How Green for Life’s CEO built a garbage empire

If Patrick Dovigi, one of Canada’s wealthiest people, cowered in the face of risk, his life would be far different.

He would not have ventured far from his hometown of Sault Ste. Marie at age 14 to chase a professional hockey career, or left a job in investment banking at just 27 to start a garbage-pickup enterprise. And he certainly would not have bought out an astronomical 220 companies en route to building Green For Life Environmental, now ranked by some measures as the fourth-largest waste management operation in North America.

The 43-year-old’s life has been punctuated by a series of big-time gambles that would make even the hardest of poker players wince; perhaps the largest of all was taking on more than $9 billion in debt to run a company responsible for much of Canada’s garbage and environmental services. But where the less-assured see the prospect of failure, Dovigi sees the potential for success.

On the balance sheets of Dovigi’s Toronto-based behemoth company, which operates in all 10 provinces and 26 states, that upside is a market capitalization of approximately $17 billion.

It’s also an estimated personal net worth of more than $1 billion, a private island in Muskoka near lake Joseph that he accesses via seaplane, and, until it was recently sold, a 75-metre yacht called Lady Jorgia that was named after his youngest of five children and was valued at approximately $90 million.

In 15 years of business, focusing on growth instead of balking at risk has clearly worked for GFL’s CEO and president.

Today he focuses more on what he’s chasing — recently, an aggressive foray into recycling technologies — rather than what might be chasing him: company debt levels that are more than double the industry average at a time when rates are as high as they have been in GFL’s lifetime. And yet the looming threat of a recession does not appear to faze GFL’s leader.

“I don’t have fear, generally,” said Dovigi, sitting in his home in Florida, where four of his children have been attending school since the pandemic. “If you decide wrong, you learn. And that’s better than standing still and not making a decision at all — my parents instilled that in me.”

Dovigi, the son of Italian immigrants, credits his fearlessness to long hours spent blocking pucks hurled at him by his father, Fred, on the family outdoor rink in Sault Ste. Marie. “Everything hurts more when it’s minus 40,” he recalls.

Hockey was a family affair: Dovigi’s uncles are NHL Hall of Famers Phil and Tony Esposito, and his mother, Mary, served as his goalie coach after absorbing the contents of a book written by Grant Fuhr, then the all-star goaltender of the young Dovigi’s favourite team, the Edmonton Oilers.

A regular weekday involved Patrick going to hockey practice, then driving to the two sports bars his father owned to close up shop late at night.

“It’s the immigrant mentality: you’re working morning, noon and night,” he said. “Hockey was a hobby, but at the end of the day, you had to make money.”

From goalie to garbage king

Dovigi came closer than most to turning that hobby into a money-maker. His skills between the pipes earned him a spot with the Elmira Sugar Kings of the Greater Ontario Junior Hockey League at 14 — a circuit dominated by 18-year-olds — and, eventually, a 41st-overall selection in the 1997 NHL draft by the Edmonton Oilers at 18.

But his auspicious start turned sour: he spent the next four years moving across the continent and bouncing around minor league teams, and eventually he hung up the skates after growing tired of not having control over his own career path.

When he was in his early twenties, he enrolled in the business school at Toronto Metropolitan University (formerly Ryerson), and then accepted a position with Brovi Investments, a real estate investment firm in Toronto.

The company used him as a jack-of-all-trades: his assignments ranged from acting as an adviser for a now-bankrupt entertainment company founded by Kiss lead singer Gene Simmons, to being dispatched to a GTA neighbourhood to revive a derelict landfill.

At the Vaughan trash site in 2004 came a life-changing event: one of the firm’s clients, garbage transfer station 310 Waste, had overloaded one of its sites with junk, which caused a massive dumpster fire that spewed black smoke over neighbouring communities for weeks.

The cleanup took two and a half years, enough time for Dovigi to form relationships in the waste services industry, and to leave the experience with a notebook full of notes on how not to run a garbage company.

“What I noticed about the industry was that most people working in it didn’t question how they could improve it, because they had grown up in it — meanwhile they were upholding processes from the ’90s.”

Transforming trash

Back then, Canada had roughly 2,000 waste management companies. Most were locally owned, mom-and-pop operations that were just large enough to offer a single service, such as industrial cleanup, municipal pickup, or stormwater collection.

Dovigi dreamed of a more efficient way of dealing with society’s trash: a one-stop garbage disposal service that could take care of it all, while cutting costs for clients.

