To unlock capital and growth, be mindful of the options you have at your fingertips including the less traditional sources of capital, such as non-bank lenders. Borrowers will set themselves up for success by remaining vigilant and working closely with the right lending partner on creative and flexible funding sources.
By John Felix
The pandemic has impacted every possible industry, and waste management and recycling are no exception. Companies reacted quickly, attempting to navigate uncertain times and alleviate the pandemic-accelerated disruptions to cash-flow and liquidity. As we move into 2021, executives that fared well have already transitioned from reactive, short-term planning, back to strategizing for resiliency and growth. Below, we have outlined the questions every CFO in waste management and recycling should be asking themselves to compete in an industry that is primed for growth, innovation and new technologies.
Our Company is Looking for Financing and Funding this Year, But Where Do I Start?
It is important for executives to look beyond traditional sources of capital such as regulated commercial banks, which are getting more and more difficult to turn to as a reliable financing source. The industry is poised for growth and companies need to think “outside the box” for creative and flexible funding sources. Looking to non-bank lenders is an attractive alternative as many banks have once again pulled back from lending in the wake of the COVID-19 outbreak.
It is important to keep in mind that the private credit markets are capable of providing flexible structures and solutions and in amounts unavailable through the commercial banking market. Private credit markets can fund your company through growth, acquisition, transformation and even recovery. Further, with Environmental, Social and Governance (ESG) being a major focus in alternative investing today, waste management and recycling operators are uniquely positioned to benefit from the increasing availability and decreasing cost of capital.
Do not underestimate the power of flexibility when looking for tailored financing solutions. The right capital investment at the right time can be the difference between success and failure for many enterprises. We have seen it time and time again, and the companies that strike while the iron is hot, capitalizing on the success they have built, do extremely well. In our experience, structured cash-flow and creative asset backed loans have been a great solution, particularly in today’s volatile economic climate. Choosing strategic and creative experts who understand the borrower’s business can ensure growth that meets objectives.
What are the Challenges Facing Our Industry in 2021?
Significant challenges will continue to include operating headwinds from the COVID-19 pandemic as well as regulatory pressures to reduce landfill waste. While there are several indicators that point to a strong recovery, successful operators must closely manage resources and uphold safety standards while remaining disciplined in assessing growth opportunities.
Where are the Opportunities for Growth in Waste Management and Recycling this Year?
Now more than ever, it is critical for executives to have sufficient access to capital. That access is essential to appropriately evaluate investment opportunities from technology and equipment to acquisitions. Savvy executives will be on the lookout for opportunities created by a normalization of the operating environment as well as expected increasing infrastructure spending by the government.
The global waste management market size is anticipated to reach $484.9 billion by 2025.1 As professionals look at how to tackle this growth and balance environmental standards, landfill professionals need to consider investments in technology to become more efficient and effective in how sites are managed. While it may be challenging to start the process, finding a lender who will work with you closely provides long term benefits such as growth and transformation.
What is One Piece of Advice that is Essential for Someone Like Me?
The key piece of advice that we give all our industrial borrowers is to pick a lending partner who understands your business and has the flexibility and creativity to construct an appropriate financing plan that meets both your financial needs and operational objectives. When lenders do not take a long-term approach to providing capital and are overly restrictive, the borrower is set up for failure. In our experience, it has been extremely important to create a close relationship between lenders and industrial borrowers. There is a huge difference that it makes in fueling business growth. Because of the knowledge gained through that relationship, it enables lending partners the ability to come up with creative solutions and lender accommodations that may not surface in other situations. Through this, we have been able to create an investment horizon that allows for long-term financing relationships, where we are constantly working with clients on flexible terms and solutions to best meet the business cycle.
What are the Key Indicators or Solutions for Successful Waste Management and Funding Operations?
An operator who is open to embracing newer technologies that solve for the demands of governmental entities is one that is destined for success. Monitoring pending legislation regionally and nationally will avoid unexpected surprises as this new administration promises to act swiftly to promote its green agenda. Agility will be critical in 2021 and in the post-pandemic era. Legacy facilities who are reluctant to change will continue to face severe headwinds going forward.
While there are many challenges facing waste management and recycling there are solutions. To unlock capital and growth, be mindful of the options you have at your fingertips including the less traditional sources of capital, such as non-bank lenders. Borrowers will set themselves up for success by remaining vigilant and working closely with the right lending partner on creative and flexible funding sources. | WA
John Felix has served as Managing Director of White Oak Global Advisors, LLC (WOGA) (New York, NY) since 2017 and has been actively investing in middle market companies for more than 20 years. WOGA is a leading alternative debt manager specializing in originating and providing financing solutions to facilitate the growth, refinancing, and recapitalization of small and medium enterprises. Together with its financing affiliates, WOGA provides more than 20 lending products to the market, including term, asset-based and equipment loans, to all sectors of the economy. Since its inception in 2007, WOGA has deployed more than $8 billion across its product lines, using a disciplined investment process that focuses on delivering risk-adjusted investment returns to investors while establishing long term partnerships with borrowers. For more information, visit www.whiteoaksf.com.