This story is the first in a series on trends shaping the U.S. waste and recycling industry in 2022.
In an increasingly unpredictable world and an ever-changing industry, it can be hard to guess what’s coming next. Instead, Waste Dive’s editors are continuing the annual tradition of sharing the questions that are on our minds heading into a new year.
From M&A to recycling policy to workforce issues and much more, we’ll be tracking many themes throughout 2022. We invite you to share your thoughts on these questions, or questions of your own, via email at [email protected]. Please also join us for a live, virtual event on Feb. 10 to engage with the Waste Dive team directly about how we’re approaching 2022 coverage and to hear from top recycling experts.
Can anything affect the outsized amount of M&A and private equity investment in 2022?
Acquisitions are a fact of life for the modern U.S. waste industry, dating back to the high-flying wave of agglomeration its first public companies led in the 1970s and continuing over multiple cycles since. Most recently, the Trump administration’s tax cuts and speculation that Democrats could make tax changes of their own are among the factors that may be fueling a new wave of activity. The pandemic has played its own role by exacerbating the evergreen issues smaller operators face around labor, capital requirements, succession planning and overall fatigue from the stress of running a business.
Yet all waves must crest sometime. Could 2022 mark that shift, or will it go down as just another year in a string of big deals? The U.S. Department of Justice showed greater scrutiny of recent large transactions by Waste Management and Republic Services, but analysts believe large players still have plenty of room to maneuver. Financial factors could change, such as rising interest rates, but that may not be enough to dampen activity either.
Private equity-backed investments in waste and recycling companies are also increasingly common, sparking bidding battles and building up companies to become acquisition targets or candidates for initial public offerings. ESG-driven transactions are similarly gaining attention, leading to intriguing bets on companies or market areas that previously had less interest.
Fourth-quarter results are still pending, but estimates indicate public companies may have spent as much $3.46 billion on acquisitions last year. Whether or not that turns out to be the peak of this M&A roller coaster, 2022 is likely to be an interesting ride.
Read more: 8 questions about the top trends shaping waste and recycling in 2022