One Gone, One Restructured Two U.S. remanufacturers transformed in 2019 by: Charles Brewer, Actionable Intelligence
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ast year, two of North America’s largest remanufacturers, Clover Imaging Group (CIG) and LMI Solutions, were forever changed. After acquiring a new strategic investment partner, CIG was restructured and sold, while certain parts of the business filed for bankruptcy. LMI fared much worse. After going into receivership, the firm’s assets were sold off and operations shut down. My company, Actionable Intelligence, which follows the market for printing hardware and supplies used in the home and office, covered all of the news as it broke. Founded in the mid-1990s, CIG and LMI were in the vanguard of companies that established the North American remanufacturing industry. Regional remanufacturing began in the late 1980s and experienced hypergrowth in the 1990s as digital printers became a feature in offices and, increasingly, in homes. The industry hit its stride in the early 21st century and thousands of remanufacturers were thriving. But things have been tough in the industry for the past decade and the number of firms that remanufacture has dwindled to a few hundred. Calamity struck CIG and LMI at about the same time after each lost a key customer, proving just how tenuous the situation is for even the largest players. Piercing the $1-Billion Mark It took a while for LMI’s business to grow, but things were different for CIG. Originally known as Clover Technologies Group, CIG quickly grew to become one of the world’s largest remanufacturers. CIG was founded in 1996 and, by 2004, was ranked 36th on Inc. magazine’s list of the 500 fastestgrowing privately held U.S. companies. According to The Hard Copy Supplies Journal, the firm’s revenue grew 642% to $68 million in the period between 2000 and 2003. In 2005, CIG became one of the first remanufacturers with revenue approaching $200 million after acquiring Ricoh Printing Systems America’s (RPSA) compatible supplies divisions, which included assets such as the Dataproducts brand. It solidified its position as an industry leader through
acquisitions and expanded into new markets. It established various overseas subsidiaries such as Clover Technologies Group Australia and Clover Technologies Group Asia Pacific, which operated a factory in Ho Chi Minh City, Vietnam. By 2010, CIG was the world’s largest remanufacturer in terms of revenue with more than $450 million in annual sales. In April 2010, Golden Gate Capital, an $8-billion private equity investment firm, took a controlling position in CIG and also acquired a smaller U.S.-based remanufacturer, West Point Products. The two remanufacturing firms, which initially operated separately, focused on different channels. CIG supplied its Dataproducts line and private-label products to some of North America’s largest retailers, including office superstores, consumer electronics stores and mass merchandisers, as well as to the region’s largest office-supplies distributors, like SP Richards. West Point supplied its premium line of remanufactured cartridges to office technology dealers and IT VARs, and expanded its presence to other companies in the managed print services (MPS) market. As the two firms were integrated, what emerged was a true omnichannel player that dominated the North American markets, as well as certain markets in Europe. With its proven record of identifying strategic acquisition targets and successfully integrating these new businesses, CIG leveraged Golden Gate Capital’s deep pockets to fuel more M&A activity. In 2013, CIG became the first remanufacturer to crack the $1-billion mark and expanded its business beyond cartridge remanufacturing to include collecting, refurbishing and marketing telecommunications and wireless devices. CIG expanded its printer parts business and made strategic investments in several large empties brokers, which provided the firm with an important competitive advantage — an endless supply of cores — and it allowed it to offer comprehensive reverse-logistical support to its customers. CIG’s last major acquisition within the remanufacturing industry came in 2014, when it purchased Micro Solutions
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