Questions a translation buyer will raise
- Which clients are under master agreements, and when do those renew?
- How many linguists do you use, and are they contractors or staff?
- Which languages bring in the most revenue and the best margin?
- Who owns the translation memory and glossaries you built for clients?
- Could the company keep winning work if you stepped away for a month?
A translation company looks simple from outside: clients send files, linguists translate them, you send an invoice. A buyer sees a chain of relationships and asks how much of it would still be there after you leave.
Client agreements carry the value
Work that comes in under a master services agreement or a standing purchase order is worth more than one off jobs. Buyers want copies of these agreements, their end dates, and any clause that lets a client cancel when the company changes owners.
Interpreting contracts with courts, hospitals or agencies can be steady for years. If some of them are federal, the contract may need agency approval through novation in an asset sale.
Our federal contractor page covers that, plus set aside size recertification.
The linguist network
Most language companies rely on freelance linguists. A buyer will ask how many you use often, how you vet and pay them, and whether any of them work only for you.
A deep bench in high demand languages is an asset; a few people doing most of the work is a risk.
Buyers also look at how workers are classified. If people who work like employees are paid as contractors, the buyer will price that risk. Your attorney and CPA can review it before you list.
Systems and the files you keep
Translation memory, glossaries and style guides built for a client save time on every new job. Buyers ask who owns them and whether your client agreements allow you to keep and reuse them.
A well kept project system with clean records also shows the company runs on process, not memory.
How buyers price it
- They recast your earnings: remove personal costs and one time income, and set a fair salary for the work you do.
- They sort revenue into recurring and one off, and by client.
- They apply a multiple, often around 2 to 3 times cash flow for companies this size, and move it up or down for risk.
Concentration moves the price most. If the top two or three clients make up more than about 15 to 20% of revenue, expect a discount or part of the price tied to keeping them. The valuation guide shows how this plays out.
Your role after closing
Buyers of language companies often ask the owner to stay for a few months to introduce key clients and lead linguists. A promise not to compete with the business you sold is still allowed in DC; keep it reasonable in length and area.
Plan for seven to nine months from hiring a broker to closing. The step by step outline shows what happens when.
For a confidential read on what your company might bring, send the short form or call (202) 555-0174.