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Language Line Services Acquires Pacific Interpreters
Posted by Nataly Kelly on January 7, 2013  in the following blogs: Interpreting
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Today, California-based Language Line Services (LLS) announced the acquisition of long-time competitor and Oregon-based telephone interpreting company Pacific Interpreters. This announcement, which results in a telephone interpreting company with a reported US$300 million in revenue, really comes as no surprise. It was only a matter of time until LLS, sitting on hefty cash reserves and looking for a way to profitably increase revenue, made just the right offer for one of the telephone interpreting companies sitting in the revenue range it considers attractive. What are the implications of LLS’s latest acquisition?
  • For Pacific Interpreters. The founders and original teams of this healthcare-focused provider have mostly moved out of the company already.  Sterling Partners, a large private equity firm which purchased Pacific in 2010, is likely very happy about the faster-than-average return on its investment. Likewise, Peter Harris, the CEO Sterling hired less than a year ago and who brokered the deal, probably has a wallet full of good reasons to exit.
  • For Pacific’s customers. Some clients of Pacific Interpreters will no doubt be uneasy about the change. Most have likely worked with LLS at some point in the past, given that it was once the only game in the telephone interpreting town.  Some customers who had past experiences with LLS may want to switch away from them, but this happens every time LLS makes an acquisition, so the company has surely accounted for that. In fact, as LLS President and CEO Scott W. Klein contended when we spoke, “This is not your father’s Language Line. Since I joined in June, we have had a relentless focus on clients and client satisfaction. What might have been acceptable in the past is no longer acceptable to me or to our team.” For the majority, the nuisance of switching providers will likely be too much of a hassle to warrant anything other than staying with LLS. But LLS still has to convince doubters that Klein's administration is truly revamping the company’s practices.
  • For competitors. Competitors have some reasons to be glad about this news. They’ll immediately target the accounts that are less than happy about being involuntarily switched over to LLS. Cyracom/Voiance, which built its client base largely in the health care field, is the rival most likely to benefit from the news. Other well-known telephone interpreting providers – such as Certified Languages International, CTS Language Link, Language Service Associates, Lionbridge, and thebigword – stand to gain more market share – although none will come close to gaining as much as LLS just did with the acquisition.
  • For the industry. Klein believes that the acquisition will benefit the greater telephone interpreting industry. He reasons, “It will afford us the opportunity to make investments that are long overdue in technology and solutions that customers really need.” Will those investments reduce connection times and improve the customer experience?  The telephone interpreting market is a small one, and LLS is the company that carried out all the original market development to build it. Since then, no company in the industry has done anything that we would consider revolutionary in terms of offering innovative services or technology.  We agree that investment – and innovation – are sorely lacking in this space to make things better for customers. Pacific Interpreters built a strong reputation for client service, so perhaps some of its infrastructure in this area will benefit LLS.
And Language Line Services? Obviously, LLS benefits the most. LLS has a history of waiting until its competitors “fatten up” and get to a size where they become a nice acquisition target, as we’ve noted since 2008 (see “It’s Getting Lonelier at the Top of the TI Market,” Jul08). LLS has been interested in acquiring companies for several years now, but the conditions recently changed, with both Language Line Services and Pacific taking on new CEOs and other key management.

Will the greater language services market change? If LLS decides to start competing more heavily in the translation or localization space, yes. Or if large providers like Lionbridge, TransPerfect, and West start buying up the same telephone interpreting companies that LLS is no doubt eyeing, that, too, might represent a game-changer. We asked Klein if we can expect any other such announcements in the near future. “We have no other acquisitions planned currently,” he said. “But we’re always on the lookout.”

This is the first major acquisition in the language services industry for 2013, and we’re confident that many other deals are brewing, not just in California, but around the world. Other players frequently spotted on the industry aggregation scene include companies like CLS, Euroscript, HiSoft, TransPerfect, and Welocalize. Until the next acquisition announcement comes forth, all we can say to translation and interpreting companies that are also seeking to sell is this: “If you build a good company, they will come.”

Correction Notices: This post was amended at 10:16 EST on January 7th, 2013 to change the headquarters location of Pacific Interpreters from California to its correct location of Oregon. The post was also amended at 5:23 pm EST on January 8th, 2013 to correct the company name of CTS Language Link.

 

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