Welcome to The Business Academy with Sieva Kozinsky. Here's what we have in store for you today:

1. From 1 garbage truck to $90 billion
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2. How to execute a roll-up strategy
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3. $20 million business building oil fields

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Do you manage 5+ bank accounts across multiple businesses? Me and my finance team used to spend hours each week checking each bank account balance. It was a pain…

Then my friend introduced me to Vesto.

Vesto made it easy to connect all of our banks into one simple dashboard. With real-time balances, transactions, and cash flow monitoring – we went from 50 account logins to one.

For any company managing multiple banks, Vesto is a no-brainer

Thanks to Vesto for sponsoring today's newsletter

​Check out Vesto here​

Acquiring a business is a lot of work.

You have to find the business you want to buy, negotiate with the seller, source the funds to close the deal - and that's all before you start the really hard work of running the business you just bought.

Now imagine doing 133 acquisitions in just four years.

That's exactly what Waste Management did when it started out in 1968.

Three waste disposal entrepreneurs teamed up with the goal of rolling up the inefficient and scattered waste business.

Today, the company is worth $90 billion and is probably the most successful and well-known rollup of all time.

Founder Wayne Huizenga grew the company by aggressively acquiring hundreds of small, local waste disposal firms across the United States. Wayne is like the original Brad Jacobs. Brad built a few billion dollar companies by pursuing roll-ups aggressively (including United Rentals).

Wayne invented that playbook.

The waste thesis: The waste business was an incredibly fragmented industry where many small operators lacked the scale to compete efficiently. Most of the garbage companies just operated in a single city or county, run by a family, with almost no scale.

Wayne, who also ran Blockbuster, AutoZone, and a bunch of other businesses later on, was one of the first to see the power of scaling a boring business through roll-ups.

He started his own garbage business in 1962 in Florida with a single truck, growing over the next 7 years to 40 trucks and over $3 million in revenue.

After dominating his local market, it was time to expand nationwide.

He teamed up with two other regional garbage businesses in other states to form Waste Management.

Right from the start, they aggressively started buying up local and regional garbage businesses.

They bought over 100 in just one year.

Wayne describes two key parts that made this strategy viable:

1. Financing: WM could not have expanded so quickly if they had to pay cash for all these companies. They went public quickly, just three years after starting, and used their rising stock price to attract sellers of smaller garbage companies. They paid for new companies mostly in stock, which worked out because the stock continued to do well for years.
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2. Integration: WM had to be hyper-efficient at integrating new companies into their operation. They built out a fine-tuned system to quickly integrate new companies in a matter of weeks. The team leveraged the new combined resources to improve efficiency - such as optimizing routes, standardizing equipment, and negotiating better supplier contracts.

Anyone can buy a business. But few can operate it efficiently and integrate the operations into another company (trust me, I've done this multiple times, it's harder than it seems).

Wayne described his process for integrating new acquisitions as a never-ending process of tiny tweaks to a system with thousands of parts. His acquisition operations team learned quickly, and got better and better each time they bought a new company and integrated it into the existing one.

The Takeaways:

1. Fragmented industries are good opportunities for roll-ups. But you must be an expert in operating the businesses in those industries. Wayne operated his garbage business for 7+ years before making an acquisition.
2. Recurring, recession-proof businesses are best. Wayne focused most of his career on buying service businesses with repeat customers who wouldn't stop being customers in a recession. He learned this lesson after his dad went broke trying to build custom homes in Florida as a recession hit.

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🔑 How to roll-up businesses

Speaking of roll-up strategies, my friend Walker Deibel put together a great video on the strategy.

If you're thinking about pursuing the roll-up and/or HoldCo strategy, you definitely need to watch this video (and devour Walker's other content)

​Check it out here​

Fun Fact - Walker published his best-selling book, Buy Then Build with Scribe Media. It's still one of the great books for learning how to buy a small business, and I learned a lot from it when I started my journey. If you're looking to write or publish a book, talk to the team at Scribe by setting up a call here.

🔑 One interesting deal

Here's an interesting business

What I like

This is a cool specialty construction business. I like niche focused businesses. The multiple seems a bit high (5.7x). And, I don't love businesses that rely on ebbs and flows of the oil industry. It's notoriously a boom and bust industry which means you can be very busy in some years, and totally shut down other years.

What I don't like

There are several issues I have with this listing. First off, cash flow and EBITDA are listed as the same figure, so it's hard to know which number is correct. Also, as mentioned, it's likely a very cyclical business; if oil prices crater, this business could see a huge drop in demand. However, the business has been around for 25 years, so hopefully they can provide some historical information to show how the company does during oil busts.

Companies in the oil industry are shrinking slowly, and are more difficult to finance. But that may present opportunities for the right buyer...

​Check out the listing here​

Have a great week,

Sieva

P.S. Last month I announced our yearly Enduring Ventures Duration Summit. We hand-pick the attendees which includes capital allocators, business owners, and long-term thinkers. If you'd like to apply for a spot, learn more and apply here.​

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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