Information on the target
Blackford Capital (“Blackford”) has successfully completed the sale of its Imagining Supplies Consolidation (ISC II) portfolio companies to CWG International, Inc. Blackford initially entered the aftermarket toner and cartridge supply industry in 2017 with the acquisition of Online Tech Stores.com (OTS). The ISC II portfolio, which includes International Toner Company, Supplies Wholesalers, and Cartridge World USA, was integrated into the OTS platform in 2019, during a period of robust year-over-year growth in the toner cartridge sector.
Prior to the ISC II acquisition, Blackford had established a strong track record in the imaging industry, having developed one of the first managed print services (MPS) platforms through a series of six acquisitions in less than 20 months, yielding a remarkable 5X return for investors. Under Blackford's stewardship, significant investments were made in ISC II to enhance value and foster growth for all stakeholders, including investors, customers, employees, communities, and suppliers.
Industry overview in the target’s specific country
The aftermarket toner and cartridge supply industry in the United States has experienced considerable fluctuations in recent years, particularly exacerbated by the global COVID-19 pandemic. As government agencies, educational institutions, and businesses closed or shifted to remote work, the demand for printing solutions saw a dramatic decline. This shift not only impacted print volumes but also altered the competitive landscape, forcing companies to adapt to new market realities.
In addition to the pandemic's effects, the industry faced significant supply chain challenges, including increased tariffs and soaring freight and container costs. These factors contributed to longer lead times and transit delays, particularly from Chinese manufacturers, further complicating the operational environment for companies within the sector. As a result, many firms have had to reassess their strategies and operational efficiencies to remain viable in a rapidly changing market.
Despite these challenges, the aftermarket imaging industry continues to hold potential for recovery and growth. Companies that can innovate and adapt to the evolving needs of customers, such as remote work solutions and sustainable printing practices, are likely to emerge stronger. The consolidation of companies within the sector may also provide opportunities for enhanced operational efficiencies and market share expansion.
The rationale behind the deal Blackford's decision to accelerate its exit from ISC II was primarily driven by the unrecoverable decline in print volumes in the United States, coupled with escalating logistics and supply chain costs. The firm recognized that the performance of ISC II was inconsistent…