Waste and recycling M&A: Resilience, disruption and sustainability

As far as recession-proof industries go, they don’t come much more immune from economic shocks than waste management. After all, no matter the state of the economy, people and businesses continue to produce waste and there is an inelastic demand for this waste to be removed, disposed of, or, increasingly, processed and recycled.

Unsurprisingly, the sector has continued to see strong performance and resilient M&A activity even during the relatively barren macro landscape of the past few years. Activity has been propped up by strong dealmaking among the traditional major consolidators, new entrants into the M&A market and investors such as private equity and venture capital firms.

Despite the resilience of the sector in the face of economic headwinds, there is also a strong likelihood that investment will have been held back somewhat by the downturn and that an economic recovery could help to unleash an even stronger current of M&A activity.

Particularly as trends such as ESG, data and analytics and the circular economy become more prominent, dealmaking will continue to be a major route for larger businesses to add and bolster new capabilities rapidly and effectively, backed by stronger investment and profits in a more stable economic environment.

Equally, as economic conditions improve, smaller and mid-market operators may be increasingly able to attract investment or devote existing funds to deals that help them add new capabilities, build scale, grow geographically and ultimately become more competitive.

The defining trends

Sustainability: ESG and the circular economy
The waste management and recycling industry is, naturally, inextricably linked to concerns around sustainability. In fact, alongside energy, it is arguably the sector at the epicentre of discussions on the environment.

Around the world, governments are undertaking massive environmental and sustainability-related efforts – such as the drive towards Net Zero – putting questions around waste and recycling at the centre of a global conversation.

In the UK, the government has announced the establishment of a Circular Economy Taskforce, which will bring experts together across industry, government, NGOs and academia to develop a strategy that will position the country as a leader in circular design and environmental sustainability.

This includes among investors, who are increasingly focused on ensuring that their investments meet their ESG goals or help them boost their sustainability credentials. This is driving significant investment into the waste and recycling sectors from the likes of global infrastructure funds and private equity.

At the same time, major waste industry incumbents – who were perhaps previously concerned that investing in or developing sustainable products or services would hamper their profits while disrupting their core operations – have long since realised that strong sustainability credentials can have a major positive impact on both profits and company value.

The importance of the waste sector to ESG is also leading companies from outside the industry to enter the market as they seek to make their businesses more sustainable – a trend that is only going to ramp up as pressure grows on companies across many sectors to improve their environmental credentials and reduce waste.

Portuguese-headquartered BA Glass is among the biggest producers of glass containers in Europe and has been making products for the global food and beverage industries for more than 100 years. The €1.6 billion-turnover company claims to produce more than 7 billion glass containers each year and exports to over 70 countries.

While glass is, of course, a totally recyclable (hence, sustainable) material for packaging, BA Glass has long sought to further boost its sustainability as much as possible by incorporating glass recycling into its core operations. In December 2023, the group increased its recycling capacity with the acquisition of UK-based glass recycling firm Recresco.

Recresco, which has recycling plants in Ellesmere Port and Cwmbran, was acquired as part of BA Glass’ aim of reinforcing its commitment to reducing its CO2 footprint and developing the circular economy.

BA Glass Chief Executive Sandra Santos said: "The acquisition of Recresco is an extremely valuable opportunity to access high-quality recycled glass, representing a significant step towards our goal of reducing 50 per cent of CO2 emissions by 2035.”

"Incorporating a higher percentage of recycled glass in our products will allow us to be nearer to close the glass loop and make the glass the most sustainable packaging material in the world."

For Recresco, meanwhile, the firm’s General Manager Tim Gent said that the deal would provide it with “unique opportunity […] to participate actively in future recycling projects in other geographies, where BA Glass has its operations”.

A crucial part of ESG in the waste sector is the circular economy – a model of production and consumption based around refurbishing, repairing, recycling and reusing existing products and materials for as long as possible, to minimise waste and extract as much use as possible from a product or material’s life cycle.

