Business Consulting specializing in professionally confidential targeted mergers and acquisitions in the small to mid-market range; exclusively in the Drug Testing/Employment Screening/Urgent Care and Occupational Health Industry.

A Growing Trend in the Drug and Alcohol Testing Industry

Ken Will, MBA, C-SAPA, CPP

Because of the booming energy industry (primarily Oil, Gas and Coal) in America, led by new and evolving drilling and fracking techniques, areas like Western ND (Bakken), Alberta (oil sands of Alberta), Eastern MT, WY and CO are “booming” with tens of thousands of new jobs being created monthly. See enclosed maps showing shale oil, gas and coal deposits in the US and Canada. Of those shown, the largest “plays” are occurring in Alberta, ND, WY (just starting), CO, and Texas.

The jobs created by this “explosion” are all very “safety sensitive” and owner/operators and their tens of thousands of contracted service providers all need and use drug and alcohol testing services. Many of this industries owner/operator companies are headquartered in Texas, LA and CO but have huge operating divisions throughout this Western US and Canadian area.

If you ask the Safety Director (by whatever title) and/or the HR Director at any of these hundreds of owner/operator companies (all of whom pretty much dictate the frequency and type of drug/alcohol testing to their contract service providers; some as frequent as 200% random tests per month), all would tell you one of their greatest desires is for “one-stop shopping”.

For companies in our industry (I continue to refer to it as a “three-legged-stool industry” of drug & alcohol testing/background screening/occ health), the challenge becomes trying to provide that “one-stop shop” in and through extremely rough terrain and weather conditions (not to mention internationally because of the Canadian border) where independent collectors may not exist or, if they do, they command very high rates because of the uncontrollable environment and the need for two collectors/visit. Most collections, with the exception of pre-employment, must occur “on-site” in an industry that operates 24/7 in locations that can be 100 miles from the nearest small town.

The “marketing strategy” for our industry “service provider” companies, wanting to grow and/or retain existing customers in this booming industry, has become expansion by acquisition. AdMed continually receives inquiries, from buyers, regarding companies that might be for sale, or they are actively looking for acquisition/merger candidates in that geographical and industry area.

Nicely run “service provider” companies are commanding some of the best selling prices in many years as buyers are looking to be able to service their existing customers and add to their “sales-pipeline” in order to up-sell new products/services to an already existing customer “pipeline”, in an industry that is not normally “price sensitive”. These savvy buyers recognize that the cost of “stealing” business from an existing service provider is very high and it ultimately erodes the profit margins for both them and the companies from whom they hope to “steal” the customers.

Ken Will of AdMed Consulting has over thirty five years of experience in: acquisition and sale of businesses; coordination of M&A transition activities; all exclusively within the Drug & Alcohol Testing/Background Screening/Occ Health industry. He can be reached at: or 701-258-7127.