Nextra Tech is seeking to acquire multiple sustainable IT solutions providers. The acquisition strategy will engage businesses that focus on IT Asset Disposition (ITAD), Trade-In, Repair, Reverse Logistics, Returns Management, and Asset Recovery Services with ESG (Environmental, Social and Governance) reporting.
But how will Nextra Tech, founded by Paul Baum (pictured, top of page), execute on that acquisition strategy? Sustainable Tech Partner reached out to Nextra Tech and Baum for more context. The result is this email interview describing how Nextra Tech plans to march forward with an M&A strategy in the sustainable IT solutions provider market.
Interview: Nextra Tech's M&A Strategy
Q: How is NextraTech funding the acquisitions? Is private equity or a third-party financial firm involved?
A: Nextra Tech is funded by Paul Baum and backed by Bank of America, no private equity, no third parties. Paul is putting his money where his mouth is and risking it all to grow the business!
Q: What is the ideal target size for acquisitions in terms of company headcount?Â
A: Any companies that are EBITDA profitable for multiple years. It’s not really about headcount; instead, it’s about profitability and do they have supply and service contracts.
Q: Are you looking for particular size companies in terms of annual project revenue, annual recurring revenue, EBITDA dollar amount or EBITDA margin range?
A: We are seeking EBITDA and recurring revenue, with business owners who don’t know how to exit, or don’t want to sell, and want to be part of something bigger. Also, the ability to leverage shared services such as accounting, HR, marketing, facilities, logistics, etc – all SGA (sales and general administrative expenses). If the company is profitable or on their way to being profitable, [our interest in M&A is] not necessarily size based.
Q: How many businesses are you seeking to acquire?
A: We are focused on NAFTA (North American Free Trade Agreement) and Canada, U.S. & Mexico in 2024. And in 2025 [we will] look to expand globally. Our strategy is not limited to a certain number of acquisitions; it's based on strategic alignment. We are well-funded to acquire profitable organizations.
Q: Will the acquired businesses retain their brand or evolve to the NextraTech brand?
A: They will retain their brand so therefore we can take advantage of their many years of brand equity and awareness. Or, there is an option to fold under another company within the Nextra Tech Platform company.
Business Background and Market Opportunity
Paul Baum also is CEO of PlanITROI -- a provider of IT lifecycle management solutions that span ITAD (IT asset disposition), data protection, and real-time transparent reporting and analytics.
The new business, Nexta Tech, arrives at an opportunie time. Indeed, annual spending on ITAD is expected to reach $34 billion by 2030, up from $16.8 billion in 2022, according to Research and Markets. That's a 9.2% compound annual growth rate (CAGR), the researcher said.
M&A activity in the ITAD market has been strong. Buyers in the sector include Apkudo, Closed Loop Partners, Full Circle Electronics, Elemental Holding, Iron Mountain, Quantum Lifecycle Partners and TD Synnex, among others.
