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Due diligence translations: a real craft

A chat with Karelijne van Kampen, lawyer, and Astrid Konings, financial translator and co-founder of translation company Fiducia.   More than 500 companies were acquired or merged in the first quarter of 2021. A corporate takeover is a long process. It is preceded by an extensive run-up that closely involves many different parties. The buyer and the seller of course, but also an accountant, one or more lawyers, a takeover consultant and, at times, one or more financial translators. The latter group not nearly enough, in Karelijne’s opinion. As a lawyer in the field of administrative law, Karelijne often handles environmental permits and authorisations for corporate takeovers. Astrid knows everything there is to know about this. Not only is she often involved with these processes as an experienced financial translator, she also sold her own business to a major party some years ago. Astrid and Karelijne had a talk about their roles in takeovers.

‘Hidden defects’

A due diligence is standard procedure when a potential takeover is on the cards. If you are looking to buy a company, it is vitally important that you know what’s what. In such a process, accountants review the financial aspects whilst lawyers look at the legal matters. The seller usually prepares an information memorandum before entering the market. Accountants, lawyers and at times translators, are involved from the very start. “Even if the takeover is between two Dutch parties, the parties are often keen to have an information memorandum in the English language,” says Karelijne. “The fact is that companies often don’t know what the future may hold; they would like to have everything ready in English just in case.” Astrid explains: “And of course we are often involved with international takeovers as financial translators. We are usually involved from start to finish. Both parties must have a good understanding of all documents every step of the way and they therefore need to be translated.” What actually happens during a due diligence? The following topics are part of it: How many people are on the payroll? What are the current terms of employment? What is the composition of the workforce? Does the company own the business premises or does it lease the office? What is the value of the property? “There is also the administrative law part,” Karelijne tells us. “Are the permits and authorisations in place for a proper continuation of the current operations? It would be extremely annoying to find out that you cannot use the factory because permits or authorisations are missing. That’s what I must find out.” Astrid: “You could compare it to hidden defects when you buy a house.”

Preparing your own translation or outsourcing it

A translator could be involved at different stages of the due diligence. This depends on the process and the parties involved. Often (too often according to Karelijne), lawyers and accountants are asked to simply work in English. Karelijne: “As lawyers we are often asked to translate the documents ourselves or to write them in English straightaway. I have been working as a lawyer for 20 years and I still remember the first time I had to translate the Dutch term ‘College van burgemeester en wethouders‘ [‘Municipal Executive’]. But how? I had no idea. Other countries don’t know this term. The same goes for other specific terms, e.g. in environmental law. As lawyers we know our specialist jargon like the back of our hand, but to put it in another language is something else completely. Translating is a craft.” Astrid can confirm this as a financial translator: “The margin of error is considerable if it is not your job. Especially in processes like a due diligence a small mistake can have considerable consequences.” Karelijne: “We often overestimate ourselves. We think that everyone can speak and write English, but that’s not true. Lawyers often do the translation on the side, even though a small mistake can indeed have considerable financial consequences. I try to be excellent at what I do and I expect the same from a translation. And I know that I have to leave that to the professionals.”

Experience in the sector

Astrid: “The translators at Fiducia are specialists in the financial sector. They come from that sector and have worked at major banks and prominent accountancy or law firms. They know the right terminology and know how the sector works.” Karelijne: “People often think they can cut back on costs by not using a translator and doing the translation themselves. But cutting back on costs for a financial translation is ‘penny wise pound foolish’ in my mind. Also, when I do it myself, it takes time, and more time than a professional would need. I use online dictionaries. Also, I think that the rates for professional translations are altogether decent.”

Internal super specialists

“Indeed, you can save time and money when you use the services of a translation company,” says Astrid. “We have different kinds of professional translators in our network that we can use for different kinds of texts. We may use a legal translator for terms of employment and employment contracts, while we would use a more marketing-oriented translator for the translation of a marketing brochure.” Karelijne: “Internal super specialists!” Astrid: “Yes, they all have access to the translation memory and any glossaries that the client might have, but they focus on their own areas of expertise. All translations are then revised at Fiducia to guarantee the consistency in terminology, fluency and style.”

Knowing what is important

Astrid: “As a specialist translation company, we really cooperate with the client. We feel the urgency in these trajectories. We know what is important, simply because we, as financial translators, come from the same world. Karelijne concludes: “The stakes are often high in a due diligence. And this means that a proper translation is key. If you deliver excellent work as a lawyer or accountant, you’d want your translation to be excellent too. In the course of the process, you’d like to rule out the risks as much as possible. A good translation is so much more professional. And the translation costs as part of the entire process are often peanuts. I’d say it’s a clear-cut case.”

Dave van den Akker Fiducia

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