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Life Sciences Consolidation Continues as Welocalize Buys Global Language Solutions
Posted by Donald A. DePalma on August 15, 2016  in the following blogs: Market Data, Supplier Business Issues, Translation and Localization
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Welocalize CEO Smith Yewell told us earlier this month his firm had purchased Global Language Solutions. Why is this deal interesting? Announced this morning, it is the company's 17th purchase of an LSP since 2000, its second this year in the highly contested life sciences sector, and brings together two of the 50 largest providers in the language industry. We spoke separately with Inna Kassatkina, president and co-founder of GLS. We discussed:

  • The acquisition. Welocalize (#7 on our 2016 global list of 100 largest LSPs) acquired Global Language Solutions (#42) (GLS), a specialist in language services for the life sciences industry. GLS is located in Irvine, California, and employs 91 people in four locations. It is Welocalize's third major acquisition in regulated industries following Park IP Translations in 2012 and Nova earlier this year. Along with Nova's contribution, Welocalize's life sciences division will earn more than US$30 million this year. 

  • The reason to buy. Yewell said that this deal strengthens his company's ability to supply the entire customer journey for life sciences clients – from the initial intellectual property protection work with Park IP, to Nova and GLS for clinical trials with clinical research organizations (CROs), onto marketing materials with Adapt Worldwide, and then to its regular production models to translate less specialized content. Besides giving Welocalize more life sciences capability and credibility, GLS also brought technology to the table. It developed portal technology for client-side management of translation spend and services within clinical trials and CROs. This capability ties in well with Welocalize's long-term strategy of investing in technology solutions, including its own business intelligence software. We expect that it will bundle GLS's software into its own application platform.

  • The reason for selling. Kassatkina related that the breadth of services required for servicing pharmaceutical organizations and CROs has become very sophisticated. While in the past she found mature buyers only in the software sector, they're now the norm for larger life sciences firms. These buyers want what GLS can offer, but also demand scale and the ability to help a customer through the entire journey. Partnering with – and now being acquired by – Welocalize filled the big-company requirements for GLS, while giving the latter the credibility as a provider of language services to life sciences. 

  • The terms. The deal closed on June 30th. As usual, the parties did not disclose terms, but we know from our global market survey that GLS turned over US$20.5 million in 2015. Welocalize drew on the funds of its owner, Norwest Equity Partners, for the purchase. Seeing opportunity with the shrinking pool of mid-sized LSPs experts in life sciences, Kassatkina and co-founder Olga Smirnova shopped their firm through Fairmount Partners, an investment banker. 

  • The acquisition process. As with most Welocalize purchases, this one follows two years of working together. While she wouldn't give us the exact number of bidders, Kassatkina did say that the formal process with Fairmount garnered strong interest and a very competitive round of bids including what she characterized as "definitely several great suitors – it was really difficult to decide." But what pushed GLS to Welocalize was that relationship plus the comfort of knowing that as the 17th acquisition, they weren't a guinea pig. She said that Yewell's company has M&A down to a science, and that it did exactly what it said it would do at every step of the process. 

  • The transition. Kassatkina and Smirnova plan to stay on for a set time, but both intend to retire after selling the business. Welocalize will merge the company into its regulated industry business line, which Smith said post-acquisition will comprise around 40% of its revenue.

  • The creation myth. We are always intrigued by the background story of companies. GLS's story is about two young women from Russia who founded a translation business 22 years ago and grew it into a respected provider of specialized services employing nearly 100 people in the United States. In 2016, with immigration a contentious topic for election-year Americans, Brexit-ing English, and many countries across Europe, this immigrant success story is noteworthy. 
What does this deal mean for the market? As we observed when it purchased Nova, Welocalize is investing in critical entry points to the localization process where buyers demand specialists. It offers complementary services and technology that track the customer journey from product inception through marketing and sales. It also underscores the fact that the pool of vendors in desirable industries is shrinking, evidenced by acquisitions of life sciences in the last 18 months by top 10 firms such as RWS (#6), Welocalize, and AMPLEXOR (#9). Meanwhile, Lionbridge (#1) and SDL (#5) are reorganizing to become more agile in general business, including M&A. 


 

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