On April 13, 2022, software localization company, Transifex, announced its sale to investment firm PARC Partners. The terms of the transaction, which closed on April 12, were undisclosed.
Transifex is a pure-play technology provider that enables the continuous localization of software and digital content via a SaaS platform model. The company focuses on web and mobile apps, websites, and games and provides integrations and workflow automation to support agile design and development processes.
Chris Reese and Tony Pilnik, Managing Partners at PARC, have assumed leadership of Transifex — as CEO and President, respectively — taking over from Transifex’s Dimitris Glezos, who founded the company in 2009.
Under Glezos’ leadership, Transifex completed two previous investment rounds, raising USD 2.5m in 2014 and USD 4m a year later. The company’s former investors have now exited, with PARC Partners acquiring 100% of Transifex.
Transifex’s new owner-operator, PARC Partners, is somewhat atypical in the context of language industry investors. A conventional private equity firm usually builds a portfolio of investments, but PARC is a search fund and was looking for one business to run.
Pilnik and Reese described the search-fund model to Slator as “a model in which investors back entrepreneurs to find a single great business, acquire it, and assume full-time management post-acquisition to pursue growth.”
PARC is backed by investors including Pacific Lake Partners, Trilogy Search Partners, and Next Coast ETA; and the fund has put in place a “veteran board of directors with significant sales and operating experience in the software industry,” the duo said.
PARC was looking for a category-leading company able to “take advantage of the market momentum” within an industry experiencing “strong tailwinds,” Pilnik and Reese said. According to the fund’s website, PARC required a service or software product with recurring revenue (ARR) of at least USD 5m, profit of at least USD 1.5m, and more than three years of profitability.
Pilnik and Reese declined to share revenue or profit metrics for Transifex, sharing only that the company’s revenues grew 35% in 2021 and that headcount also increased, by 20%, in 2021. Transifex’s 55 staff are mainly based in Greece, while the company’s corporate headquarters are located in California.
Asked about their initial impressions of the language industry, Pilnik and Reese said they “did not know of the specific market of localization for software prior to Transifex, [but] were very aware of the strong growth drivers propelling both the language services industry and the software industry.” Among the key drivers they observed are “modern approaches to application development and delivery such as Agile or CI/CD and DevOps.”
In Transifex, the pair identified a “greenfield opportunity” at the “nexus of two industries that are experiencing strong growth.” Transifex was the natural choice “once we understood that customers are looking for ways to modernize their approaches to localization,” Pilnik and Reese said.
In particular, the duo highlighted Transifex’s tech talent, continuous localization product, and reputation among customers as elements that attracted them to the business.
Partnering with LSPs
Incoming managers, Pilnik and Reese, hail from professional services backgrounds with “a lot of exposure to entrepreneurship.” They felt taking over an existing business was a better use of their skills rather than founding a new company — which is what set them on the search-fund path.
There were also several factors that prompted Transifex to pursue the acquisition by PARC, Pilnik and Reese said. On the one hand, Transifex had its house in order: good growth in 2021, solid product, new features, team in place, etc. On the other, PARC was a good match because of its investment approach, SaaS track record, financial resources, and “desire to keep the team intact.”
Moving forward, Pilnik and Reese said the opportunity for Transifex lies in “continuing to make our product a painless fit in [our customers’] technology stack” as well as “advocating for the customer within the localization process.” The added that this “can only be fully achieved through partnerships with LSPs and adjacent language technology providers to create collaborative services,”
“Transifex needs to be top of mind anywhere that companies are meeting their customers through digital platforms and need to localize their message,” the duo concluded.