He believed in his vision so much that he bet his career on it, and in 2007 tried to rally investors to launch his own business. He was 27, with no experience leading a company, but managed to convince an investor he met through an old hockey acquaintance that his idea had merit.

David Kassie, a partner at Canaccord Genuity Group, met with him, liked his enthusiasm, and offered him $10 million for a 65 per cent stake in the company, under the condition that he spend the entire investment by the end of that calendar year.

Dovigi wasted no time, and used the money to merge three small waste companies to create Green For Life, and set a relatively modest goal for his new enterprise.

“The plan was to build a little business that could generate $20 million of revenue over five to six years,” said Dovigi. “But once I got in, the rest is history.”

Soon, larger investors took notice of Dovigi’s bundled services model, which was disrupting what was then a $6-billion garbage industry in Canada.

Roark Capital Group, a private equity firm from Atlanta, Ga., invested $105 million in the company in 2010.

Once he had capital on his side, Dovigi aimed bigger, and headhunted business lawyer Joy Grahek to join GFL and spearhead a new mergers and acquisitions department.

“We met for coffee. At this point he’s 32, has a 650-person company, and he tells me he wants to do M&A and needs someone in-house,” said Grahek, who ran her own private law firm at the time. “I had always loved entrepreneurship — my father was one. So I took a chance and told him I’d join part-time.”

The new M&A department was like rocket fuel, propelling GFL upward as Grahek and Dovigi extended buyout offers to companies across the continent. Grahek was the paper pusher, Dovigi the relationships guy: he travelled to cities, towns and remote villages to convince waste industry proprietors that a shift in ownership would improve their business.

In a northern Alberta diner, Dovigi once made a deal with the owner of a garbage company over bowls of Jell-O, and inherited the business’ garbage routes, all written neatly on the back of recipe cards.

It was the beginning of a decade-long acquisition spree of more than 200 companies.

Toronto takeover

The wind was already in GFL’s sails by late 2011, when the city of Toronto announced it was looking to privatize its municipal garbage contract for 165,000 households between Yonge Street and the Humber River.

On paper, the gig appeared unattainable: GFL had fewer than 1,000 employees, and would be competing for the contract against the likes of Houston, Tex.-based Waste Management, the largest waste and recycling enterprise in the world.

But to Dovigi, challenging Goliath was the perfect opportunity to prove that GFL belonged in the big leagues; the garbage industry’s equivalent of a promotion from the minor leagues to the NHL.

“I thought: young me — what business do I have privatizing one of the largest municipal contracts in North American history? I told people on our team, ‘this contract is going to make or break this company.’ ”

Wanting to leave nothing to chance, Dovigi and a handful of his colleagues went to work. They spent months in rented vehicles and chartered helicopters to shadow city garbage trucks from sunrise to sundown, trying to pinpoint how the city could improve its collection strategy.

They came away from their research sessions with insightful field notes: fuelling at night would avoid morning lineups at the pump and save crucial time; accounting for parking schedules when drafting routes would allow quicker and more seamless collection; and using two-person instead of one-person trucks in busy areas would expedite pickup.

Dovigi estimated that tightening those processes would allow the city to take care of its garbage with 25 fewer trucks than the 110 already guzzling about.

“People think entrepreneurs just make decisions with their gut,” said Grahek. “What people don’t realize about Patrick is that he is the most informed decision-maker I have ever met — he’ll do the legwork that others are not willing to do.”

With a list of ideas, Dovigi sat across the table from then Toronto mayor Rob Ford — whose mayoral campaign was partly based on remediating Toronto’s putrid garbage strike of 2009 and privatizing the city’s trash pickup — and presented him a seven year, $122.5-million garbage contract proposal, almost $20 million lower than the next lowest bid.

“After the proposal, Ford patted me on the back and said: ‘I’m going to support you, kid.’ He had a lot riding on that contract — it meant a lot.”

It was Dovigi’s first brush with the big time, and it came with more scrutiny than he had expected. Questions arose about how a kid from Sault Ste. Marie managed to win that contract among the waste industry’s more seasoned players and build a garbage empire, all before turning 40.

Rumours swirled about Dovigi being involved with the mafia, which he dismissed as discriminatory pot shots at his Italian background, and an ugly manifestation of tall-poppy syndrome.

Allegations surfaced again in 2020, when New York hedge fund Spruce Point Capital Management criticized GFL’s “extremely aggressive and opaque business model” and questioned his business connections.

Dovigi called the accusations self-serving and flawed.

