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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.
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