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Acquisition of Celencia by Stoquart During Turbulent 2009


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Dimitri Stoquart photoDimitri Stoquart founded and operates Stoquart s.a., one of the most successful, mid-sized, single-language translation vendors in Europe. In April of this year, the Brussels’ based Stoquart acquired its French supplier, Celencia. With the acquisition Stoquart became the second largest human translation company in the French market. Dimitri initiated this acquisition during the most turbulent economic climate of our time.

We wanted to know Stoquart stayed on course and how it all turned out so CSN recently interviewed Dimitri about the acquisition and here’s what he had to say.

ClientSide News Magazine pictureCSN:

Dimitri, congratulations on your latest acquisition. When did you initiate due diligence into acquiring Celencia and what were the circumstances leading up to the acquisition?

Dimitri:

It was a lengthy process starting in Spring of last year. The process was extremely long because Celencia was in trouble at the time. When we learned of the company’s troubles we thought; “We know the team, we’re using them already as our supplier, we can’t let them go.” “So why not take them over?”

CSN:

Did the economic downturn cause Celencia to get into trouble and create this opportunity for Stoquart?

Dimitri:

I don’t know whether it was specifically from the economic downturn.

CSN:

Was the deal in serious jeopardy at any time?

Dimitri:

The challenge we faced was that the process was a tricky thing to manage. As I said earlier, the acquisition process started last spring when we were hit by the economic crisis. However, since we had a pretty good year in 2008 there was a delay in the crisis for us a bit. It wasn’t until about the middle of last year that it touched us. By then we were already into the process. Even though keeping on track was a tough decision because we were seeing the market and prices under pressure while we were going in the direction of growth and building we still thought that strategically it was a good idea to go through with it. That way, we would be even stronger when the market begins to improve again. So no I don’t think we ever thought to change our minds. We were going to make this acquisition and we did.

CSN:

Has anything changed in your core business model through this Celencia acquisition?

Dimitri:

Well, now we offer an even larger capacity to our MLV customers. Serving LSP’s has always been the core of our business. I started as a freelancer back in the ‘80’s. Obviously as a French speaker, I was just translating into French, my own language. From there I grew my single-person business into a company of 24 on staff in Belgium and we recently integrated 7 more through the acquisition in France at the end of last year. So it has always been serving MLV’s as a single language vendor with the key language being French. From that we did evolve our model because we also serve direct customers here in Belgium, some large corporations in fact.

The difference in strategy now in France, as opposed to what we have in Belgium, is that they are a 100% subcontractor. This is a model that I want to see evolving over the coming months. I would like to see them have some direct customers as well.

CSN:

Did you also acquire Celencia’s Madagascar operation?

Dimitri:

No, we were only interested in the French group that we were already familiar with for several years and the Madagascar operation was not in the scope of our offer.

CSN:

Stoquart is a supplier to 50% of the top 25 largest localization companies. With the acquisition of Celencia did you bring more of those top 25 accounts into your client portfolio?

Dimitri:

As far as the subcontracting portfolio, yes, there were a couple of big MLV’s in their portfolio who we were not working for anymore so it meant we were able to restart relationships with some past customers through the French office. We also started to work for new MLV’s in various countries such as Eastern Europe for instance which is a new market for us.

CSN:

What are your growth expectations from this acquisition?

Dimitri:

It’s pretty early to give projections. Our first year goal for the French office is basically to break even. We didn’t want to establish too difficult a target because the economic situation was pretty bad last year. We have been very cautious and also don’t want to go too fast. We also need time to properly integrate the whole team, applying the same processes from the Belgium office into the new, French office.

In terms of turnover I would have to make quick calculations but it won’t be a huge increase because basically we are just looking to break even in France in the first year.

CSN:

It’s always very exciting to hear about M&A activity in our industry, especially activity that was initiated in 2009. Do you have any plans on the horizon for further expansion?

Dimitri:

Yes, there are so many things that I would like to do. We’ve already done quite a few things in fact. This is a structure that you might not be aware of in the states but in Europe there is a European Economic Interest grouping and we’ve created such a grouping a couple of years ago, LETS Communicate, in cooperation with a Danish, Swedish and German company.