Naturally, the waste sector plays a huge role in this model and the circular economy has grown to become a major driver of M&A activity in the sector. According to a report from BDO, there were 184 transactions involving UK circular economy investments in 2023.

As well as representing a 30 per cent increase in circular economy investments, perhaps more importantly the figure showed just how much sustainability is contributing to the resilience of the broader waste sector: with the UK M&A market as a whole registering a 17 per cent drop in activity during the same period.

The value of deals is also increasing – demonstrating the strength and attractiveness of circular economy businesses. BDO found that average disclosed deal volume was up 15 per cent last year to £10.7 million, while total disclosed deal value soared from £879 million in 2022 to £1.3 billion last year.

The circular economy is, of course, proving extremely popular with investors, too. BDO’s report found that venture capital accounted for 58 per cent of transactions last year, while mid-market private equity investors were responsible for 21 per cent of deals.

Discussing the strength of investment in the circular economy, BDO Deal Advisory Partner Rory McPherson said: “We continue to see circular economy deals out-pace the rest of the UK M&A market. As well as exceptional deal value and volume, we’re seeing many high-quality transactions with innovative businesses right across the UK being backed to support their scale-up journey.”

“We’re excited by the level of activity in the sector and its future potential as businesses continue to create value, reduce waste, and drive inefficiencies, as well as driving wider benefits for society and delivering against environment goals.”

Todd Mills, circular economy M&A at BDO LLP, meanwhile, delved into the prospects for growing investment into the market over the coming years. According to Mills, there are “clear and compelling benefits” for companies investing in the circular economy.

Mills added that BDO expects to see “increasing interest from trade investors, with high quality circular economy businesses attracting premium valuations as the competition for assets hots up.”

Dublin-headquartered Beauparc is one of the UK and Ireland’s leading utility corporations, providing essential utilities for communities throughout the UK and Ireland. Over recent years, the company has been making major investments in circular economy M&A as it seeks to become the leading supplier of sustainable waste management solutions to UK businesses.

Earlier this year, the group acquired Sheffield-based recycling and waste management firm Fletchers Waste Management, in a deal that significantly bolstered its UK operations, with Fletchers joining its existing portfolio of 10 UK brands.

Following the deal, the group’s UK coverage extended across Yorkshire, Merseyside, Manchester, the East and West Midlands and Scotland, managing approximately two million tonnes of waste a year for around 50,000 customers.

The overarching strategy guiding the group’s M&A activity is its plan to develop a network of 26 sites dedicated to extracting waste from resources, which can then be returned to the circular economy through material recycling facilities.

Commenting on the deal, Beauparc Chief Executive Brian McCabe said: “As we continue our growth strategy, Fletchers is a significant geographical connection for our existing UK infrastructure."

"As part of the wider group, existing customers will experience tangible benefits such as a more expansive service offering, greater coverage, share in the developed ESG/Safety programmes and have the support from the wider Beauparc management team."

Technology playing a key role
As in many other sectors, the push towards sustainability in the waste and recycling sector is leaning heavily on technology. There is a wide range of technology that is already strongly incorporated into the sector, such as artificial intelligence-based systems and robotics at waste sorting facilities, and new innovations are regularly breaking through.

Recycling is perhaps the channel in which new technologies are most vital – given the growing pressure on companies and facilities involved in recycling to handle an ever-increasing volume and to improve the quality of their output.

Over the past few years, there has been significant investment in developing cutting-edge recycling facilities, with many pouring huge funds into new technologies. This has also helped to drive advancements in recycling, as new technology-led methods mean that new waste streams, such as batteries, solar panels and electric vehicles, can now be recycled – boosting revenue streams for recycling companies and helping to attract further outside investment.

The incorporation of cutting edge technologies into the recycling industry has led to a number of high-profile deals, such as the recent partnership between UK retail giant Marks & Spencer (M&S) and recycling tech firm Polytag on a programme for tracing and recycling single-use plastic packaging.

