Thinking About Selling Your Travel Business? Summit Advisory Answers The Most Frequently Asked Questions

If you know your way around our blog, you might be familiar with Summit Advisory, the Travel M&A experts and Elman Wall’s sister company. At the same time, you might have stumbled into a previous article in which Summit Advisory’s founding director, Deborah Potts, illustrates the 7 Hats of a Travel Corporate Finance Advisor. Deborah explains how the world of corporate finance can be all too unnecessarily shrouded in mystery and gives readers a lighthearted illustration on the hats SA has to wear when it comes to selling your Travel Business.

This time, Summit Advisory has taken things a step forward to bring readers some of the most frequently asked questions when it comes to selling a Travel Business.

  1. How long does a travel business sale typically take?

It’s a bit like having a baby! 9 months from project commencement to completion is a good guide. This assumes no skeletons in your closet, your own availability at key stages of the process and potential buyer availability for presentations. Lawyers tend to disappear for most of August and December so we need to allow for this when we agree the Project Timeline with you.

In certain circumstances, projects can be fast tracked.

  1. Why use an M&A specialist firm to sell my business?

Most business owners only sell their business once.  Most trade buyers and private equity houses have considerably more experience in purchasing companies. By engaging a professional M&A firm, you ensure you are not at a disadvantage and the experience scales are balanced.

Many buyers will also tell you that they view your engagement of a professional M&A firm as a sign of serious intent. Furthermore, they know they will save time and money as you will be better prepared for the Sale Process and all the relevant information will be available at the right time.

  1. Can’t I just use my Accountants to sell my business?

 Selling a business is more about Marketing than Accounting.

Accountants have their own role and responsibilities to fulfil in relation to your business and will, indeed, need to be involved in the due diligence part of the deal process. However, when it comes to a travel business, the numbers for sale purposes are often different to those for your formal accounts.  We spend a lot of time examining them to ensure your business is presented in its true commercial strength with its true underlying profit.  After all, your formal Accounts may be designed to minimize profit and hence corporation tax.

Furthermore, it’s often what your Accounts leave out that drive value. Your Accounts say nothing about your market sector, your market  positioning, your products and services, the strength of your brand, your talented team, your customer loyalty,  routes to market, IT and so much more that tells the true ‘Story’ of your business.

  1. Is it important that you are Travel Industry specialists?

Yes!

Our deep understanding of the Travel Industry, your sector and niche ensures not only that your  company’s ‘Numbers’ and ‘Story’ are presented in the best possible and true light, but, also, that your business is  presented to  the most relevant potential buyers. Our contacts are second to none and our Research arm ensures our worldwide database of buyers by sector interest, is constantly growing.

As we only focus on Travel Industry deals, we are highly familiar with the questions buyers will ask, industry benchmarks, due diligence questionnaires, deal structures and valuation ranges. And our understanding of the requirements of the trade regulatory bodies and those of other stakeholders, such as your Merchant Services and IT providers often proves invaluable when it comes to securing you the best possible deal and one that will complete on time.  We’ve even found ourselves having to educate overseas trade buyers on eg ABTA, ATOL and IATA requirements to ensure deals cross the line for our clients.

When it comes to selling  your travel business, you deserve to have fully on your side a specialist travel industry M&A firm that really understands your ‘Numbers and Story’, as well as the Sale Process and marketplace for your business.

  1. How do you ensure that I will get the best price for my business?

A business is ultimately worth what someone will pay for it. And the best way to drive price is competitive tension. Our tried and tested Sale Process, allied to our buyer ‘Search and Selection’ research are designed to deliver this. Remember that ‘beauty is in the eye of the beholder’. It’s our role to ensure that when it comes to your beauty parade, all the right eyes are on you and competing for your attention.

Of course, headline price is not the only aspect of the deal. Payment and your handover terms, as well as definitions of ‘surplus cash’ and ‘working capital’ all need to be negotiated too, plus other business specific issues that may arise, let alone  the interplay of tax or regulatory considerations.

  1. Can you reassure me that my Sale Process will be confidential?

No potential buyer will even get to learn your company’s identity without your prior approval and before having signed our rigorous Non Disclosure Agreement.

As a boutique, specialist Travel Industry M&A firm, we are opposed to the ‘scattergun’ marketing  approach of larger brokers and the attendant, enhanced risk of a confidentiality breach. Our targeted approach means that only the most relevant, serious potential buyers are even invited into your sale process in the first place. Their reputations are also at stake. Confidentiality works two ways. A breach is in no one’s interests.

Having said this, nothing stops speculation but only those fully signed up to our confidentiality agreement know for certain that your company is on the market.

  1. Should I tell my staff that the business is for sale?

This question worries many owners. Our view is to avoid doing so for a number or reasons, not least of which is confidentiality obligations. Moreover, why worry your team with speculative ‘what if’ scenarios that you are in no position to answer with certainty until a sale completion. It may well be that you require the involvement of senior management at various stages of the process, with the heaviest workload generally falling on your Financial Director’s shoulders, if you have one. We will discuss and advise you according to your own company’s circumstances and fully respect your choice.

  1. Will I need to stay on in the business at all after it is sold?

All aspects of a deal are negotiable. It’s important you share at outset with us your reasons for sale and personal preferences. Buyers are understandably concerned to mitigate any risks to business performance triggered by an owner’s departure. The more dependent the business still is on you personally, the less likely we are to be able to secure you a ‘clean break’, without an impact on value.

Trade, as opposed to private equity buyers,are more likely to let you leave the business fully at sale or shortly after an agreed handover period.  Private equity will not run your business. They look to invest in a Management Growth Plan. If your team can demonstrably own and run this without you, they can prove to be your exit pass.

Whilst some owners cannot wait to leave their business, others are reluctant sellers due to ill-health or other personal reasons. Some are perfectly happy to sell but continue to work in the business without all the responsibilities and risks of ownership and to enjoy the benefit of increased resources and investment.

  1. How do your fees work?

Our fees typically consist of an upfront Project Entry fee and success related Transaction fees. The latter are on a sliding scale of percentages of the Purchase Consideration we obtain for you.  Quite simply, the more you receive, the more we receive. The Project Entry fee ensures commitment from yourselves and ourselves to your Sale Project. However, by far the lion’s share of our reward depends on a successful sale. Our mutual interests are absolutely aligned.

Fees are tailor-made on a project by project basis. You are very welcome to meet us for a complimentary, confidential discussion and we will provide you with a quote.

  1. Can you share any testimonials with me from previous clients?

Please contact our Director, Deborah Potts, who would be delighted to share testimonials with you and answer any other questions you may have about selling your travel business on a completely confidential, complimentary basis.

For more information email Deborah Potts at deborah@summitadvisory.co.uk or call 0207 600 5772

©D Potts

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