Life moves at an astonishingly fast pace, and I finally have the opportunity to share my reflections on the incredible experiences and wonderful people I encountered at SlatorCon and the ALC Summit in September. Attending these conferences back-to-back provided a refreshing boost of positive energy about our industry and its growth potential with AI.

The ALC Summit featured two panels on Mergers and Acquisitions (M&A), highlighting ongoing interest in this area. We only had 1 hour for our exciting Buyer’s panel, so I promised to answer a few of the pending questions in this column.

How do I determine my company's worth?

The most effective way to gauge your company's value is through market feedback—specifically, offers from potential buyers. A broker can facilitate this "marketplace" process. To attract buyers, you need a seller’s packet, which involves estimating your business's value by calculating EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure is crucial for buyers as they assess how quickly they can recover their investment and determine a fair offer. We discussed EBITDA calculations in our initial technical webinar that members can view in the ALC Member Knowledge Bank. An advisor can assist you in evaluating your readiness to sell, create an exit strategy, and organize your documentation effectively.

Once you establish your profitability and EBITDA, negotiating a favorable multiplier becomes essential. Your broker or legal team should handle this aspect. Currently, I've heard that a 2x-5x multiplier is what buyers in our industry are looking for, though various factors may influence this range. Consulting with an industry-savvy expert alongside your accountant, lawyer or broker can help increase your asking price.

What is happening in the LSC M&A space right now?

September witnessed several deals and funding rounds (as noted in Slator’s September M&A Advisory Newsletter,) reminding us that deal activity is cyclical. In the U.S., there appears to be some pent-up demand due to the uncertainty of the upcoming election and because interest rates have been so high. However, substantial capital remains on the sidelines, suggesting that activity could ramp up soon.

The ALC Language Industry Survey indicates that 16 companies made acquisitions in the last year. Smaller firms are increasingly interested in selling, while larger companies may consider selling if offered a compelling price. Approximately 5-8% of firms plan an acquisition or an exit within the next year.

What will we cover in the November Seller’s Panel webinar?

Our final M&A webinar of the year is scheduled for November 12th at 11 a.m. PST, featuring exceptional panelists: Kare Lindahl from Argos Multilingual and Esther Bond from Slator will join us, along with a special guest Marty Smith who is an entrepreneur outside our industry, but he has a fabulous story of how he bought some companies, sold his company, turned General Manager, helped them sell and then became advisor and investor to multiple companies! 

They will provide valuable perspectives on both the selling and buying side, so this promises to be an insightful discussion addressing key questions such as:

• What are the keys to preparing for a smooth sales process?

• How do you know when it's time to sell?

• What strategies are best for selling your LSC?

• How do you select the right buyer?

• What resources and players are essential for a successful M&A deal?

I look forward to sharing these insights with you!

Register here 

Somebody recently asked me, "Why do you keep repeating the same webinars?" It’s a great question. You might think we've covered every angle of M&A, but the truth is, each deal is a unique puzzle. While we revisit certain topics, the fresh perspectives of our panelists and the evolving M&A landscape ensure there's always something new to learn. 

To clarify, our goal isn't redundancy. Rather, we aim to provide a comprehensive resource for our members, offering diverse viewpoints and practical insights. Past webinars are always available, but each new panel brings fresh experiences and challenges to the table. Plus you have a forum to ask your questions every quarter as you move down the M&A field.

Take our upcoming Buyer's Panel in Montreal, for example.  For the first time, we’ll hear from a resource vendor among the 3 successful entrepreneurs:1) a private equity expert with experience in Argentina, 2) a repeat acquirer, 3) a solo buyer who did most of the legwork herself. This panel will happen on Friday of the ALC summit and will not be recorded, so please submit any questions through the M&A Corner form. I am very excited to see you there in person in just 4 weeks!

The June technical details webinar is another example. Last year's overview provided a foundational understanding, an accountant showed us how to calculate EBITDA, a lawyer spoke generally of how to prepare for the sale and a broker outlined his steps.  Here’s a link to the past webinar and I hope to hear your feedback!

This year, we delved deeper into the legal intricacies with M&A law expert Nancy Fallon. We first reviewed the steps involved and the paperwork needed for each,and the key takeaway is to get as much advice and support as you can afford since exiting a language company through a merger or acquisition can be complex and fraught with challenges. 

Then Nancy went through all the documents required and how to protect yourself and your data, especially since most deals in our industry happen between industry partners. Both webinars offered invaluable insights for different stages of the M&A journey and you can find the link to the June webinar at the ALC M&A Corner.

Here is a great question that we were not able to get to in that session: 
What are the top 3 pitfalls in the M&A process? 

Valuation and Expectations

Pitfall: Sellers often overestimate the value of their language company due to emotional attachment or overly optimistic projections.
Strategy: Conduct a thorough valuation, work with consultants who can help you be realistic. An objective valuation can help communicate with the seller or conversely with the buyer as well.

Due Diligence

Pitfall: Lack of preparation hinders the sale process.

Strategy: Prepare comprehensive documentation well in advance. Address any potential red flags proactively and make notes on your financials in real time.

As we covered in the webinar, starting with the end in mind will help you work smarter now and create the records you will need when ready to exit.

