Consolidation Shrinks the Aftermarket

Consolidation in the aftermarket has been happening at a regular pace. Over the last few months alone, there were several notable mergers and acquisitions, including Clover's acquisition of ERS, Reclaim IT, and Pinpoint; Katun's purchase of Media Science's toner business; KMP's purchase of Intercopy; MBP's purchase of GTA SISTEMAS; and Redeem's purchase by an incoming management team.

Globally, aftermarket companies are chasing the strategy of acquiring companies that help them expand vertically. This is a way to gain more control over the supply chain, mitigate risk, and reduce exposure on empties.

With market consolidation shrinking the number of available supplies manufacturers, we expect companies to look outside their core business capabilities and acquire other businesses that are complimentary, allowing some expansion into other markets.

In addition, it is important to note that some of the already large remanufacturers are getting even larger and more powerful with these acquisitions. Therefore, it is in the interest of the medium-sized remanufacturers to look at joining forces so they can continue to compete. Smaller, localized remanufacturers may have the benefit of dominance of a small geographic region and should look to keep customer loyalty by expanding services to their customers. Small remanufacturers could find advantage partnering with small or medium-size MPS providers as they already have the advantages of providing customer facing services.

The coming year is sure to be marked with more mergers and acquisitions. InfoTrends will continue to monitor the activity and report on the impact on the supplies market.