The Polytag Ecotrace Programme will use a network of invisible UV tag detection equipment at a network of high-volume recycling centres to gather granular data on household waste recycling and provide M&S with insights on how its single-use plastic packaging is collected and sorted.

Predictably, the success of technology and software within waste and recycling has also attracted a considerable amount of interest from investors – ranging from smaller investors (such as the Wales Angel Co-investment Fund which invested in Polytag earlier this year) to private equity firms.

Headquartered in Ireland, AMCS is a global software provider with a major presence in the recycling sector. The company provides cloud-based, AI-enabled planning, performance, safety and sustainability-focused software for waste management, recycling and other resource-intensive industries.

AMCS has made a number of waste sector acquisitions over recent years in regions including the US, UK and Europe, helping it to significantly expand its customer base and geographic reach.

In August 2024, Stockholm-based EQT Private Equity acquired a majority stake in the company, adding to its existing portfolio of recycling and waste businesses, including Reworld (formerly Covanta) and battery recycler Cirba Solutions.

Raphael Grunschlag, Managing Director in William Blair’s technology investment banking group who served as lead on the AMCS deal team, said that the transaction “underscores two trends we see in the market: importantly, the positive impact which software companies can make with their solutions to drive measurable sustainability improvement for resource intensive-industries; as well as the private equity industry’s expanding appetite to back both market leading software and sustainability platforms globally, and to do so with multiple capital strategies.”

Underlying resilience crucial in uncertain times
In our recent insight on the building products and services market, we discussed how the sector’s innate resilience had helped to make it something of a safe haven for investors at a time when economic uncertainty was seeing rapid declines in M&A activity in other industries.

Given its status as an essential service that will always be a requirement, this is perhaps even more true for the waste and recycling sector. Simply put, businesses, local authorities and individuals will always require waste services – meaning that businesses in the sector often have strong, reliable revenues and predictable cash flows.

These are exactly the kind of attributes that investors will look for during times of heightened economic or geopolitical risk – such as has been seen in the UK and worldwide over recent years – and this is one key reason (although of course not the sole reason) why M&A activity has remained solid and investment from the likes of private equity firms and venture capital funds has actually increased in certain areas of the market.

Discussing why the sector’s resilience is so attractive to investors earlier this year, Quercus Head of Waste Management Mark Whelan said: “This class of investor increasingly views waste management as part of their core infrastructure focus; an essential service where there will always be a requirement from local councils, businesses or individual consumers, underpinned by regulatory and legislative agendas, and recycling targets. They are motivated by the defensive qualities of waste collection/processing and the control of materials, and similarities with other more traditional essential utility type services that they invest in such as water provision/treatment and energy supply. Moreover, acquisitions can often secure volumes of waste to feed other assets in their portfolios, such as EfW and AD plants.”

“The robustness of revenues and the predictability of cash flow in many waste businesses makes it easier to fund deals with leverage and this in turn can help support higher valuations, especially for high quality assets.”

Of course, the sector’s integral place in ESG-related trends and initiatives, as well as the wealth of innovative technology, is also key to attracting major investors (something that marks the sector out from the building products and services industry) - but its innate resilience has arguably been even more important in sustaining funding at a time when many investors would have been proceeding with caution.

Who are the main buyers?

Large incumbents
Traditionally, M&A activity in the UK waste and recycling sector has been driven in a major way by large firms such as Biffa, Veolia and Suez. This is a trend that has continued over recent years, with these industry leaders using M&A to pursue their strategic objectives.

Major transactions have included Suez’s takeover of F&R Cawley Limited in December 2023, in a deal that expanded the company’s footprint north of London and provided an entry into the lithium-ion battery processing market.

The acquisition contributed to a number of key strategic objectives for Suez. Fundamentally, the deal was the company’s second in the UK in 2023, providing the French-headquartered group with a greater presence in one of Europe’s largest waste markets as it seeks to reach 40 per cent turnover from international markets by 2027.

