Welocalize has completed a merger with Park IP Translations, a specialist in legal and patent translation. A well-known industry consolidator, Welocalize is a veteran of mergers and acquisitions. In fact, it hasn’t even been a full year since the company merged with Boston-based translation provider Avantix Global. We spoke with CEO Smith Yewell to learn what’s different this time around.
The main goal of the merger? For Welocalize, it’s primarily about distributing its eggs across multiple baskets. As Yewell pointed out, “Patent and IP translation is growing significantly. We were looking at a variety of different niches to diversify, and we had our eye on this area. So, when this opportunity came along, we jumped on it.”
Yewell noted that the merger would enable Welocalize to increase the share of translation work it receives from existing customers. “Our clients often ask us to handle their legal translation work, and we always turned that down before. Now, we’ll be able to say ‘yes’ to those projects.” He also commented that many cross-selling opportunities have crossed Park IP’s desk recently that will enable Welocalize to penetrate large accounts in the legal and IP spheres. The Park IP management team will be staying on board, and the company will retain the Park IP brand, in order to take advantage of the strong recognition it has within its niche.
Up until recently, Welocalize focused heavily on the localization services implied in its name. But localization is just one piece of the overall language services market, which was worth more than US$31 billion in 2011. As a market segment, translation is far bigger, accounting for 45.68% of the market in 2011. With its 2010 acquisition of London-based Lloyd International Translations (LIT), Welocalize made its first major move out of localization and into manufacturing translation. Now, by merging with Park IP, which posted an impressive US$25 million in revenue after just seven years in business, Welocalize will address an even broader segment of the market.
We asked Yewell if he believed that the merger would put him in head-to-head competition with British competitor RWS, a well-known provider of patent translation. He does not believe so, since Park IP’s client base is located primarily in the United States, while RWS focuses more on European business. However, RWS has made acquisitions of its own in recent years for much the same reasons as Welocalize – to expand into other sectors and industries. We agree with Yewell’s assessment – the two are not likely to compete directly with each other for now.
Yewell noted that Welocalize is on track to close its own books for 2011 with around US$80 million in revenue. So, adding the business from Park IP will put the company above the US$100 million mark in 2012, a significant milestone. Welocalize’s 2010 revenue placed it in the 18th spot globally among our most recent ranking of the Top 50 language service providers. In the same year, Manpower placed 10th, with US$101 million in language services revenue, followed by RWS in the 11th spot, with US$97 million. So, it may well be the case that Welocalize jumps a few spots in the next ranking. Will it find itself among the Top 10 soon? If organic growth continues steadily in 2012, it’s likely.
As we mentioned in last year’s state-of-the-industry report and in our report on characteristics of the fastest-growing companies, the language service providers (LSPs) that are perennial high-performers are the ones that adopt a strategy of mergers and acquisitions. Still, with more than 25,000 companies active in this space and lots of owners looking to exit, there is plenty of room for consolidators like Welocalize to keep on growing.