Waste Management

"That’s when, in 1984, a call came from our largest customer. Waste Management, whose primary business was solid waste, was now expanding a new division called Chemical Waste Management and offered to buy Clean Harbors for approximately $1 million."

"This is one of the processes by which the number of competitors in an industry tends to decline over time, as discussed earlier. Waste Manage¬ ment, run by Huizenga and Dean Buntrock, acquired scores of local mom-and-pop operators. Increasing the scale produced operating effi¬ ciencies and improved managerial methods. In addition, and not inci¬ dentally, Waste Management told its story very effectively to stock market investors. Huizenga later applied what he had learned about growth through acquisition to a high-growth business, the Blockbuster chain of video rental stores."

"From this modest start, Huizenga built the world’s largest trashhauling business. Together with Dean Buntrock, who had married into the Huizenga clan, he founded Waste Management Technologies (now WMX). A few years earlier, Browning-Ferris Industries, led by Tom J. Fatjo Jr., had conceived the idea of creating a nationwide waste-hauling company. Buntrock and Huizenga set themselves a similar objective and a breakneck timetable, acquiring 100 companies within the first two years. Waste Management went public in 1971 with an aggregate share value of $5 million. By 1984, the company’s valuation had grown to $3 billion."

"Another industry consolidation that provided plenty of instruction in deal making was Wayne Huizenga’s creation of Waste Management. In acquiring independent waste haulers, he minimized the haggling over price by beginning at a level within 5 or 10 percent of the maximum that he would pay. Then, he would focus the discussion on such issues as the tax benefits of taking Waste Management stock in payment and the seller’s ongoing relationship as an operator. Sometimes, the owner would insist that Huizenga’s proposed price was too low and that the business was about to experience a profit surge. Instead of arguing the point and potentially antagonizing the owner, Huizenga would plan to call again to see if the two parties could get to¬ gether on price. In some instances, he would point out that if the owner delayed in selling, Waste Management might meanwhile acquire a com¬ petitor in the region and therefore have less interest in buying. Stamina and patience were additional keys to Huizenga’s success in acquiring waste-hauling operations. One negotiation took place at the owner’s office above a transfer station, where garbage was dumped and reloaded for further shipping. The weather was hot and humid, making the stench nearly unbearable. After a full day of negotiating, Waste Man¬ agement’s corporate attorney was nauseated, but Huizenga ignored the distracting smell and closed the deal.5"

"United Waste Systems My next start-up was in the U.S. waste management industry. I remember vividly the moment the industry caught my attention in 1989. I was reading Merrill Lynch research reports in bed on a lazy Sunday morning in London, and came across a report written by Bill Genco, the top-ranked analyst for environmental services then. Bill had written that the two largest companies in the waste industry at the time, Waste Management and Browning-Ferris, were each making about half a billion dollars a year in profit, and I thought, How hard can it be to have trucks pick up trash, deposit it in a safe place, and send out an invoice? I wanted to know more. Waste management turned out to be a straightforward business with two big trends at the time. Landfill capacity was becoming precious, because government regulations were pushing small trash dumps out of business. Together with the second trend—integration of hauling and disposal—this created an opportunity for end-to-end consolidation. I liked those dynamics and started United Waste Systems in 1989. Then I looked for a way to capitalize on both trends and found it in tech-based truck routing."