International Deal of the Year: Clarion Capital Partners, Moravia


  • Company: Moravia
  • Lender: Barclays
  • Legal advisor: CMS, Paul Weiss, Mintz Levin
  • Financial adviser: William Blair


  • 137.8 pct gross IRR; 8.3x multiple
  • Increased number of employees from 916 to 1,521
  • Overhauled sales, introduced company to prominent new customers

The sale of Moravia to RWS was “a phenomenal result” for Clarion Capital Partners, said Jonathan Haas, who heads the firm’s healthcare and business services groups.

But the path from thesis to exit was complicated, with false starts and setbacks along the way.

Managing Partner Marc Utay said Clarion has long been interested in “companies that facilitate international commerce.” Though business has been increasingly global for decades, “it’s actually pretty hard to do a good job, for people who want to do business all over the world.”

Good business-process outsourcing involves applying expertise to create an economy of scale, Utay said. One service that fits that description is translation and localization.

“We were introduced to a company in 2011 that was trying to disintermediate traditional translation agencies with a software solution,” Haas recalled. “It was too small for us, but they were aware of another company that was undergoing a strategic alternative process, and that happened to be Moravia.”

Founded in Czechoslovakia in 1990 by linguists Eva and Rudolf Forstinger, Moravia started out translating technical documents. Some early clients were photocopier companies, whose machines had been banned under Soviet rule.

In 1996, when Microsoft was seeking a vendor in Eastern Europe licensed to use Trados, the leading translation software, Moravia fit the bill. The company began localizing Windows and Office for a number of countries. Other tech giants would follow as clients.

Clarion wanted to put Moravia and the small software company together at first. But the firm decided “there were too many bets,” Haas said. Moravia itself was still quite small, with a new CEO, customer concentration issues and geographical quirks. Clarion was impressed, however, and had established a good rapport with the owner, Katerina Janku, daughter of the Forstingers.

After considering a second combination and coming to the same conclusion, Clarion kept an eye on Moravia. “Three years later, the company actually had managed to exceed all the projections that they had shared with us,” Haas said. The question now was where to find “the next leg of growth.”

Up-and-coming unicorns were identified as potential targets, a strategy Clarion thought it could help facilitate. So in February 2015 the firm acquired a majority stake.

Utay said the circuitous process suited Clarion: “We can be at this for years, meeting companies, understanding an industry better, until we find a situation that really makes sense for us. It takes us out of the broadly based auction business and into things that are more bespoke.”

Financing the deal was a challenge, since Moravia drew most of its revenue from U.S. customers but was based in the Czech Republic, which lacked established precedents around bankruptcy. That it was a small company seeking a cash-flow loan also deterred some lenders. Eventually a deal was struck with the Czech subsidiaries of Erste Group Bank (Austria) and Société Générale Group (France).

Once invested, Clarion worked to add new customers, successfully introducing Moravia to two of the biggest tech unicorns. Major public companies signed on as clients as well.

An enterprise-resource-planning system was implemented to replace the outmoded management processes for the company’s three production centers (in Brno, Czech Republic, Nanjing, China, and Rosario, Argentina). A new head of sales was hired. Headcount climbed to 1,521 from 916.

Ebitda more than doubled, to $27.1 million in 2016 from $11.6 million in 2014. Wanting to use the increased borrowing capacity for acquisitions, Clarion pursued three life-sciences translation firms. But Moravia was outbid, twice by RWS, a British patent translation provider that was trading at 25x Ebitda. In August 2016, Clarion did a dividend recap, recouping 1.2x the shareholders’ investment.

In the end, RWS acquired Moravia itself, agreeing in November 2017 to pay $320 million. “There’s a little bit of a bittersweet element, because we really like the company and the management team, and it would have been enjoyable to continue the journey,” Haas said.

“But we’re paid by our LPs to optimize companies at any given point in time, and we thought that this was a good time, given the strength of the M&A market.”

Photo courtesy Moravia.