Industry News

Shotgun Capital Advisors LLC, Southlake, Texas, has released a 27-page report that looks inside the financial and operating performance of privately held document destruction companies.

"Our report, compiled from data provided by 184 participants in our 2007 industry survey, shows that the growth characteristics and profitability of the document destruction industry remain robust," Jim McGuire, president of Shotgun Capital Advisors, says. "Participants in our study represent nearly $120 million in sales, 336 trucks and 108,000 consoles and totes in service."

The report provides metrics on 23 separate data points, including revenue, margin, paper tonnage, console and tote counts, fleet size and type, customers and employees. The report also includes a complete copy of the survey results.

The report is available for purchase at www.shotguncapital.com for $275.

Shotgun Capital Advisors is a merger and acquisition advisory firm with a specific focus on document destruction services.

Allied Capital Corp., with headquarters in Washington, has invested $79.5 million in debt and equity to complete the buyout of CitiPostal Inc., a full-service document storage and management company based in Brooklyn, N.Y. CitiPostal operates under the names CitiStorage and U.S. Document Security.

Allied Capital also invested $20.8 million of subordinated notes in 10th Street LLC, an affiliated entity that owns the real estate leased by CitiPostal. As part of this transaction, Allied Capital acquired an option to purchase a majority equity interest in 10th Street. In connection with these transactions, Allied Capital was repaid $22.5 million from previous loans to the companies. The transactions closed in December 2007.

CitiStorage provides document storage, secure document destruction and other document management services. The company has nearly 2,300 accounts, primarily in the health care, government, financial services and legal industries.

"We have grown this business into a leading records management company in the New York region through our focus on customer service and value-added services and we look forward to continuing to invest in its growth with the help of Allied Capital," Louis Weiner, president of CitiPostal, says. "We are pleased to be partnering with Allied Capital again because of their balance sheet strength and flexibility and their long-term, relationship approach to investing."

Balcones Resources, an independent high-grade paper recycling firm, is merging its operations with Austin Shred, a plant-based shredding firm. Both companies are based in the Austin, Texas, area.

Under the agreement, Austin Shred functions as the Central Texas arm of Balcones’ secure document destruction operation. Shane Mericle serves as vice president of operations for Austin Shred. The company will be known as Austin Shred, a Balcones Resources company.

"This merger leverages Austin Shred’s contacts, clients and resources, helping to round out the services that Balcones Resources offers and accelerating our growth exponentially," Kerry Getter, Balcones Resources CEO, says. "With our combined equipment and increased capacity, we will now be able to offer customers a faster, wider variety of document destruction services at a lower price."

Balcones had recently begun a shredding division in the Austin area. With the addition of Austin Shred, the combined company is expected to handle more than 1,000 tons of paper per month. Balcones will also inherit Austin Shred’s 350 customers.

"The timing of this merger could not be more ideal: Austin Shred was getting ready to move into recycling just as Balcones Resources—with whom we had a long-standing relationship—was looking to spin off its shred business," Mericle says. "Joining forces with Balcones affords us the opportunity to service clients in a more economical and efficient manner."

A portion of the recent economic stimulus package signed by President George W. Bush targets small businesses and could benefit companies considering purchasing capital equipment.

An analysis of the economic stimulus package by the Manufacturers Alliance/MAPI notes that the bill allows for an accelerated deduction for the first year on capital equipment expenditures.

In an alert sent by MAPI, Tracy Hollingsworth, vice president of finance and director of the Manufacturers Alliance/MAPI Tax Councils, writes:

"The temporary cost-recovery provisions are aimed at encouraging small businesses to expand and create new jobs. Taxpayers that place less than $800,000 of equipment into service in 2008 will be allowed to expense or immediately deduct as much as $250,000 (up from $128,000). The stimulus measure also increases so called ‘bonus’ depreciation from 20 percent to 50 percent for new tangible property and software with a recovery period of 20 years or less whose original use commences with the taxpayer. With some exceptions, the property must be placed in service in 2008."

Hollingsworth notes that this policy allows small businesses to "front load the deduction this year," while taking smaller deductions over the ensuing years, effectively lowering 2008 taxes.

Spinney & Huber LLC , Jacksonville, Fla., has announced its Record Storage University dates for 2008.

The classroom-style Records Storage University provides a step-by-step guide for starting a records center, including information on best practices for operational policies and procedures manuals, including workflow outlines, staffing job descriptions, operations forms and agreements. Spinney & Huber can also provide assistance with financial forecasting, effective sales and marketing materials and prospecting tools.

The company’s first class of the year was held Feb. 4-5, and additional classes are scheduled for April 7-8, June 9-10, Aug. 4-5 and Oct. 6-7.

Classes are at the offices of DHS Worldwide, Orange Park, Fla., near Jacksonville.

More information is available from Patty Huber at (904) 535-2935.

Total Training Services, Spartanburg, S.C., is conducting Shred School sessions April 23-25, June 18-20, Aug. 20-22, Nov. 5-7 and Dec. 3-5. The sessions take place in Spartanburg.

Ray Barry, president of Total Training Services (and SDB columnist), says, the company also is conducting "Mini Shred Schools" in the alternating months when Shred School is not scheduled.

He adds, "Being that we still operate our own successful destruction business, we also understand that the shredding business owner has a very busy schedule, and adding a few more "Mini Shred Schools" this year may provide more flexibility for them."

More information is available at www.shredschool.com or at www.totaltrainingservices.com.