When Should I Sell My Translation Agency?

How to Sell a Translation Agency

Slator covers dozens of acquisitions each year. In doing so, we almost always unpack the rationale behind the deal: why the acquiring company has chosen to buy this business in particular and why owners and founders of language service providers (LSPs) are motivated to sell.

But if you are an LSP owner, how do you decide when is the right time to sell your business, or if a sale is the even right path to pursue? And do you know what your options are? 

Typically, the sale of an LSP involves a smaller company selling to a larger LSP. But you could also merge with another LSP, sell to a language technology company or a company external to the language industry, or be bought out by an investment firm (in part or entirely). 

Then there’s the option — at least in some parts of the world — of becoming an employee-owned trust (EOT), and let’s not forget about the lesser-trodden IPO path.

Preparation is Key

Formulating an exit plan and going through the process of a sale usually takes a significant amount of time, whichever route you pursue. So it is important to think about at what point you might sell your business, even if that milestone is several years away. 

Buyers (of anything) like to understand what it is they are buying. When the time comes, you want to make sure that someone reviewing your company is able to quickly understand what you do and — by extension — identify whether there is a potential fit with his or her own business.

This is easier said than done. Typically, the first thing a potential buyer will see of your business (or know of its proposed sale) is a one- or two-page “Teaser” document that outlines a few key financial and operational facts about your company in an anonymous overview. It provides a highly condensed view of something that is inherently complex — your business.

Think about how you currently describe your company and how the business is performing at the moment, then you will get a sense of what your “Teaser” might look like. You want to get your LSP into a position where this condensed overview paints the best possible picture of your company so buyers will want to explore the opportunity further. This may involve some restructuring, hiring, and marketing and strategic work, for a start.

Size and Scale

While the world is seemingly obsessed with economic and business growth, is a company ever too big to sell? Theoretically, no, but your exit options change as your company scales into a mid-sized and larger organization. 

At USD 2m and under in revenues, your company has a large pool of potential buyers — in the very real sense that there are a lot of companies with the financial means to acquire a business of that size. 

One thing to bear in mind, however, is that a buyer usually needs to spend a lot of time studying your company before he or she is confident enough to sign the cheque — there is a lot of leg-work that goes into closing a deal of any size. 

All things being equal, a buyer may prefer to acquire a slightly larger LSP (if they are able to and such a company exists) to get more out of the effort they put into completing a deal in terms of scale.

Meanwhile, at more than USD 20m, your universe of potential buyers is a lot smaller because, realistically, there are fewer companies who can afford to buy yours. But, the route of private equity becomes more accessible at this level, and there’s also the option of potentially becoming a publicly-traded company via IPO — which is a different type of exit strategy altogether.  

The reality for LSP sellers is that the “sweet spot” revenue-wise is probably somewhere in between, although it’s not a hard and fast rule and that is still a big range. Profitability is also a big factor, of course. 

As a guiding principle, it’s a good idea to think about what the profile of your potential buyer profile looks like. Consider who this “hypothetical buyer” is and what they might be looking for. 

Knowing when to pull the trigger on taking your LSP to market will depend on a million-and-one factors, not least, when you feel ready to take a step back from (or out of) the business. Financial considerations are one thing, but the personal readiness of a seller is probably equally as important. When should I sell my LSP? When you’re ready. 

Whether you are ready or just curious, you can book a call with Slator’s experts to learn more about language industry M&A and how to prepare your company for a sale. Can’t find a time that works for you? Contact us via chat to request a different time.