The Vasak Vantage: Knowing the Shredding Industry from Inside Out

To become influential in an industry, you need knowledge and experience- lots of it. There are few people in information destruction today who have amassed as much of both as Vlad Vasak, an experienced multinational corporate executive and founding member of K-2 Partners, a Mergers & Acquisitions advisory service company for the document destruction/information management sectors.

With a background that includes such varied industries as ready-mixed concrete, waste hauling, and large scale plant bakeries, Vlad joined Recall Corporation in Sydney, Australia in 1994, where he became national manager of Intershred Confidential Destruction (as it was then known). When Recall entered the North American document destruction market in 1999, he moved to the US and has been here ever since. He joined Iron Mountain in 2000 as president of the Secure Destruction division, charged with establishing the company’s presence in the shredding industry throughout North America. This included the development of a dedicated business model, management and sales teams, and acquisition activities. Under his leadership, the division grew from $0 to $50 million.

As the business continued to grow and become more integrated into Iron Mountain’s core operations, Vlad’s role was becoming more specialized. He supported international operations, continued to play a key role in mergers and acquisitions, and was the company’s NAID representative. He also headed up the design and construction of shredding facilities and was responsible for all technology aspects, workflow optimization, and for health and safety initiatives.

When Vlad and two ex-Iron Mountain colleagues launched K-2 Partners in 2010, they jointly represented more than 60 years of senior-level industry management and 80 years of hands-on experience in service-based environments- as well as completion of over 175 acquisitions worldwide, including the industry’s largest.

Partners Bob Miller and Ross Engelman are also highly respected experts in their field, having served as Iron Mountain division presidents in the records management, data protection, and document imaging sectors, both in North America and worldwide. Miller had also served as president and COO of Iron Mountain, before heading up the development of Iron Mountain’s Asia Pacific region. Engelman headed up the Latin American operations as well as the company’s fulfillment business.

K-2 Partners closed 11 deals in 2012 and 19 since their launch in 2010, reaching the $400 million mark in aggregate deal value. In the process, they have also achieved some exceptional results for their clients. “We got in by luck at the perfect time,” said Vlad. “Together we had experience buying, selling, integrating and running companies, so we came at mergers and acquisitions from the operating, instead of the financial end. Most people in the M&A field have a financial background, but have never run Document Management companies. We personally know the senior leaders of all major companies in the industry. We know how they look at a business in this industry and what they expect to maximize from it. It allows us to analyze, position, and present a seller’s business in a way that will be most attractive to each potential buyer. It’s a unique vantage point.” This intimate familiarity and know-how helps K-2 understand precisely what each buyer and seller is looking for. And they help clients improve their businesses whether they are ready to sell or not.

“My favorite part of mergers and acquisitions is pulling together all the knowledge I’ve gained from all sides of the industry,” Vlad said. “I can get a feel for a company in minutes now, and see how to maximize its value and make it more profitable and saleable. It’s a huge thing for a business owner to go through the sales process on his or her own. The ‘serial buyers’ have the experience and the upper hand. It is very stressful and extremely time-consuming for a seller, especially when they have a day-to-day business to run as well. The skills and experience we bring to the mix enable us to level the playing field for our clients and achieve higher valuations than they would have on their own.”

Vlad has some advice for companies that may want to sell one day. “Maintain a solid customer base with good contract coverage and a recurring service schedule. Don’t compete by lowering prices- differentiate your service instead, maintain accurate financial records, and always work toward a denser service footprint. Lots of companies travel too far and wide- instead, reduce windshield time by finding a new customer stop along the route between two existing accounts.”

He added that although mobile shredding is a less capital-intensive way to start in this industry, as the business gets larger, plant-based shredding becomes more economical.

And of course, good equipment is always a strong asset. “Taking short cuts with cheap or worn out equipment is a short-sighted approach that will result in costly downtime, higher maintenance costs and lower productivity. We selected Allegheny equipment back in 1995 for our first new shredding operation in Sydney with Recall,” Vlad recalls. “Since then, I have specified many of their largest machines in numerous facilities around the world. Allegheny equipment is very rugged- it goes on forever. It’s a simple design, but the quality is high and if maintained correctly, will operate for a very long time. I have seen old machines reconditioned by the Allegheny factory that were impossible to tell from new.”

How has the industry changed over the past 20 years? “The biggest change has been the shift from corporate security to personal privacy as the driving factor behind this industry. In the 90s and early 2000s, we were convincing people of the need to protect their own company’s confidential information against competitors. But around 2002, there was a major shift and suddenly companies were expected to protect their clients’ personal information. The explosion of e-commerce on the Internet opened the world up to identity theft on an unprecedented scale and that triggered the introduction of state and then federal, laws such as HIPAA.

Companies were suddenly responsible for protecting confidential information, and the industry exploded.” Is the industry getting saturated? “It’s definitely very competitive, and hard for little start-ups to compete,” Vlad said. “And these small companies get squeezed on pricing, as paper prices fluctuate. A lot of them are competing purely on price.” Vlad sees roll-up acquisitions continuing. “When I joined Iron Mountain in 2000 we started developing our footprint and bought a large number of shredding companies over the next 6-7 years, as did Recall and Cintas. Frankly, we all thought then that the pond was fished out,” he said. “But as it turned out, companies were multiplying faster than we could buy them.”

E-waste is a relatively small piece in the overall information destruction puzzle right now, Vlad notes. “The bulk of the industry’s current business is still paper based. However, given that some industry verticals such as healthcare have already largely moved to electronic records, it is inevitable that there will be a decline in paper generation over time. This is becoming apparent among large Fortune 500 companies and it will continue to trickledown.” He added: “The records management sector is already seeing a significant slowdown in the rate of new incoming boxes.”

Vlad has served on the NAID Board of Directors for a number of years, chaired and participated on committees, is a frequent panelist and a NAID President’s Award recipient. He gives large credit to NAID for helping develop and steer the shredding industry. “NAID helps level the playing field, too – each member has only one vote, whether it’s a huge corporation or a small mom-and-pop operation. All interests are represented.”

An ongoing challenge for the industry is to ensure that existing destruction standards continue to be universally accepted. “The industry does not need some kind of external mandate that would seek to dictate such things as particle size or operational standards”. Vlad feels that NAID plays a very influential role: “It is in NAID’s interest (on behalf of its members) to keep evolving the NAID Certification program, so that it remains in step with client expectations and regulatory requirements, without adversely impacting operational aspects such as destruction equipment capacity and operating procedures.”

Vlad Vasak is a Founding Partner of K-2 Partners, a Mergers & Acquisitions advisory company. He can be reached at: vvasak@rimvendorhosting.com

Featured in Shredding Industry Report, Spring 2013, Published by Allegheny Shredders