New Zealand-based Straker Translations on January 4, 2022 announced the acquisition of Brussels (Belgium)-based language service provider (LSP) IDEST, according to a press release. IDEST was founded in 1990 and is focused on institutional clients such as the United Nations and the European Commission. IDEST employs 18 staff and generates annual revenues of EUR 4m and an EBITDA of approx. EUR 0.4m. The transaction closed on January 1, 2022.
According to the press release, IDEST CEO Jean-Paul Dispaux first met Straker Translations CEO Grant Straker in 2017 to discuss an acquisition. At the time, Dispaux said they would first focus on growing the business. And they did. According to the Slator Language Service Provider Index, IDEST grew revenues to EUR 2.8M in 2020 from EUR 1.8m the year before.
Straker Translations, which is listed on the Sydney Stock Exchange, will pay EUR 1.75m in cash and EUR 0.25m in shares at closing as well as up to EUR 2.5m in earn-out payments over two years based on IDEST hitting predefined revenue targets. With a potential earnings multiple of over 11x EBITDA and 1.1x revenue, the acquisition is priced relatively high — that said, over half of the maximum acquisition price is tied to the earn-out, mitigating the risk to Straker.
According to the press release, Jean-Paul Dispaux and the team will stay on with the company post-deal and, given the earn-out, have strong financial incentive to continue to scale the business. Straker said they recently set up an office in Amsterdam, which, combined with IDEST’s Brussel office, will give them a strong presence in the attractive Benelux market.
The IDEST acquisition is in line with earlier Straker deals. The LSP targets boutique rivals with the intention of moving them on to the Straker technology platform, hoping for efficiency gains and margin improvements. The large earn-out component is also in line with earlier Straker acquisitions.
Straker shares were up 7% in 2021, lagging peers like Zoo Digital or RWS but ahead of fellow Sydney listed peers like AI Media or Appen. In November 2021 Straker guided investors that FZ 2022 is set to exceed NZD 50m (USD 34m).