It also helps the group to further strengthen its presence in the North of London, where the group had secured a waste and environmental services contract with Milton Keynes City Council earlier in 2023. This includes Cawleys’ HQ in Luton, as well as three depots, two transfer stations, a battery processing facility and materials recycling facility.

Perhaps most importantly, the deal helps Suez to enter the UK’s growing lithium-ion battery processing market, amid soaring demand for solutions at a time when the use of electric vehicles and other battery-powered devices is rapidly increasing.

Suez CEO and Chairman Sabrina Soussan commented: “This second acquisition in SUEZ’s first year back in the UK recycling and recovery market highlights our ability to capitalise on opportunities in areas identified for strategic growth. F&R Cawley complements SUEZ’s offering in innovative and resilient solutions such as battery recycling, where SUEZ is already a first player in France with the development of a battery recycling facility in Dunkirk.”

While overseas-headquartered giants have long taken a strong interest in the UK waste sector (and seem to be increasing their investments), activity has also been notable amongst domestic market leaders, particularly Biffa.
High Wycombe-based Biffa has long used acquisitions to pursue its strategic goals, regularly completing large deals. Over the past few years, it seems to have been ramping this activity up, with two acquisitions in 2023 and three so far in 2024.

Increasingly, Biffa’s activity has focused on bolstering its operations, improving its sustainability credentials and adding more environmentally-focused lines to its massive business.

The group’s most recent acquisition saw it take over South Coast-based construction and demolition (C&D) waste operator L&S Waste Management, in a deal that provided significant geographic expansion and greater scale to Biffa’s existing C&D processing operations in Edinburgh, Glasgow, Cardiff, Newcastle and Birmingham.

L&S’s core business includes C&D material recycling facilities in Portsmouth and Southampton, which have a combined annual capacity of 225,000 metric tonnes. The company also has a transfer station in Fareham, as well as a fleet of more than 90 collection vehicles.

Biffa Managing Director, Construction and Demolition, Marc Angell said: “Biffa is the largest collector of waste and recycling in the UK and the addition of L&S’ capability in the C&D sector will further strengthen our services in this important market.”

“We look forward to working together to leverage Biffa’s unique position at the heart of the circular economy, enabling more customers to meet their carbon reduction commitments.”


Biffa’s commitment to using M&A to bolster its offering in the circular economy market was also demonstrated by its April 2024 acquisition of the entire share capital of waste-to-fuel business Eco-Power Green Energy Limited.

The acquisition saw Biffa take over the company’s decommissioned plant in the village of Melton, near Hull. When operational, the plant has the capacity to produce more than 100,000 tonnes of solid recovered fuel (SRF) pellets per year, using non-recyclable household waste. SRF pellets are a valuable alternative to fossil fuels and are primarily used in the cement industry.

Following the acquisition, Biffa said that it would work to rapidly recommission the Melton plant, with the group’s Chief Operating Officer for resources and energy Mick Davis saying that getting the facility back up and running “allows us to further diversify our capability to divert more difficult-to-deal-with wastes away from landfill and help reduce customers’ carbon footprint.”

Davis added that the deal provided an opportunity for the group to develop its expertise and offering in the alternative fuels market, as well as potentially serving as “a stepping stone to a broader strategy in this space."

Institutional investors
In a dedicated insight on ESG considerations in M&A, we outlined how investments in sustainable businesses can help to drive a major increase in value. It’s no wonder then, that investors such as private equity firms are continuing to look at the waste and recycling industries as they become increasingly focused on sustainability, recycling and circularity.

Investors have acquired numerous firms in the UK waste sector, often providing funding for these companies to then undertake buy-and-build strategies and consolidate niche subsectors within the industry.

Circular economy giant Reconomy Group, acquired by EMK Capital in 2017, is one of the most notable private equity-backed companies in the sector. Since EMK’s initial investment, the group has undertaken a major acquisition drive, both in the UK and internationally, helping to establish itself as one of the leading companies in the rapidly growing circular economy industry.

