The UK waste and recycling sector is attracting more private equity capital than ever - but the bar for investment has never been higher. That was the clear message from our webinar back in March, "Private Equity in the UK Waste Sector: Opportunities for Operators and Investors," which brought together deal advisors, an active investor and an exited founder to unpack what actually drives value, and what kills a deal, in today's market.
Chaired by Jerry Biggs, Managing Partner at Bowthorpe Growth Partners, the panel featured Todd Mills, Ben Holland and Alistair Rowland from BDO's deal advisory, transaction services and restructuring teams; Greg Holmes, Senior Investment Director at Palatine Private Equity; and Jacqueline O'Sullivan OBE, an exited founder of a waste management business and now an operator and industry advocate.
A sector with strong tailwinds - and growing sophistication
Private equity's interest in waste management isn't new, but the pace has accelerated sharply over the past three to five years. Large infrastructure investors led the way - Macquarie into Biffa, I Squared into Enva - before that appetite cascaded into the mid-market, with deals such as Warren Equity into FirstMile, Waterland into Cumbria Waste, and Palatine into Papilio.
According to Todd Mills, the sector's appeal comes down to a few consistent drivers:
- A fragmented market ripe for consolidation - there are over 2,500 waste collection businesses in the UK alone, giving investors plenty of targets for buy-and-build strategies.
- A track record of deal activity - the sector has averaged around 50 transactions a year over the past five to ten years, so consolidation is a well-worn playbook.
- A large, stable, defensible addressable market, underpinned by an ever-tightening regulatory backdrop.
- High confidence of an exit - investors can be reasonably sure there will be a bigger buyer, corporate or investor, waiting at the end of the hold period.
Greg Holmes added that recent regulation has only sharpened that confidence. The Environment Act, Extended Producer Responsibility, DEFRA's simpler recycling reforms and the AMP8 water investment cycle have all landed within the last five to six years - and rather than creating uncertainty, they've reinforced the view that demand for the sector isn't cyclical. Palatine has backed that thesis directly: five acquisitions since investing in Curridero, and two in the last nine months alone at Papilio, with a further deal in progress.
The valuation multiple: what actually moves the number
If there's one question every business owner wants answered, it's "what is my business worth?" Todd Mills was candid that valuation is "an art rather than a science" - but the underlying mechanics are consistent: profit multiplied by a multiplier, with the average multiplier in the sector currently sitting between six and seven times.
Scale is the single biggest driver of that multiplier. BDO's data shows:
- Transactions under £100m enterprise value average multiples of around 5.5–6x
- Transactions under £20m tend to sit closer to 5–5.5x
Beyond scale, the panel identified the factors that push a business up or down that range:
- Growth - over 20% is considered exceptional and viewed very favourably by PE investors
- Margin - a 10–15%+ EBITDA margin is strong; 15%+ signals a genuinely excellent business
- Capital intensity - capital-heavy businesses sit toward the lower end of the multiple range, but investment in high-quality, well-maintained fleet can offset this
- Technology - particularly the ability to track environmental KPIs, which due diligence teams are scrutinising more closely than ever
- Addressable market - whether a business is a strong regional player in a small market, or genuinely expanding the market it can serve
External factors matter too. A business that attracts competitive tension - multiple buyers who see genuine strategic fit - will command a materially higher price than one negotiating with a single interested party.
Why contracts matter more than owners think
Contract quality emerged as one of the most practical themes of the session. Ben Holland noted that a lot of business in this sector is built on relationships rather than paper - which feels secure to an owner, but looks very different to an investor running due diligence.
Jacqueline O'Sullivan offered a candid counterpoint from her own experience: half of her business's turnover came from skip hire, an industry where contracts are rare and reputation does the work instead. Her advice to operators: don't get too hung up on paper contracts if that's not how your part of the sector operates - but you must be able to evidence repeat business. Multi-year, price-reviewable contracts, where they exist, give investors real comfort over future trading and directly support a stronger multiple.
Red flags that kill investor appetite
Alistair Rowland, who works with businesses facing financial or operational stress, was direct about what separates an investable business from one that struggles to attract capital:
- Under-investment in capital expenditure - particularly in fleet and plant
- An over-geared balance sheet, with debt levels disproportionate to profit and cash generation
- Legacy liabilities, such as arrears with HMRC over landfill tax
- Chasing top-line growth at the expense of profitability - described bluntly as "being a busy fool"
- Acquisitions that bite off more than a management team can chew, diverting focus from the core, profitable business
He also flagged a growing note of caution among investors: any process where a buyer "sniffs" an unusual issue tends to lose momentum well before offer stage. Early engagement with advisors, he stressed, preserves options - leaving it too late can mean the only remaining route is a distressed one.
The human element: an underrated value driver
Perhaps the most compelling insight came from Jacqueline O'Sullivan's own exit. Her business was the first independent operator to achieve gold status in the Freight Operators Recognition Scheme, and she sat on its governance board for 13 years. That investment in safety, driver welfare and ethical working practice didn't just build reputation - it built a materially higher price.
Compared against a competitor of identical turnover, fleet size and profitability, her business commanded a multiple she estimates was two full turns higher - driven almost entirely by staff retention, employer-of-choice status and public visibility around safety standards. Her observation for the sector: due diligence tends to focus heavily on volumes and profitability, but rarely digs into the human element of a business - even though, in a sector facing a well-documented HGV driver shortage, people may be the biggest asset on the balance sheet.
Platform or bolt-on? A question worth asking early
Looking ahead, Todd Mills raised a strategic question operators should be asking themselves now: do you want to be a platform investment - building and buying other businesses under private equity backing - or a bolt-on, acquired into someone else's platform? The preparation required differs significantly. Platform ambitions demand robust forecasting, a clear growth strategy and the ability to identify future bolt-on targets; bolt-on status still requires preparation, but less intensively.
Greg Holmes reinforced that management team strength and bandwidth is often the deciding factor in how a business performs post-investment - private equity investors typically take a non-executive position rather than stepping in to run the business day to day, so the existing team needs to be capable of handling the next stage of growth, or have a credible plan to build that capability.
The bottom line for operators
The sector's opportunity is real: strong regulatory tailwinds, a fragmented market, and no shortage of capital looking to deploy. But as the panel made clear, the scrutiny has caught up with the opportunity. Contract quality, balance sheet strength, management bandwidth and demonstrable, repeatable profitability are now the areas where operators need to focus if they want to attract serious private equity interest - and the earlier that preparation starts, the stronger the outcome tends to be.
This article is based on an ESS Expo webinar featuring speakers from BDO, Palatine Private Equity, and exited waste management founder Jacqueline O'Sullivan OBE.
Watch the webinar back on-demand here.
--------------------------------------------------------------------
About ESS Expo: Environmental Services & Solutions Expo (ESS Expo) is the UK's largest cross-sector environmental event, taking place annually at the NEC Birmingham. ESS Expo 2026 runs 16-17 September and unites seven co-located industry shows spanning resource, waste management, recycling, water management, air quality, sustainable engineering, decarbonisation, land remediation, circular economy, net zero, energy from waste, and geotechnical engineering. Register free at ess-expo.co.uk.
--------------------------------------------------------------------
