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@TransPerfect $1B Tower of Babel Exit Strategy in Hands of Delaware Court

@TransPerfect $1B Tower of Babel Exit Strategy in Hands of Delaware Court

TransPerfect Global Inc., one of the world’s leading providers of translation, website localization, and litigation support services. It is also a WBENC-certified women-owned business. TransPerfect reportedly generated over $500 million in revenues and $80 million in EBITDA in 2015. The company is said to have a market value in excess of $1 billion. TransPerfect is a Delaware corporation with its headquarters in New York City, and regional headquarters in London and Hong Kong. It has offices in 90 cities worldwide, employs more than 3,500 full-time employees, and maintains a network of more than 10,000 translators, editors and proofreaders working in approximately 170 different languages. More than 3,000 global organizations employ TransPerfect’s GlobalLink product suite to simplify management of multilingual content. LANGUAGE BARRIERS The court case chronicles “the tumultuous relationship of two individuals who started a company (TransPerfect) in a college dormitory room over twenty years ago,” while attending business school at NYU. The company grew from a two-person operation into one of the top 125 privately held companies in New York. One co-founder, Liz Elting. owns 50% of the company. The other co-founder, Phil Shawe, owns 49%. They currently serve as TransPerfect’s co-CEOs and its only two directors. The remaining 1% is owned by Shawe’s mother, Shirley Shawe, who is firmly aligned with him. “Shawe has accused Elting of spiking his ankle with her pointy pumps and throwing a pitcher of water at him in a conference room; she, in turn, has accused him of crashing her Jamaica wedding and hiding under her bed during a business trip to Brazil,” the New York Post says. DELAWARE COURT OF CHANCERY: THE NEW GOLDMAN SACHS Delaware Judge Andre G. Bouchard accepted the recommendation of attorney Robert B. Pincus, a partner at Skadden Arps Slate Meagher & Flom, the custodian appointed to oversee the judicially ordered sale of TransPerfect, to pursue a modified auction “permitting each stockholder to bid for control of the Company (alone or in partnership with a third party), as well as permitting third parties (unaffiliated with the stockholders) to bid for the Company.” After his appointment by the court on August 13, 2015, Pincus engaged Houlihan Lokey Capital to act as financial advisor, Alvarez & Marsal to provide financial and operational services, and Grant Thornton to perform an audit assessment and eventually an audit. Pincus concluded that, absent a consensual resolution before implementation of a sale order, the modified auction would be “the alternative most likely to maximize stockholder value while continuing the business as a going concern (and which can be accomplished in a reasonable time frame).” The court granted Pincus “complete control of the auction process,” including among other things, “determination of ‘qualified’ bidders to participate, … the number of rounds of bidding, … selection of a winning bidder…” and “retention of financial advisors and other consultants to assist the Custodian with execution of the auction process.”

“In essence, the court stepped into the role typically reserved for experienced M&A investment banks, with far greater expertise, resources and access to the global private equity and capital markets, which could arguably have been able to produce much faster and far better results for all the stakeholders involved,” commented ExitHub’s CEO Norbert Mehl. “This story is reminiscent of the biblical Tower of Babel.”
“It’s never happened in American history, for a private, profitable business to be taken over by the government in a forced sale,” Shawe said. “Mr. Shawe is resolute that the company never faced irreparable harm regardless of any alleged acrimony between the shareholders,” said his attorney Martin Russo. “He is confident that the company will continue to prosper and reiterates his offer of $300 million cash to Ms. Elting for her shares.” Elting declined Shawe’s offer and made in turn her own $300 million counteroffer for her ex-partner’s shares, which he declined. THE TOWER OF BABEL: BIG BUSINESS [caption id="attachment_432505" align="aligncenter" width="1024"]The Tower of Babel by Pieter Bruegel the Elder (1563) The Tower of Babel by Pieter Bruegel the Elder (1563)[/caption]
“The Tower of Babel (/ˈbæbəl/ or /ˈbeɪbəl/; Hebrew: מִגְדַּל בָּבֶל‎‎, Migdal Bāḇēl) is an etiological myth in the Book of Genesis of the Tanakh (also referred to as the Hebrew Bible or the Old Testament) meant to explain the origin of different languages,” says Wikipedia. “According to the story, a united humanity of the generations following the Great Flood, speaking a single language and migrating from the east, came to the land of Shinar (Hebrew: שנער‎‎). There they agreed to build a city and a tower “tall enough to reach heaven”; seeing this, God confounded their speech so that they could no longer understand each other and scattered them around the world.”
More than 6,500 languages are spoken around the world. The global market for outsourced language services and technology was over $38 billion in 2015 and the 2016 market was estimated at nearly $41 billion, with more than half of it within Europe, according to independent market research firm Common Sense Advisory (CSA Research). The language industry is big business, with the worldwide language services market growing at an annual rate of 8% for the past several years, and a projected growth rate of 6.5-7.5% annually through 2018, CSA says. In its 2015 annual report CSA listed the Top 100 Language Service Providers or LSPs worldwide, ranking Lionbridge Technologies (US), TransPerfect (US) and HPP ACG (FR) in the top three spots. THE 28 ATTORNEYS AND 11 LAW FIRMS BACKING THE 2 INDIVIDUAL LITIGANTS Elting is represented by 13 attorneys and 4 law firms: Eric Stone, Gerard Harper and Robert Atkins of Paul Weiss Rifkind Wharton & Garrison LLP, Philip S. Kaufman, Ronald S. Greenberg, Marjorie E. Sheldon, and Jared I. Heller of Kramer Levin Naftalis & Frankel LLP, Kevin R. Shannon, Berton W. Ashman Jr., Christopher N. Kelly and Jaclyn C. Levy of Potter Anderson & Corroon LLP, and Kurt M. Heyman and Melissa N. Donimirsky of Proctor Heyman Enerio LLP. Shawe is represented by 15 attorneys and 7 law firms: Ronald C. Minkoff, Richard M. Maltz and Andrew J. Ungberg of Frankfurt Kurnit Klein & Selz LLP, Philip L. Graham Jr. and Penny Shane of Sullivan & Cromwell LLP, Howard J. Kaplan and Joseph A. Matteo of Kaplan Rice LLP, Gregory P. Williams, Lisa A. Schmidt and Robert L. Burns of Richards Layton & Finger PA, Peter B. Ladig, Brett M. McCartney, Kyle Evans Gay of Morris James LLP, and Paul D. Brown of Chipman Brown Cicero & Cole LLP, and David L. Finger of Finger and Slanina LLC. Photo: Liz Elting, Co-Founder & Co-CEO of TransPerfect. (SmartCEO/Mindy Best; Inset: Wikimedia)]]>