Despite the group’s rapid growth and strong position as an industry leader, EMK has said that it will continue to finance further acquisitions, saying there are “attractive and actionable opportunities for further transformational growth.”

This was demonstrated last year when the group swooped for Newark-headquartered waste management services business UK Waste Solutions Limited. UK Waste Solutions has four brands, AMA, Click Waste UK, Evolution and its flagship Novati brand, providing waste management services to clients across industries including distribution, manufacturing, hospitality and facilities management.

The group has an array of prominent UK clients, including CBRE, Network Rail, Birmingham Airport and Italian restaurant chain Prezzo, and its expertise across a number of industries was said to be highly complementary to Reconomy’s existing operations, providing wider capabilities and broader services.

Reconomy Group CEO Guy Wakeley said the company was “a great fit with our business due to our shared commitment to developing closed loop solutions that will accelerate the shift towards a more circular economy”, adding that the deal was “consistent with our ambitious plans to grow both organically and through further acquisitions in the UK and around the world.”

However, it's not just major operators reaping the rewards of private equity investment in the sector. Increasingly, investment is filtering down to smaller and mid-market operators, reflecting a trend that is being seen across numerous other industries.

In June 2023, private equity firm Palatine invested in Swinton-headquartered waste management and recycling business Roydon Recycling UK, after the business was carved out of the Roydon Group.

Roydon Recycling, since rebranded as Papilo earlier this year, supports a range of blue-chip fast-moving consumer goods (FMCG) companies, particularly manufacturers in the European food and beverage industry, providing waste management strategies focused on resource efficiency and circularity.

At the time of the initial investment Palatine Impact Investment Director Greg Holmes described Roydon as a “market-leader in developing innovative waste strategies, audits, consultancy and management.”

He continued: “Given the circular economy is so high on the agenda, it is great to welcome a company with such an aligned mission to our Impact Fund, as we continue to deliver returns with purpose.”

By the time the company rebranded as Papilo in March 2024, less than a year after the initial investment, it had already registered significant growth. During the first year, the company’s year-on-year revenue growth increased 25 per cent to £31.9 million as a result of continued expansion across Europe – with the company beginning to operate five new sites in the Netherlands, with plans for additional locations in Belgium, France and Germany.

The company also moved to a new 4,620 sq ft office space in Lowry Mill, Swinton, providing a 73 per cent increase in size compared to its previous HQ.

Papilo CEO Paul Hodgkiss commented: “Launching Papilo builds off the success of Roydon Recycling’s track record over the last 14 years. The team remains the same, just under the new name, with the same dedication to providing best-in-class service to our clients, whilst also highlighting the importance of best ESG practice within the company.”

"We have an ambitious growth strategy that has seen us relocate offices, increase the workforce, and expand across new countries in Europe over the last year. The new brand aligns with the ambition and impact of our team, clients and partners.”

It is also the makeup of the sector that is attracting investors, with the fragmented industry offering huge scope for PE-backed companies to consolidate at scale and build a huge market presence, exponentially increasing their value.

Discussing why the sector is so attractive to investors with industry publication letsrecycle.com, Evelyn Partners Managing Director Jason Hollands said that interest is being driven by “the swelling of ESG funds globally and the fact that there are only a relatively small number of larger players in this space – and relatively few are listed opportunities”.

Outside of private equity, there have also been a number of major transactions over recent years involving global infrastructure funds, including US investment firm Energy Capital Partners’ (ECP) £2.1 billion takeover of Biffa in 2023 and KKR’s acquisition of Viridor for £4.2 billion in 2020.

Smaller buyers enter the market
Another crucial aspect of the strong activity seen in the waste sector is growing dealmaking among smaller buyers, who are increasingly using M&A to bolster their service offerings, expand geographically and consolidate fragmented sub-sectors.

In a sector in which there is such a sharp divide between the largest firms (such as Viridor, Biffa etc) and the rest, mid-market companies face a huge degree of competition as they seek to adapt, grow their profits and increase the scale of their business.

