Opportunities
Translation & Interpretation Services with Daily Clients
Sold
Specifications
Located near the heart of Iowa in the Des Moines metro area, this interpretation and translation services business contracts with over 50 linguists to help dozens of companies across the state. Specializing in medical, legal and community interpreting, linguists work with 40 companies monthly. The top 5 requested languages for translation services are Spanish, Arabic, Burmese, Nepali and Bosnian, with all linguists screened and trained before working with clients.
Most clients are concentrated in the healthcare, insurance and banking industries, and are located across Iowa. Contracts are in place with companies to provide services within a certain period of notice, mostly for medical appointments. Handling these services are 50 interpreters and 20 translators, with the company averaging work with 45 linguists each month.
As part of an in-demand field, the company has been asked to expand into Minnesota and Illinois. This is a great option for a buyer to consider, ensuring that more linguists are contracted for work. Increasing the client base by offering more translation services for corporate documents and educational materials is another great option.
Business Highlights
- Years in Business: 16
- Location: Des Moines metro
- Service Area: Iowa (some Nebraska)
- Services: Medical / legal / community interpreting, translation, transcription and more
- Number of Clients:
- Work with 75 – 85 clients throughout the year
- 20 clients request services daily
- Work with 40 companies monthly
- Client Industries: Healthcare, insurance, banking
- Top 5 Languages: Spanish, Arabic, Burmese, Nepali, Bosnian
- Reason for Selling: Retirement
- Employees: 1 Scheduler. Company works with 50 Interpreters and 20 Translators.
- Seller Training Period: 90 days
- Growth Opportunities: Expand into Minnesota and Illinois as requested by clients. Increase client base.
- Current Owner’s Responsibilities: Very passive - manages finances and some employee screening. Owner does not do any billable hours as a linguist.
- Profit Opportunity:New owner would absorb Operations Management role (over $60,000 salary)
Financial Highlights
- List Price: $656,000
- Gross Sales
- 2017 - $544,250
- 2016 - $396,318
- 2015 - $367,502
- 2014 - $293,857
- Cash Flow
- 2017 - $187,615
- 2016 - $197,643
- 2015 - $144,576
- 2014 - $94,107
- Profit Margin: 34%
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return | Tax Return | Tax Return | Notes |
| 2017 | 2016 | 2015 | 2014 | ||
| GROSS SALES | $544,250 | $396,318 | $367,502 | $293,857 | |
| Net Income Shown on Financial Statement | $15,855 | $65,802 | $48,014 | $40,025 | |
| ADDBACKS | |||||
| Compensation to Owner | $0 | $3,000 | $3,000 | $0 | Owner's W2 salary |
| 11% Tax on total W2 Salaries | $0 | $330 | $330 | $0 | |
| Contributions/Donations | $600 | $200 | $1,070 | $600 | Non-onward going expense |
| Meals & Entertainment | $0 | $290 | $0 | $0 | Personal expenses run through the business |
| Absentee Owner | $85,580 | $63,274 | $31,731 | $40,025 | Owner's 1099 salary |
| Operations Manager | $85,580 | $64,747 | $60,431 | $13,457 | New owner to absorb Operations Manager duties |
| TOTAL ADDBACKS | $171,760 | $131,841 | $96,562 | $54,082 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $187,615 | $197,643 | $144,576 | $94,107 | |
| Profit Margin | 34.47 % | 49.87 % | 39.34 % | 32.02 % |
- 34% profit margin for a very passive owner
Services
- Medical / legal / community interpreting
- Business escort interpreting
- Translation and transcription
- Notarized translations
- Proofreading, editing and Desktop Publishing
- Voice over
- Telephone and videoconferencing interpreting
- Website translation and localization
The company’s 50 interpreters and 20 translators speak or write in over 50 languages. Below is a small sampling of them:
| African English | Turkish | Vietnamese | Korean | Russian |
| Czech | Burmese | Bengali | Pashto | Japanese |
| Laotian | Portuguese | Thai | Chinese | German |
Translation vs Interpretation
- Translators work with written text
- Ability to understand a country’s culture and write well in the language, utilizing dictionaries and reference material
- Most translators use computer-aided tools
- Interpreters operate with oral language
- “the art of paraphrasing”
- Rephrasing idioms, colloquialisms and culturally-specific references
- Able to translate on the spot without dictionaries and reference material
Clients
- Most clients are in the healthcare, insurance and banking industries
- 75 – 85 clients are worked with throughout the year
- 20 clients request services daily
- The company works with an average of 40 companies each month
- Over a 3-month period, there were 1,780 appointments with company linguists
- 580 per month
- 29 per day on average
Employees
- 1 Scheduler
- Handles most of the scheduling and answers emails
- 50 Interpreters
- 20 Translators
On average, the company works with 45 linguists in a month.
The owner, who is very passively involved at this point, manages finances and does some employee screening.
The Operations Manager handles most of employee screening and training. This position could be absorbed by the buyer.
Growth Opportunities
- Expand into Minnesota and Illinois
- Company has been asked to work with clients in these states, but has not pursued the opportunity
- A buyer should also consider expanding into more states surrounding Iowa
- Hire more linguists
- Adding more linguists will allow the company to expand its territory
- Increase client base
- Work with schools and more corporations with international clients
Valuation Details
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, the 2017 Cash Flow was used with a prescribed multiple of 3.5. With this information, the computation is as follows:
$187,615 x 3.5 = $656,652
The Fair Market Value found above positions the business List Price at $656,000
Funding Example
Purchase Price: $656,000
15%Buyer Down Payment: $98,400
15%Seller Financing: $98,400
70%Bank Loan: $459,200
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,834
Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $6,544
After business expenses and loan payments, a buyer with a 15% down payment of $98,400 would retain a profit of $97,097 which results in an 98% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $656,000 with the terms listed above, the coverage ratio is 1.97.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857