWaste should reach out to Darrell Rogers, CEO or to Leo Ounanian, VP of Business Development.

In the rare case that American AllWaste or the business owner decides not to move forward, the process can still benefit both parties. “We want to be viewed as a resource. We do whatever we can to help them continue to grow their business,” Rogers says of these instances.

What Happens Next?

After Ounanian and the business owner determine the preliminary details, he seeks approval from the American AllWaste board of directors to present a letter of intent. Upon acceptance of that letter, the due diligence process precedes the final closing.

After closing, a business owner can rest assured that their business will continue to grow and thrive. American AllWaste buys great businesses. Hence, acquisitions continue to operate under the same name the community trusts with the same employees who built the business. The biggest change in the first few months and years after acquisition will be more resources and more capital.

Darrell Rogers says, “We are not disruptive to the operations. We come in and do our best to seamlessly integrate businesses into the American AllWaste family. Rather than having a short-term strategy, we are not a conventional private equity type of business. We have a long term horizon.”

If you envision the future of your business requiring more time, capital, or resources than you can or want to provide, consider selling to an experienced wastewater industry leader that has a history of helping other businesses grow.

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