There has long been a link between the world of financial printing and translation services. The financial customers that large printing companies serve typically also have a need for translation of investor relations (IR) and disclosure documents. So translation is a relatively obvious bolt-on service for financial printers.
For instance, Tokyo-based printing giant Toppan Merrill has its own in-house language capabilities; and Donnelley Financial Solutions was the long-time operator of an in-house language unit, Donnelley Language Solutions, before selling it off to language service provider (LSP) SDL in 2018.
In 2020, another language-related deal occurred in financial printing when Japanese-based Takara & Company (Takara), acquired LSP Simul International (Simul). On March 6, 2020, Takara announced that they had acquired Simul from Benesse Holdings for a price tag of JPY 4.9bn (USD 46.4m).
Benesse Corporation is a Japanese company listed in Tokyo, which has a focus on education and publishing. It also happens to be the parent company of Berlitz Language Schools, which owns ELS Language Centers.
Simul provides translation and interpreting services to industry, government, and academia. They work with a pool of more than 2,000 interpreters, and deliver 9,000 translation projects annually. Simul also partnered with remote simultaneous interpreting (RSI) platform Interprefy in 2019.
In the financial year ended March 31, 2019, Simul generated revenues of JPY 5.1bn (USD 47.9m) and profits of JPY 129m (USD 1.2m). At 0.97x revenues, the valuation is in line with recent language industry transactions for services business.
Slator 2021 Language Industry Market Report
Takara did not report EBITDA or equivalent pre-tax profits for Simul. But adjusted for taxes, interest, depreciation, amortization, etc. the Simul transaction may fall into the 10–15x EBITDA range, which is also in line with prior LSP transactions.
Bolting on Translation
Through the Simul deal, Takara hopes to expand their service offering to include what they described in an English-language press release as “peripheral fields,” while maintaining their focus on disclosure and IR services to help their clients relate to foreign investors.
Slator 2019 Language Industry M&A and Funding Report
One important driver of translation demand within the financial services arena is Japan’s Corporate Governance Code, which was introduced in 2015. The code aims to improve corporate governance across Japanese companies, particularly as regards IR, and was designed to make Japan a more attractive setting for foreign investment.
“We see an expansion in the need for translation of information disclosure document”
Pointing to the importance of the code for business, Takara said it was seeing “an expansion in the need for translation of information disclosure documents with the increase in the number of non-resident shareholders and as companies work to comply with Japan’s Corporate Governance Code.” Incidentally, this same code may be the reason that Takara’s press release was issued in English.
In addition, Takara noted that demand for translation and interpreting is growing as its clients become more globalized, thanks to the growing tourism industry in Japan. (Note: the acquisition was completed before the coronavirus pandemic had taken effect.)
Simul is not Takara’s first language industry acquisition. Takara acquired Singapore-based LSP Translasia in 2018 and what was Japan’s oldest LSP, TOIN, in 2019. Yet, Takara said, “securing high-quality translation resources, in particular, has become an urgent management issue for the Group.”
Takara has now bought its way into becoming a major player in Japan’s language industry landscape. The size of their translation and interpreting operations will likely soon rival that of Honyaku Center, which generated around USD 107m in the 12 months to March 31, 2020.
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