Also, we have many requests in French Canadian so I would also like to open an office in Canada but I don’t think it will be a short term thing. The Dutch language is something we have a lot of activity in because we’re based in Belgium and this is one of the national languages. We’d like to see this activity increase but I don’t think we will be really targeting any new acquisitions. Celencia is the very first one we did. We’re really a new player on that side of the business so my idea is that you’ve got to move slowly and cautiously and this is what we plan to do. Integrate the French company slowly and perfectly if we can into the whole organization.

CSN:

Let’s communicate sounds like a very interesting organization.

Dimitri:

Within this group, we work and translate for each other. We have a lot of confidence and trust in what each company serves to each other. It’s also totally open with a meeting each quarter in each company’s country. In the meetings we talk about our successes, we talk about our problems, and we discuss how we can work together to sort out issues.

We even exchange staff. One of our in-house translators went to Sweden for a week. Doing the same job remotely but learning their processes, discovering the people and the city. We organized a Trados training which was shared across all the offices in the group which is a strength we couldn’t have if we were working independently without each other.

CSN:

I would imagine some of your business processes would have to be similar in order to operate effectively. How did you decide to group together?

Dimitri:

The managers of the companies have known each other for 10 or 15 years. That’s why we have a lot of trust and we all use similar tools. We basically all use Trados. The German office and our office use Across. The Danish office uses a tool called Web Proof to share PDF’s over web. The German office uses Project Open and so we do too, and we share experience and expertise on this tool but there’s no common platform whatsoever. We’ve discussed this as an option already but it’s pretty complicated so the conclusion we’ve come to is that it’s not worth it. We have so many Trados licenses we’re negotiating with SDL to see what we can do and now with Lionbridge coming back into the tool arena we still don’t know what’s going to happen there but there are most probably economies of scale that we can do with the tools.

CSN:

What are your thoughts on the overall state of our industry now?

Dimitri:

I’ve been in the business for close to 25 years which makes me somewhat of a veteran. It’s quite disappointing that there’s so much price pressure all the time and you can’t talk about quality. This is frustrating to linguists who are working hard to produce good quality. It’s a tough industry in fact and now we’ve got to take into account that MT is a reality. The translators have to be aware that there is a lot of work coming up for post editing. This is a clear trend now in the market but trained post editors are scarce and it’s not so easy to convert translators into post editors. There’s a lot of psychology involved but I think it’s all quite interesting because I do like technology but it has good and bad points.

The value of linguists is sometimes not recognized by the industry. I think it’s a pity and I would like to see the focus moving back into translation quality. Not just metrics. Because we use freelancers we know it’s pretty difficult to find good linguists and keep them and at the same time to pay them decent rates because it’s difficult in the market.

CSN:

Are you experiencing any improvement in pricing models?

Dimitri:

Over 2009 when it was clearly a difficult year for almost everyone, on our side we decided that we would never jeopardize quality by going down on prices. It did cost us a lot to be honest because as companies were looking for lower rates we did lose some shares but in the end we did not provide any non-conform service to our customer base and they are coming back and they are still happy. While it was a tough decision to keep saying no over the year I think it was the right decision.

We did have some customers ask, “Could you add a person to this project?” There will be a first batch of this many words, but you should give us a discount of that many persons. And I said, “We can help you definitely but we cannot afford the discount.” They used another supplier and we actually got batch 2. And now we are working on batch 3. That’s why I think quality still matters.

I still see the same low price modeling but it’s strange because we see the economic conditions improving. I still think things are going to change because it’s hard to find good linguists. Also, there was a big problem with the Euro/USD exchange rate which was bad for European suppliers and bad for US buyers. Now that the trend is going the other way it will help everyone if it keeps going that way.

CSN:

Generally speaking, where do you see the industry heading at this point?

Dimitri:

MT will be stronger, post editing will be another task for linguists, they will have to accept it, MT will help us, there will be more and more content going out for translation, there will be a lot of things happening with the tools sector because there are so many players with good tools and no standard, I mean many standards but no unifying standard.

Bio

In 1991, Dimitri Stoquart founded Stoquart SA, a Belgium-based language service provider built and managed by native linguists. Stoquart SA is ISO 9001:2008 certified (initial certificate in 2001). Dimitri is a founder of LETS Communicate in Europe and is serving his second year as GALA Board Member.


Published - November 2010




ClientSide News Magazine - www.clientsidenews.com








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