A new trend: language interpreting and translation companies are being acquired by companies outside the language industry

Alexandra Dumont
Media Operations
The Posse List

31 January 2020 (Paris, France) – As I have noted before, we attend numerous language industry conferences and trade shows such as Elia, Gala Global, SlatorCon, etc. to stay current in the language industry. The information technology/informatics/legal services/legal technology sector still comprises 82% of our job postings and non-English language reviews comprise 23% of those postings.

The other 18% of our job postings are in:

-advertising
-artificial intelligence
-cyber security
-journalism
-TMT (telecommunications-media-technology)

It is good to attend these events to mingle and network with the leading language service and technology providers.

And just as The Posse List has diversified beyond job posts for the legal services and legal technology markets, so have many legal staffing agencies diversified, especially those who post a large volume of non-English language reviews and analytics projects. There is a new kind of AI language translation agency that is transforming the language industry and law firms and in-house corporate legal departments are gravitating to it. They look just like the existing agencies, but they have a fundamentally different engine that is far more efficient. And they are going beyond legal document review and analysis. They do not attend just Legaltech and ILTA anymore. They are popping up at advertising events, cyber security events, journalism events, medical technology events, etc. selling their capabilities.

This makes sense. They are going to go and sell exactly the way a “standard” agency would sell, but under the hood they’re going to be much more efficient, which also means they’ll have higher gross margins. So they’ll either have one of two passes: they can either run the business at a higher net income margin or they can underprice the market.

And other trend: three and a half years after LanguageLine sold to customer service conglomerate Teleperformance, another large U.S. interpreting/language company has been acquired by a company from outside the language industry. And there are a few others in progress.

This one is by San Diego-based AMN Healthcare Services who just bought Stratus Video … at a whopping $475 million.

Full disclosure: Stratus Video was owned by private equity firm Kinderhook and our boss, the founder of The Posse List, has an equity interest in Kinderhook.

According to the AMN press release, “Stratus employs a network of more than 3,000 interpreters with an on-shore / off-shore staffing model.” Based on the financials I found on Bloomberg, fourth quarter 2019 results show Stratus Video’s twelve-month annualized run rate was approximately USD 119 million of revenue and USD 34 million of adjusted EBITDA. Not beer money.

AMN has been on a tear, increasing revenues from $1bn in 2014 to $2.1bn in 2018. Growth slowed in 2019 and the company is expected to end the year at around $2.2bn. It is a public company and it has a current market capitalization of $3.1bn.

AMN has a neat story. It started as a company providing travel-nurse staffing services but has since expanded into various adjacent businesses. In a Q3 2019 investor update, the company broke down its main business lines: 63% of revenues are generated from Nurse & Allied Solutions (such as short- and long-term travel and local staffing); 15% from so-called Locum Tenens solutions (placement of physicians, advanced practice clinicians, and dentists throughout the US, etc.); and 22% from other Workforce Solutions (such as interim and permanent executive leadership and physician placement, recruitment process outsourcing, and other related services).

Adding language capabilities makes sense to AMN given their business portfolio. In the announcement, AMN said that Stratus “will provide further opportunity for us to expand in the virtual workforce and patient care arena.”

Medical technology and healthcare is a boom market and qualified healthcare interpretation and translation, which is mandated by federal and many state regulations, is a service that many healthcare organizations do not have the resources to provide for themselves. So the opportunities are enormous.

But wach for this development. At SlatorCon San Francisco 2019 Bryse Memlis of Bloomberg told me “once an organization reaches a certain size, a strong case can be made for insourcing and building an internal language services unit. So look for more medical corporations … and, quite frankly, non-medical companies … to swallow language service companies to build their own units”.