“It’s just crazy stuff you read online,” he said. “Canada can be a weird place — we don’t celebrate success as much as we should; we try to knock the guy on top. But in my time as a goalie, I developed the habit of not reading the paper during the highs, or the lows … play the game and block the noise.”

Since then, the game that Dovigi and his colleagues have played is remarkably aggressive.

Since locking down the Toronto contract, they’ve expanded to all 10 Canadian provinces and 26 U.S. states, while growing quickly to 21,000 employees. In 2020, the company raised a stunning $1.4 billion in an initial public offering — one of the largest in Canadian history — while generating some pretty impressive debt levels, too.

Rate risks

In 2021, the year after the IPO, GFL had one of its busiest years in terms of mergers and acquisitions: it acquired 46 companies, including Canadian environmental solutions company Terrapure, for just shy of $1 billion.

The deal punctuated a 15-year buying spree that has left the company with a mountain of debt valued at $9.68 billion — more than six times its EBITDA of $1.6 billion, a ratio that is roughly twice the industry average.

Darryl McCoubrey, head of research at Veritas, an independent equity research firm, struggles to think of other Canadian companies with a growth rate as steady as GFL’s. He wonders if that desire for growth could hurt it in a potential recession, especially given the company’s high levels of debt and interest rates that are higher now than they have been in GFL’s lifetime.

“They bring businesses on at a low margin and tend to improve them over time, and ameliorating poor businesses becomes risky in a recession scenario,” said McCoubrey.

“In a recession, people produce less waste and the whole industry suffers, and GFL, who has more leverage and M&A embedded into their strategy, could be impacted disproportionally.”

And yet, said McCoubrey, the garbage industry is nowhere near failing — people produce waste no matter the economic climate — and that could shield GFL from collapse.

“That’s what makes GFL unique: they have a risky strategy built onto a safer-than-safe asset.”

Rotman School of Management marketing professor David Soberman said some might see similarities between GFL and MDC partners, the advertising and marketing firm built rapidly by Toronto magnate Miles Nadal, who aggressively borrowed money to snap up smaller agencies.

But while Nadal eventually ran into trouble, abruptly resigning from the company he founded in 2015, Soberman said the two companies couldn’t be more different.

The safety of the garbage industry is what sets GFL apart, Soberman said. “The main difference between the two is that, with communications and marketing, you need to earn your customers every month, whereas collecting garbage from municipalities is an absolutely necessary business.”

To Dovigi, holding $9 billion in debt in a time of rising interest rates is “not a worry whatsoever.”

He said he expects GFL’s $750-million cash flow to double in the next two years, and has a plan to increase his company’s $2-billion EBITDA to $3 billion. Plus, he said, he is less at the mercy of investors than ever.

He may have a point: while GFL’s debt-to-EBIDTA ratio is much higher than the ratios at competitors, that ratio has decreased significantly since GFL was a private company. For instance, GFL’s debt was an eye-popping 16.4 times its EBITDA in 2018.

“We’re operating at significantly lower leverage than in the past; the business is more so operating on cruise control.”

Dovigi is decidedly not on cruise control though: he remains allergic to stagnation and, if anything, he is forcefully pressing down on the throttle. His next big bet — a foray into recycling initiatives — may again be too calculated to fail.

Since 2021, GFL has spearheaded a province-wide Extended Producer Responsibility program in British Columbia, which promotes the design of more easily recyclable packaging and products; the company has also implemented 15 AI-supported vision systems and 59 optical sorting units at its material recovery facilities across the continent to divert recyclable matter from landfills.

Peter Hargreave, director of policy and strategy at the Ontario Waste Management Association (OWMA) from 2011 and 2017, said GFL’s decision to invest more into recycling than many of its direct competitors comes with a good dollop of risk, as it exposes the company to fluctuations in commodity prices. But, he said, past experience has taught him not to bet against Dovigi.

“For the last 10 years I’ve been told how GFL is a house of cards and won’t last,” he said, adding the chatter was especially loud when the company bought TransForce solid waste division Matrec in 2016 for $800 million. “Every year they’ve gotten bigger … I don’t think now is any different.”

Investing heavily into a new wing of waste management — not to mention recycling, which should eventually reduce the need for landfill junk — might sound counterintuitive for a garbage company. But, as in most cases, Dovigi claims he has done his research.

“We’re in the second or third inning of a baseball game, and I don’t want to do anything but grow. Imagine all the good we can do in the next 15 years.”

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