Key Points From the Interview
édric Sigoire admits that he overpaid when he acquired DEMAN Translations.
In 2015, Cédric paid €1 million for the agency, which offers translations in a range of European and Asian languages, as well as in English.
He didn’t negotiate the price because he was eager to jumpstart his entrepreneurial path. He also didn’t want to pass up the opportunity to get into translation services, which is a €1 billion industry in Germany (where he lives).
“I didn't want to grow something [from zero]. I wanted to buy something, because then from the beginning you have the funds to pay your salary,” he says in an interview with Acquiring Minds.
Before acquiring DEMAN, he didn’t have much experience with the language translation industry. But after six years, a total of 12 acquisitions and expected revenue of €5 million, Cédric seems to be in just the right place to enjoy the freedom and lifestyle he sought out when making his first acquisition.
I sat down with Cédric to learn more about his first acquisition in the language translation space and how he’s tripled business revenue over the last 6 years.
No Money? Don’t Dismiss Loans
Before acquiring the language translation agency, Cédric was working in sales at a safety footwear company when he had an epiphany: He was generating around €2 million annually for the company, but his salary wasn’t even 10% of the money he was bringing in.
“At that point, I told myself that to be successful and to build something for my future, I need to be independent."
With a background in sales, Cédric saw acquiring a business as a better fit for his skills than starting something from scratch.
He understood how to sell to other businesses, so he looked around for B2B opportunities. Eventually, he saw a listing for DEMAN, which happened to be based in Dusseldorf, the city where he lived.
At the time, Cédric had about €50,000 in the bank — not nearly enough to cover the €1 million DEMAN Translations sale price.
“I think for entrepreneurs who want to take something over — don't be afraid of the million or big money … the state [wants] to help you because the population is getting older. And they know that if young people don’t take over those companies, they will disappear — with jobs.”
He got creative and searched for ways to make the acquisition possible. Through his network, Cédric discovered a German loan program specifically for aspiring business owners — similar to the SBA loan program in the U.S.
In Cédric’s case, the government guaranteed 80% of his loan which gave him the edge he needed to make the acquisition.
“If the state believes in you, then you can get this leverage. So for entrepreneurs that want to take something over, don't be afraid of the million.”
Cédric was surprised to learn that the government actually wants acquisitions to succeed. Rather than let stagnating businesses sputter out, many governments guarantee loans to prevent job loss or ideally, encourage job growth.
As an added bonus, the government guarantee minimizes the lending risk for banks, giving entrepreneurs more leverage for getting the loan.
Applying Consultative Sales To Business Acquisitions
Cédric has come a long way since sourcing the DEMAN Translations opportunity more than five years ago.
He used to approach between five and 10 companies each year about a potential acquisition. Now, he sometimes has around five or six calls per day and is constantly on the lookout for acquisition opportunities and almost takes a consultative sales approach.
He’s developed a network of business owners and brokers who send him deals. He also reaches out to entrepreneurs with the simple goal of starting a dialogue about selling their business.
After 12 acquisitions, he’s able to speak from experience and discuss how different factors could affect the valuation of the business. “Even if we don’t do [a deal] now, I give them some advice,” he explains.
It helps that Cédric doesn’t mind hearing “no.”
“I already have a no before I go to them, so you can only turn it into a yes. If it's not my company after the call, it's okay. Because it wasn’t before, right?”
Plus, “no” could mean “not right now.” That’s what happened with a translation agency he bought in January 2021.
He first made contact with the owner in 2016. At the time, they couldn’t agree on terms for a sale. But Cédric stayed in touch with the owner, checking in with him every few months, offering ideas and advice along the way.
After building the relationship for a few years, Cédric and the owner came to an agreement, and the deal was done two months later.
Can You Do Better Than The Current Owner?
One way to minimize the risk when acquiring a business is to evaluate whether you can do better than the current owner, Cédric says. By that he means: is there a way in which you can add more value to the business?
And that doesn’t mean you need to have a specialized skill set, either. You just need to add something to the business that isn’t already there.
It could be as simple as scouting for businesses with an absentee owner.
When Cédric acquired DEMAN, the owner rarely made visits to the office and was generally uninvolved with employees. Cédric knew that just by being onsite, he could inspire employees and drive up revenue.
3 Pro Tips For Making Your First Acquisition
Having completed 12 acquisitions, Cédric has gained a lot of insight on what makes for a good purchase.
Based on our discussion, here are three things you don’t want to overlook when acquiring a company:
- Look For Fragmentation
One way that Cédric knew there’d be an opportunity to do more with translation businesses is because of existing industry fragmentation.
Having done his research, he knew there were many small translation services in Germany doing under €200,000 annually. There were only around 40 companies doing more than €1 million per year.
This suggested there was a strong opportunity to grow market share through acquisitions. He could consolidate the smaller business and streamline operations, creating efficiency and expanding revenue potential.
Additionally, Cédric was drawn to the translations industry because of existing demand. “The demand is there — 80% of German companies need translations,” he says. - Have A Continuity Plan
This seems like a no-brainer, but the truth is there are a lot of businesses that are very dependent on the owner. Big red flag!
Cédric discusses the case of another translation agency that got into trouble post acquisition: “They bought a company and lost 70% of the business because the clients were related to the [previous] owner.”
Cédric also directly lost revenue after acquiring a customer list from an individual translator whose business was strongly tied to personal relationships.
As a result, he now targets agencies for acquisition rather than solo translator businesses.
Before buying a B2B business in particular, it’s essential to understand the role of the owner and how you can ensure the continuity of client relationships once he or she is no longer involved. - Get Your Family On Board
Acquisitions are a family affair. “I think it's very important to bring the family with you because you’re taking a risk and you really need to be supported by your family,” he says reflecting on his early acquisition experience.
From working long nights at the office to meeting owners on weekends, taking over a new business doesn’t operate on standard hours.
Without a proper support system and the understanding of family members, the acquisition process can be extra challenging.
Final Thoughts: As The Pandemic Fades, It’s A Good Time To Buy a Business
The time is ripe for new acquisitions. In Cédric’s experience alone, several business owners who weren’t willing to sell previously are now ready to renegotiate after more than a year of pandemic stress.
“I think now after COVID, the CEOs were pushing, pushing, pushing. And with COVID, they had a lot of stress. Now, people — not just in small companies, big companies too — people are saying ‘no, now I want to do something else.’”
After hunkering down through the majority of the pandemic, many small business owners are reevaluating their priorities and reconsidering selling.
