Transline, One of Germany’s Largest LSPs, Sold to Investment Firm Blue Cap

Transline Gruppe Übernahme durch Blue Cap aus München

One of the largest language service providers (LSPs) in Germany has a brand new backer. On March 3, 2022, investment company Blue Cap AG announced it had acquired a 74% stake in Transline Gruppe and its five operating subsidiaries.

The transaction, closed on March 4, 2022, saw Transline’s former majority-owner, private equity firm LEAD Equities Group (which originally invested in 2014), hand over majority control of the LSP to Munich-based Blue Cap. Transline Gruppe’s Founder and CEO, Wolfgang Sturz, retains his significant minority stake (26%) in the company.

Although the valuation and specific amount paid by Blue Cap was not disclosed, the company said in a press release that the purchase price for Transline was “in the lower third of the double-digit million range.”

Katja Schabert, CEO of Transline Deutschland and coordinating manager for all subsidiaries, said those subsidiaries are Transline Deutschland, Transline Software Localization, and Medax (in Germany), as well as Transline Europe in France and Interlanguage in Italy. Transline acquired Medax and Interlanguage in 2019.

In a separate transaction expected to complete in the next few months, Transline’s operational management team will acquire a stake of around 5% from Blue Cap, reducing Blue Cap’s eventual stake to ca. 69%.

Along with Schabert and Sturz, key members of Transline’s management include Hans Haug (Head of Finance), Oliver Keutel (Chief Information Officer), Anja Gebauer (Chief Revenue Officer), and Sasa Tripkovic (Chief Product Officer).

Schabert said the team will remain unchanged and Blue Cap will support Transline’s organic and acquisitive growth strategy, which remains focused on Germany, Austria, and Switzerland (DACH).

Blue Cap’s Take on Translation, Transline

Blue Cap, a publicly-traded company in Germany — yes, a publicly traded investment company that buys privately held firms — is forecasting revenues of EUR 305–325m and an EBITDA margin of 9–10% (adjusted for 2022, post-Transline acquisition). Transline will join Blue Cap’s Business Services division, a growing area of interest for the investment firm.

Blue Cap typically invests in small and medium businesses in the DACH region, with a focus on the production process for and services relating to industrially manufactured goods.

In the press release, Blue Cap described Germany’s translation market as being “very fragmented and therefore subject to strong consolidation pressure.” They added that this environment “creates significant growth opportunities via buy-and-build measures designed to acquire new customers and unlock new sectors.”

Against this backdrop, Transline’s own track record of M&A and integration was a key factor in Blue Cap’s decision to invest, Schabert said. “Transline is able to implement Blue Cap’s buy-and-build strategy,” according to Schabert. She pointed out that the LSP has made “significant changes in the past years to meet the growing demands of a more and more digitalized market.”

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Proprietary Tech, Growth Drivers

Transline uses TBlue, a proprietary technology that Schabert said was developed “not only for highly-automated order processing, but also to match the growth strategy of the group.”

Blue Cap’s CIO, meanwhile, said in the same press release that Transline’s new technology will help support both organic and acquisitive growth.

According to Schabert, midterm growth for Transline will come from a number of sectors including building technology, life sciences and medtech, software (e.g., “SAP and embedded applications for mechanical engineering”), and e-commerce, while language supply chain consulting is a growing service line.

Transline Gruppe recorded revenues of EUR 20.8m (USD 23.7m) in 2021, making it the fourth largest Germany-headquartered LSP behind rivals KERN, Apostroph, and t’works. Revenue growth from 2020 (EUR 18m) topped 15%.

Schabert said the company is forecasting an organic growth rate of around 10% for 2022. As for future M&A, the CEO told Slator that Transline is “talking to several smaller as well as medium-size translation service providers in the DACH region. So, there will be more news to come — maybe even already in 2022.”