Multi-Regional Recycling Facility Southwest

Representing a northeastern recycling company with a desire to expand, Accession undertook the acquisition of a recycling facility in Phoenix Arizona. It was, at the time, the largest single stream municipal recycling facility in the United States. Although the facility was privately owned, it's sole customer was the City of Phoenix and its revenues were precisely controlled by a binding 10-year operating agreement. It was, at the time, the sole processing facility for the City of Phoenix's residential recycling program. The facility was losing a significant amount of money under its owner/manager. We developed a coherent approach to the turn-around. While better management would significantly reduce labor overhead , even under optimistic projections, the labor saving factor was insufficient to bring operations into the black. The major factor turned out to be the operating contract with the city. We made the purchase contingent upon a successful contract renegotiation. We spent several months meeting with city officials and eventually achieved agreement on a workable concept. We were then able to bring the owner onboard, and proceeded in earnest to complete the renegotiation of the municipal contract. Seven months later, we completed the new contract with the city and our client took ownership of the facility.

As we predicted, the facility went marginally into the black the first twelve months of ownership. In the second year of operation, we upgraded the processing line further reducing the operational labor cost. The improvement was so significant that the upgrade cost was returned in less than a year, and the facility returned significant profitability for the first time. The improved P&L combined with the highly favorable terms Accession negotiated, resulted in asset acquisition with superb ROI.