Acquisitions can help companies to quickly expand or diversify their service offerings, grow their geographic presence and add greater expertise, in order to stand out from competitors and ultimately boost their revenues.

With the waste sector having remained so resilient to the economic and political challenges of recent years, M&A deals can enable smaller companies to position themselves to fully capitalise on the economic recovery that the UK is expected to see over the coming months.

Universal Tankers is a waste management specialist based in Stokesley. The company, which is based in Penrith and Carlisle, specialises in wastewater and liquid disposal and has depots across the UK that provide waste management services to a wide range of commercial sectors.

Earlier this year, the company strengthened its business with the acquisition of Cumbria-based H.& E. Trotter, a specialist in the servicing of septic tanks. As well as expanding its existing operations in Cumbria and strengthening its overall presence in the North of England, the deal also bolstered its service offering.

According to Universal Tankers, the deal would improve its commercial offering and expand its operations in Cumbria, enabling it to offer a wider range of waste management services in the region, including liquid food waste management, bulk water provision, tank and sewage treatment plant services, as well as welfare accommodation units and portable toilets for events and sites.

Additionally, with the sector being so heavily shaped by emerging themes such as new technology and, in particular, environmental-related trends (e.g. ESG and the circular economy), acquisitions can be crucial for waste companies seeking to rapidly adapt and add new capabilities, without the need for time-consuming organic change.

In some sub-sectors of the broader industry, meanwhile, fragmentation remains at a high level. In such scenarios, a small or mid-market business could quickly assert itself as a dominant market leader by consolidating a few smaller firms to build geographic presence, greater scale and a broader service offering.

A number of medium-sized operators have signalled their intention to become major market forces by making numerous acquisitions within a specific segment of the broader waste industry. Sortera, for example, has made a number of acquisitions in the construction and demolition waste space, most recently with a deal for South West London-based Reston Waste.

With private equity activity potentially poised to increase further in the sector over the coming years, SME consolidators such as these could find that they are able to attract investment that could enable them to boost their M&A activity further.

Several niche consolidators are already reaping the benefits of private equity investment in the waste sector. OCU Group has made several acquisitions in the water and wastewater sector since securing backing from private equity firm Triton Partners in July 2022, helping it to grow its revenues to £611 million in the year to April 30 2024 (up 34 per cent from 2023) and EBITDA of £65.7 million.

US-based Impact Environmental Group (IEG), meanwhile, which is owned by Aurora Capital Partners, has targeted acquisitions in the UK waste products and services sector over recent years, including waste and recycling compactor manufacturer Capital Compacters, waste container manufacturers Duraflex and Egbert Taylor and waste container repair and refurbishment specialist UK Container Maintenance (UKCM).

As the UK economy improves, private equity investment in the waste and recycling industries potentially increases and PE firms increasingly target mid-market companies to drive their investments through buy-and-build strategies, it could be that more consolidators such as OCU Group and IEG begin to emerge over the next few years.

What next?

After proving so resilient against the economic and geopolitical shocks of recent years, the waste and recycling sector looks set to emerge from these difficulties in an extremely strong position.

The ever-increasing importance of environmental and sustainability-related concerns will ensure that cutting edge technology and circular economy companies continue to be high value targets for both industry giants and external investors.

Improving economic and political stability in the UK, meanwhile, should lead to more favourable dealmaking conditions and help to drive an increase in domestic M&A activity and potentially even lead to a further increase in private equity and venture capital involvement in the sector.

This could be crucial to helping to sustain the trend for growing activity among smaller and mid-market operators across the sector – something that will also be helped by the ongoing fragmentation and high levels of disruption being seen across numerous industry sub-sectors.

Overall, even after several positive years for the industry, the trajectory for dealmaking and investment activity seems like it is definitively continuing upwards through 2025.

Share this article

Latest Businesses for Sale

---

---

---

View more businesses for sale