Mergers & Acquisitions in the Power Sweeping Industry:

How a unified group of companies creates synergistic value

Face it, nobody knows your power sweeping business as well as you do. Perhaps you started the company. Or maybe your parents started the business with a single sweeper 30 years ago and you’ve helped expand the business over time. In any case, you know the sweat, aggravation, challenges and joy involved in running a complex service business.
So when the time comes to think about retiring or selling the business to an interested party, you begin to evaluate your options and the value your business will generate. It is never too early to start preparing your business for a sale process, even if that date is likely 5 to 10 years in the future. The question is, how will other people from the outside look at how to value your business? Outsiders will review the inherent structure of your company with an eye toward their ability to leverage the assets, customers, routes and employees that you have built up over time.
Consolidation within any industry is inevitable.
Many of us have watched the waste handling and recycling industry consolidate over the past 20 years, taken with the methods employed to purchase individual owners’ stakes and create a blended identity and value. Participating in the roll-up of companies and appreciating the role of aggregators, whether from inside or outside the industry, gives business owners a fair vantage point from which to view the value their business holds to a buyer.
From a buyer’s perspective, particularly when there is interest in consolidating multiple companies, there are few things as attractive as identifying consistent platforms — methods, functionality and systems across those companies. Multiple companies that offer a buyer consistency via a common platform as they are merged together create additional synergistic value under the new umbrella company.
This additional value is based in part on cost saving and operating efficiencies as companies are added to the group allowing for a more profitably run new company – let’s call it “NewCo.”
Smart buyers know to look for these synergy opportunities within companies they acquire, particularly when cobbling together multiple businesses to create a “NewCo.” Equally smart sellers understand that being part of a platform that maintains consistent high standards tips the scale higher when they go to sell.

1-800-SWEEPER: A Branded Platform Built to Leverage Connections
For those unfamiliar with the history of what has become the largest co-op of independently owned power sweeping service companies, 1-800-SWEEPER was formed ahead of the current trend in 2011. The partner companies in the organization receive cost savings as a unified buying group, share marketing and lead generation costs and methodologies, along with opportunities to share ideas on subjects from stormwater compliance to dust control regulations on a localized level.
In addition, as the partnership has grown – now nearly 50 companies strong – additional technological advances have added to the value of the program. The partnership now includes proprietary programs for fleet maintenance, employee screening and hiring. and sweeper truck driver training, among other programs. A web based, complete sweeping business management system, featuring route scheduling, job costing, billing and reporting empowered with GPS, and on-board activity tracking, will soon be available. In addition, the partnership has provided many opportunities to interact with other like-minded sweeping business owner including the upcoming Sweeper Summit 2016 in Las Vegas. (see sidebar.)

Exit Strategies for Owners
In addition to systems for running a sweeping business day-to-day, a key part of the 1-800-SWEEPER platform from the beginning was the ability to facilitate exit strategies, both within the group internally or externally, when the time came for a partner to sell his or her business. The 1-800 SWEEPER platform is unique from an outside buyer’s perspective because they value the people and welcome the opportunity for current employees to transition with the business and continue adding value to their organization.
Shared knowledge of the systems and methods, and strategic buying arrangements with vendors creates a mutual comfort level for the sale/purchase of a sweeping business. Remember, smart sellers understand – efficiencies occur for the buyer when similar or identical systems can be employed across merged companies. This means more value for the seller/owner at point-of-sale.
Buyers are inherently motivated to pay an existing owner as little as possible, and often pursue the initial benefit of one-off purchases in fragmented industries. Getting what you perceive as a fair value for your company when you sell will no doubt be affected by patience, planning and how many viable buyers exist. Arriving at both a fair price and reasonable payout schedule can be greatly affected by how much buying interest exists and how “motivated” you are to sell.
In most cases, the current owner’s ability to continue on in a managerial or mentoring role may also affect the selling price. Smart sellers understand that there is strength in numbers. With nearly fifty companies sharing a well-recognized industry brand, 1-800-SWEEPER partners possess a competitive advantage of synergistic shared value against buyers looking to expand through one-off acquisitions.

Managing Timing And Arriving At a Fair Value for Your Company
Arriving at both a fair price and reasonable payout schedule can be greatly affected by how much buying interest there is and how “motivated” you are to sell. Because buyers are motivated to give you as little as possible, getting what you perceive as a fair value for your company when you sell will no doubt be affected by how many viable buyers exist. Second on the importance list is how quickly do you want (or need) to sell?
Fewer buyers equals lower price. Greater need to act today = lower price. The owner’s ability and/or interest in staying involved in the company post-sale, is an important factor for some sellers and buyers.

A seller’s representative can help determine appropriate value
In the earlier-mentioned consolidation of the waste collection industry, when small groups of companies banded together for sale, efficiencies based on their shared systems inevitably led to a higher valuation for each of the individual owners in comparison to each owner acting alone. Using a seller’s representative and being part of a larger group can significantly improve an individual owner’s one-on-one negotiating position as a sale comes to fruition. Your representative will help negotiate value and terms with a potential buyer.
At the upcoming Sweeper Summit in November, a featured speaker will be Eric Van Dam, Vice President of Quarton International, a Detroit-based investment banking firm focused on representing sellers during mergers and acquisitions. For more information on attending Sweeper Summit, contact Carolyn Bell at 419-708-4847 or email cbell@1800sweeper.com.