TransPerfect Sale Clears Final Hurdle!
Hoorah! After four-years, the TransPerfect legal battle has finally ended with co-founder Philip Shawe and his mother Shirley Shawe continuing to own and run this successful private company. After following every detail of this case, reading all available documents several times, and interviewing many employees, I feel I know what is right and wrong about this case.
First, let us celebrate what is right: Philip Shawe, the manager and 49% owner who built the business, and who EVERY witness in the case testified in favor of, prevailed in his bid. He now owns 99% of the company. Additionally and importantly, my fellow senior citizen, Shirley Shawe, who was never accused of anything in this case and was being unconstitutionally forced to sell her 1%, was able to maintain her stake (However, I understand that she did lose her control premium in the process).
I also understand the Shawes have pledged to keep the jobs where they are, and not offshore them. While there are many in Delaware who scoffed at my analysis, it was obviously correct that massive jobs were at risk, based on Bouchard’s decision to go to public auction, because the Custodian and the Court relied on this in their final rulings. Shawe was forced to bid against a private-equity backed competitor that would have cut or off-shored an estimated $50 million in U.S. jobs, according to my research.
Simply put, Shawe was made to compete on an uneven playing field for the shares he already owned, and not bid their market value (or even his former business partner’s value), but instead had to outbid HIG-Lionbridge, which is known for job-offshoring. Shawe was competing with a company that would have cut jobs, raised prices, and in the end, TransPerfect would have been devastated.
While the TransPerfect case never should have occurred, the bloated and outrageous expenses of nearly $300 million also should have never happened. This victory was righteous for Shawe, TransPerfect, and for thousands of employees worldwide. Delaware and the Chancery Court have been embarrassed by Bouchard’s method of operation, but ultimately, they got this case right. Could the same result have been achieved without years of litigation hanging over the company, and without hundreds of millions of unchecked dollars spent by court order?
That is a question generations of law students will ponder in the future, but not today. The many unanswered questions about this TransPerfect case, and who truly benefited, can be left for another day. Today let’s celebrate. I say to Chancellor Bouchard and Custodian Pincus, I do not agree with how you got there, but I do applaud the end result because the employees and their families are safe in the hands of the man who built the company, Philip Shawe.
Folks, read this industry trade article below from “Slator” which has devoted extensive coverage to this unprecedented decision throughout the case, and wraps up what everyone hopes is the final chapter clearly and concisely.
One of the most acrimonious boardroom battles in recent American corporate history is over. On May 3, 2018, the Delaware Supreme Court affirmed the Court of Chancery’s final judgment to approve the sale of TransPerfect to co-founder (and now sole) CEO Phil Shawe.
For years, Shawe had been fighting for control of the company with co-founder and former co-CEO Liz Elting. In June 2016 a court in Delaware, where TransPerfect is incorporated, ruled that the company was to be sold in an auction process.
As reported earlier, the process that began with 97 potential participants ran four bidding rounds and ended with H.I.G. Capital, Lionbridge’s owner, and Phil Shawe, virtually neck-and-neck.
Elting made an attempt to team up with private equity group Blackstone but failed to put together a competitive bid. Eventually, Robert Pincus, the custodian in charge of the sale process, went with Shawe’s USD 770m offer, citing five factors that tipped the balance in Shawe’s favor. Shawe is buying all of Elting’s shares for USD 385m in cash, yielding her about USD 287m in after-tax net proceeds.
In a May 3, 2018 email to TransPerfect staff obtained by Slator, Pincus called the Supreme Court’s decision the “last major step in the process” and expects the sale to close on May 7, 2018.
“Personally, I feel both pleased and vindicated to have won the auction and to now be in a position to ensure that TransPerfect’s successful business model will be maintained into the foreseeable future,” Shawe said in an email statement to Slator. “However, at this time, I simply want to thank the TransPerfect staff; it is our team who deserves profuse praise for driving the company’s unparalleled performance.”
TransPerfect’s performance throughout the saga was indeed impressive. The company’s revenues grew from USD 401m when the battle began in 2013 to USD 549m in 2016. Even more remarkably, the company managed to grow by another 12% to USD 614.8m in 2017, a year that saw mass departures amid the company’s executive ranks and precious management attention absorbed by the legal case.
TransPerfect can now claim the bragging rights of being the world’s largest language service provider by revenue as per the Slator Language Service Provider Index (LSPI) released on May 3, 2018.
Upon completion of the sale, TransPerfect will be released from its current M&A restrictions and is expected to return to the acquisition trail.
Slator reached out to a spokesperson for Liz Elting but is yet to receive a response as of press time.
Update: In a press release published on May 7, 2017, TransPerfect said revenues in the first quarter 2018 grew nearly 16% to USD 154m vs. the first quarter 2017. The company also announced it was going to resume M&A and pursue strategic mergers and acquisitions (the legal battle meant TransPerfect has not completed a major acquisition for over 4 years).