Investment, M&A activity heats up in electronics recycling

Investment, M&A activity heats up in electronics recycling

By Editorial Staff, Resource Recycling

The rapid growth in electronics recycling is generating new interest from outside investors, as well as new merger and acquisition activity, according to reports from the recent Institute of Scrap Recycling Industries Convention in Orlando, Florida.

For example, Kleiner Perkins has invested in eRecycling Corps. Kleiner Perkins sees the fragmented nature of the industry as actually a key reason to invest and is particularly interested now in the downstream processing elements of the industry. Additionally, the firm says, as part of its analysis prior to an acquisition, it closely examines an organization's management personnel and structure. For many larger firms looking to either invest in, or acquire, an electronics recycling business, perceived vulnerabilities in an organization's management or business plan can offset the broader attractiveness of the industry.

For instance, Catterton Partners invested in TechTurn seven years ago, citing "insatiable" demand in the sector. Since the investment, however, the company looked at a dozen other firms for potential acquisition but made no purchases.

Other sources at the ISRI Convention suggested that contract manufacturers such as Jabil and Flextronics will be the next group to invest in e-scrap recycling, especially for firms with $100 million or more in annual sales. The source says buyers will initially focus on IT asset disposition, but will move toward processing firms, which have not received much attention before now. Many expect the market to move to a "winner-take-all model," where consolidation will eventually yield only a few companies at the top.

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