Welocalize Expands Into Life Sciences, Buys Spain’s Nova

Welocalize bolts on another niche player in a high-cost of failure industry vertical. The US-based language service provider announced, on May 11, 2016, it was buying Spanish life science specialist Nova Language Services.

Nova is based in Barcelona and was owned by founder Consol Casablanca. According to government filings, the company was established in 1998 as Nova Traductors Interprets SL. It currently employs 47 full-time equivalents.

According to the latest available figures obtained by Slator, Nova generated revenues of EUR 4.53m in 2014, up 18% from EUR 3.83m in 2013. Gross margins in 2014 were at 44.1%.

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EBITDA for 2014 was EUR 222,000, marking a slight increase from EUR 214,000 in 2013. Net profit after tax in 2014 was EUR 81,000.

Slator reached out to Welocalize to learn more about the acquisition and received information the company attributes to Erin Wynn, Chief Customer Officer of Regulated Industries at Welocalize, Consol Casablanca, founder and former owner of Nova (now Nova GM), and Welocalize CEO Smith Yewell.

Welocalize said it acquired 100% of the company, buying the legal entity rather than doing an asset deal. The company did not comment on the purchase price, but said the transaction includes an earn-out clause for founder Consol Casablanca. She will remain General Manager running Nova under the Welocalize Regulatory Business Unit that reports to Erin Wynn.

Standard earnings multiples paid for language service providers in recent years have fluctuated between 5x and 7x EBITDA, although life science specialist CTi fetched more than 8x earnings when it sold to RWS.

“[We] expect to increase the pace of our M&A to support our diversification strategy across a variety of verticals”―Welocalize

Unless Nova experienced explosive growth in 2015, for which figures are not yet available, Welocalize might have paid anywhere between EUR 1m and EUR 1.8m for the acquisition.

Welocalize told us Nova will operate as a separate brand for life sciences in the same way Park IP is Welocalize’s legal and Adapt Worldwide its multilingual digital agency arm. The integration is expected to take 12 months.

As private-equity owned and growth-hungry Welocalize continues its acquisition drive, it remains to be seen if this strategy of continuing to run acquisitions under their original names might not, eventually, become unwieldy from a corporate identity perspective. Indeed, Welocalize told us they ”expect to increase the pace of our M&A to support our diversification strategy across a variety of verticals.”

In merging two language service providers, technology integration is often among the most complex and costly exercises. According to Welocalize, Nova deploys memoQ as its CAT tool of choice and runs a proprietary translation management system. Asked whether Welocalize plans to make technology changes at Nova, the company remained vague.

Life sciences has been a key growth area for large LSPs seeking to diversify their portfolios. With Nova and CTi acquired, established players like LUZ, Dora Wirth, Language Scientific, and upstarts like NCT Linguistics, must be figuring ever more prominently on the M&A radar of acquisitive LSPs.