Ignoring Regulatory and Legal Risks

Pitfall:vNeglecting to address regulatory compliance, legal liabilities, or intellectual property issues can lead to significant sale complications.

Strategy: Perform legal due diligence to identify and mitigate any potential risks. Ensure all contracts are reviewed, intellectual property rights are clear, and compliance with relevant laws is documented.

Like the webinars, these answers are not all inclusive. Feel free to call me if you have more questions and I will make sure to address any that deserve more attention in future webinars.

We're committed to providing the most relevant and helpful content for LSCs. Have you found value in our repeated topics? What other M&A areas would you like to explore? 

Please leave your feedback below so we can best plan the program for 2025 and let's build stronger M&A resources together.

À bientôt , 

Carla 

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Have you ever wondered if selling your language service company (LSC) might be the right move? You're not alone!  At my first UNconference in 2013 , I was surprised to see how many seemingly successful business owners raised their hands when asked about interest in selling.

The truth is mergers and acquisitions are relevant to LSCs at any stage. Whether you're contemplating an exit strategy or curious about the possibilities, there are many topics to explore! This column is here to be your resource.

I sold my LSC in 2022 after 5 years of actively pursuing various exit options. I learned a lot and wanted to share that with my business-owner friends at the ALC, so I spearheaded the successful first round of the M&A series in 2023. 

The positive response confirmed a high demand for this type of knowledge, and I am happy to report that we were able to secure Slator’s Sponsorship for this year’s webinars.

Join us for the 2024 M&A Lab Seminar Series!

6/2024 M&A Lab : The Seller’s Packet - technical details

9/2024 M&A Lab : Buyer’s Perspective Panel - at the ALC Summit 

11/2024 M&A Lab : Seller’s Perspective Panel

2/2025 M&A Lab: A year in M&A - at the ALC Unconference 

We’ll delve deep into M&A with experienced industry leaders to explore topics like how to prepare to sell, what buyers are looking for, navigating the process, and maximizing your company's value. I'll be sharing key takeaways from the webinars in this column and hope to receive your feedback, suggestions for future panelists, and of course, questions or stories!

M&A Corner: Your Dynamic M&A Resource Hub

It was your feedback that helped us realize that the ALC could offer support for LSCs beyond the webinars.  So, this page/column was born to focus specifically on mergers and acquisitions within the language services industry!

The webinars provide a great starting point, but there's so much more to explore. For instance, at our recent integration webinar, we discussed the pros and cons of having the previous owner stay on after an acquisition , and I learned that most owners probably don’t stick around beyond 1-2 years anyway... We all have 20 questions about this, right? So watch this space for details.

Other questions that I have been pondering are: History is written by the winners, so all integrations we hear about are successful; but how would we even know about a failed integration? Is an acquisition strategy right for a small company? Can an exit strategy increase your organic growth? Are acquisitions the best way to expand your service mix?

What are your burning questions about M&A?   Is it the legalities? Valuation strategies?  Let me know in the comments below!

Why me? My bio has the coordinates, so I will just say a few words here about my journey and why you might want to hear from me. 

I started making videos and founded a communications company many moons ago, before I finished college. I am from Mexico so there was pressure to do Spanish videos. My first corporate client asked me to make a Spanish version, and we did.  Another client requested Japanese, so we did. We got lucky, but quickly learned the importance of accuracy in addition to smoothness in localization. We developed the systems to ensure that and soon, at the request of clients who wanted their collateral material translated, the company began doing print translations. Then a City customer required us to provide interpreters, and so on. Always to serve the client's needs, a new language or a new specialty was added. 

40 years later when I sold it, my one-stop company offered over 30 specialty services in more than 100 languages!

When I joined the Association of Language Companies 25 years into it, I realized that there was a whole multibillion dollar language industry growing around me. I welcomed the ALC’s help and all the benefits membership brought, and wished I had found them sooner. 

In a similar way, selling my LSC was a long and complicated process. I learned a whole lot about it and wanted to learn more. The ALC continued to be the venue for me to share those lessons with my peers while continuing to learn more from our excellent experts and start a new service once again.

You can tell that I am fascinated with the mergers and acquisitions process, so I am very excited about my new role as an advisor for Slator and about starting this M&A Corner. 

Unlocking the Potential. ALC is committed to providing valuable resources for its LSC members.  We'll be exploring every facet of M&A, from initial considerations to successful integration, to equip you for informed decision-making.

I think that the webinars have been successful because I was in your seat not long ago, so I  can represent you, the small LSC owner, and ask the questions you need answers to.  I will bring the same perspective to this column/page.

I'm excited to embark on this journey with you . We hope to be a permanent repository for the webinar content a nd other resources to help with your buying, selling or merging questions.

I will publish new content each quarter ahead of the upcoming seminars and perhaps more often as topics come up. So please subscribe , help us grow and make this resource relevant in the comments section below!

This is your space! Please share your unique perspectives and experiences.  Want to know more about specific aspects of M&A?  Leave a comment below with your ideas, questions, and requests.

Together, we can build a valuable resource for navigating the exciting world of M&A in the language services industry.

Let's Talk M&A!