Language services is a highly fragmented market, with the top 100 companies accounting for only 15% of total market share.
In such a competitive environment, the art of survival is to understand the pace of change and the tipping point.
Typically, this creates a highly dynamic environment with different waves of consolidation, which have happened at different times and at different tempos.
In the aftermath of Covid, things have accelerated and we have seen quite a bit of portfolio restructuring. Access to money is still there, and the opportunity for consolidation has continued.
There is also an abundance of buyers and a lot of demand to buy companies because organic growth in niche markets is typically hard.
Putting your business in a position where it is attractive to buyers and you are ready to sell takes good old-fashioned hard work, but also a good growth strategy.
Olga Blasco has this advice for companies to help them visualise what that growth strategy might look like.
“First of all, you need to realise the bridge that you need to build between where you are and where you want to be, and to see where the growth is going to be coming from,” Olga says.
“Growth opportunities come from either expanding into new geographies or new services, deploying technology in ways that you maybe haven’t done so far, and exploring new sectors.
“Growth enablers are obviously a sales and marketing team and good investment in there, as well as high caliber executive brain power and executives that want to make it happen.
Organic growth combined with M&A will accelerate growth, but in order to figure out where the growth is coming from, you need to figure out who your client segments are and the type of client relationships that you need to build.
“For example, do you want to be an eminently transactional business, or do you want to create long term relationships that are going to turn your clients into champions for other clients,” Olga says.
“Figuring out where those customer segments are means examining what geographies have the type of client that I want, what type of industries could benefit from the services that I offer, where do we have in-depth experience, and what are the near adjacencies?
“What type of service offerings do we see that are going to be most in-demand in the next few years? What do we do distinctly well that maybe we should explain better and improve the narrative.
“What kind of skills do we have that could open new doors or what kind of skills do I already have that could mean I can develop a service based on that?”
In order to make these things happen, as well as the stamina and willpower that you will need, you will also require the financial muscle because if you need to hire executives or a sales team or invest in marketing or you’re considering acquiring, obviously you need money.
“You need to have a lot of clarity on your revenue streams and the channels that you’re going to use in order to get them,” Olga says.
“You need good resources, good partners, technology, good strategic marketing and you need infrastructure. So if you are prepared to do all of that, you can then come up with a plan in order to achieve that.
“For some companies, it might take a longer route, but it’s like if you wanted to exit in five year’s time, you can develop a strategy that gets you there in those five years but you’re going to have to have all of ducks in a row.”
If you want to know more about this area, visit Lion People Global’s website where you can watch back our M&A Talks series of videos and fill out a questionnaire that entitles you to one hour’s free consultation on getting a LSP or language tech business ready for sale.