Larry Olschwanger started ScrapSource, a company that manages scrap for industrial manufacturing facilities, in 2010. In 2022, he sold the business to Schnitzer Steel, a 117-year-old company that recently changed its name to Radius Recycling. For Schnitzer, ScrapSource was doing about double the business they were doing in the same niche of the industry. The acquisition, he says, was a way for Schnitzer to roll up and become a major player in the scrap management business. The motivation for Olschwanger was different.
"We've always had strategic buyers wanting to try to take us over," Olschwanger said at this year's Dallas Smart Business Dealmakers Conference. "We've had private equity groups come talk to us, but we wanted to make sure we had a good fit for my son going forward."
And that, Olschwanger says, is in large part why he chose to remain on to help manage the business — to continue to work with his son who went over to the combined company after the sale.
Another reason to sell the company is that the scrap industry is very cyclical — there are great years, bad years, average years — and commodity based. He says he thought they were at a good time in the cycle to sell, and also because major players in the business were getting closer downstream to the customers.
Schnitzer, he says, was also a good fit for his team. His business, by design, was light on assets — the hundreds of millions pounds scrap metal the company controlled each year was done with a dozen people.
"So, the return on our net asset was astronomical," he says. "That that was the beauty of our industry is controlling the scrap through our knowledge and our relationships."
Choosing this buyer also set the stage for his son's career.
“I wanted a good strategic buyer that he has an opportunity to build a good career with, as well as my team members," he says. "That's why I'm staying on right now. It's not the salary they pay me. I really want to make sure they get a good investment; they look back and five years, they got a good deal off this. I feel obligated, even though they paid me everything up front, I just feel an obligation to make it good for them. And I want to make sure my team members, including my son, have a good career path going forward.”
Another reason Olschwanger says he wanted to sell the company was to be able to give back more now versus having to wait 10 or 15 years when he retires. They’ve done some family business types of endeavors. But, since he’s still working for the company, and plans to for several more years, he hasn’t yet opened up a family office, but they are actively investing in a lot of different opportunities.
“It was very important to me to try to do that," he says. "We have a donor advised fund that we've set up that we do give away to more charities. But we have certain specific causes and issues that were important to me. And so, that was one of the key drivers to sell the company. I do think that it's important for all of us to give, maybe give to where it hurts a little bit at times. And it does make a difference in this world. And so that was very important for me. And hopefully my kids will see that.”
