In December 2016 alone, no fewer than four major takeovers and mergers were announced. At the beginning of the month, the Berlin-based service providers think global GmbH and Milengo Ltd. became one.
A day later, the United Language Group, a company that sent shockwaves through the market by acquiring Merrill Brink in April 2016, announced that it had acquired Language Select, a provider of telephone interpretation services.
The next announcement came in mid-December when the Belgian company Xplanation took over the Munich-based service provider Matrix. Another major merger.
But the biggest deal of them all was the acquisition of the listed company Lionbridge Technologies Inc. by H.I.G. Capital. The transaction volume of this acquisition alone was $320 million. H.I.G. Capital is an investment company that has about $21 billion under management.
We think that we will have to get used to such announcements and, above all, the frequency of them. In light of its total size, the translation business is much more fragmented than most other global industries. It has tremendous economies-of-scale potential. Other service sectors (marketing and PR) blazed this path decades ago.
One thing about these deals has really caught our eye: the increased quality of the companies that appear on the buyers side. We are increasingly seeing companies that come calling with sacks full of private equity – that is, we are talking about professional investors who apparently now view our business as an interesting playground. This is what H.I.G. Capital is all about. The same is true for the financing of the United Language Group. A deep-pocketed parent company, the Northern Pacific Group, is working in the background here. This is creating a completely new type of momentum and a completely new type of transactions (see Lionbridge).
Put simply: 2017 will be exciting!