Iron Mountain’s intention to acquire Regency Technologies makes good business sense. Iron Mountain has become a key player following early last year’s acquisition of IT Renew and is now anticipating major activity in 2024 as the entire IT sector may be experiencing important transformations. With this move, Iron Mountain may not be buying a company with huge geographic footprint, but it is acquiring one that not only has assets that Iron Mountain needs to drive growth, but one with an excellent reputation among enterprise clients, based on Compliance Standards research.
My colleague Jared Paben of E-Scrap News broke the news today, 2 November 2023, about Iron Mountain, known as a company with core business in enterprise information management, agreeing to purchase NH-based ITAD firm Regency Technologies. The price tag is set at $200 million, most of which, or $125 million payable now and the rest in less than a couple of years. This is the second major acquisition executed by Iron Mountain, following the 26 January 2022 purchase of IT Renew. Iron Mountain will take ownership of Regency’s eight locations that process over 50,000 metric tons of material and resell over 2 million devices annually.
In two years, Iron Mountain spent nearly $1.2 billion to emerge as a major player in the IT asset disposition sector. This is indeed a clear signal of the company’s readiness and a significant commitment to engage in the ITAD space, for good reasons. Iron Mountain sales for the 12 months ending June 30, 2023 exceeded $5.2 billion, a 8.51% increase from 2022 and so $1.2 billion investment in its life cycle management unit is definitely a strong signal of commitment to the sector.
In his assessment, Jared noted that Iron Mountain’s Asset Lifecycle Management (ALM) business is expected to witness a significant expansion as a result of this purchase. It will give Iron Mountain more ITAD and data center decommissioning capabilities, in addition to “extensive capabilities for commodities recovery from end-of-life electronics, which Iron Mountain doesn’t currently have in house.”
While the deal is expected to close late this year or early in 2024, Iron Mountain is part of a small group of companies in the ITAD space that have been looking to engage in M&A activity to grow their business ahead of what could be a major year for the industry in 2024. Compliance Standards’ research indicates that between 6% and 10% of ITAD companies say they are looking at acquisitions as a way to grow and prepare for 2024.
The move is also timely as an increasing number of companies are preparing to up their environmental reporting, making the IT asset disposition function a critical component of such disclosure. The transformation imposed by AI in the IT hardware and device markets starting next year is also likely to lead to a flood of devices retiring and in need of end-of-life treatment, and it is the case that Iron Mountain may have identified the opportunity.
From Compliance Standards perspective, Regency brings a bit more positives to Iron Mountain than its physical assets. Regency comes with a strong ITAD Vendor Reputation Rating of four (4) stars. Interviewing 19 of its customers last year, Compliance Standards found that while its share of mind of the enterprise market is lower than the average ITAD vendor, the company outperformed the average ITAD vendor in five out of six performance measurements, rating better in ITAD portfolio of service offerings (depth and breadth), quality of work, relationship, pricing, and vision. In the area of flexibility and customization, Regency is on par with average performance. What this means is that while it has a lower penetration rate of US enterprises compared to some of the 31 other tracked ITAD vendors, the company is perceived as a provider of good quality services and has a good reputation.
Operationally it remains to be seen how Iron Mountain will integrate Regency. The company may likely keep Regency operating as separate entity from an identity perspective. It appears that it did the same with IT Renew, keeping it going with unchanged identity, but emphasizing instead its “data center decommissioning” business. We anticipate Iron Mountain to do the same with Regency, considering that the latter may receive more payments if it outperforms during its first one or two years after it is officially acquired. Any efforts to integrate Regency and IT Renew could spell trouble as we saw with the dismal and failed ITAD acquisition spree of Arrow Electronics.
