Slator tracked a total of 23 mergers, acquisitions, and private equity investments in the first half of 2023, excluding start-up and growth funding. Since the end of June, Slator has tracked a further four such transactions.
As the second half of the year unfolds, what do the first six months of 2023 tell us about the current trends in language industry M&A?
As has been the case in previous years, the majority of translation- and interpreting-related deals were trade sales, i.e., company-to-company transactions, in the first half. All but two trade sales were completed by language service providers (LSPs) or language technology providers, rather than companies operating primarily in areas outside of translation and localization.
The US Leads the Charge
North America, and specifically the US, accounted for more than half (11) of the 20 trade sales that occurred in H1 FY23. Meanwhile, five targets were acquired by European buyers, and three targets were acquired by UK-based buyers.
Sellers were less geographically concentrated. The only locations with more than one seller were the US (6), Germany (3), and France (2).
On a vertical basis, multi-sector translation agencies remained the most popular targets for buyers. The media localization sector (including services such as subtitling and dubbing) was also favored among buyers in the first half of 2023, as was interpreting (including the growth sector of US healthcare interpreting).
Private Equity Remains Active
The first half of 2023 saw one transaction by a private equity firm making an initial investment in the language industry — when Mayfair Equity Partners acquired a majority stake in Belgian-headquartered LSP Jonckers.
But beyond this, private equity continued to flex its financial muscle in the industry, with more than one-third of transactions (7) being carried out by PE-backed language service providers in the first half.
A further four transactions were completed by VC-backed buyers, while companies with no external funding were responsible for six transactions, and listed LSPs completed three transactions.
A Range of Acquisitions Strategies
Buyers of translation, localization, and interpreting companies consider a range of factors when deciding which target(s) to acquire. Although the rationale behind a deal is rarely simple, it is typically heavily influenced by the location, sector expertise, and technology capabilities of the prospective seller.
In the first half of 2023, six buyers acquired companies primarily to strengthen their presence in an existing location, while four made acquisitions to expand into a new territory. Four buyers acquired companies to consolidate their expertise in an existing vertical, while one buyer was motivated to extend their offering into a new vertical via acquisition. A further five acquisitions were technology-related.
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