M&A in Travel

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Insights into the Market, Offers, Multiples, Deals

TMC (Travel Management Company) buying is heating up in the travel industry.

In the TMC acquisition space I’ve seen publicly traded companies buying TMCs for 3x-5x EBITDA, using their publicly traded stock to entice sellers to sell at lower the enterprise valuations. The highest I’ve seen in a TMC transaction recently is 8x EBITDA.?TMCs are valued by sellers based on EBITDA due to the transactional nature of their revenue model.?The bottom line is the more EBITDA you have the higher the enterprise valuation for your company.

One of the advantages for TMC owners to sell to publicly traded companies is that you can liquidate your stock for cash generally between 90-120 days post the transaction. Some of these publicly traded companies that are acquiring TMCs are trading at 20x+ EBITDA. Great deal for the publicly traded.?

AmexGBT & CWT Acquisition

AmexGBT recently announced the acquisition of CWT. It’s been in the press daily. This is a good deal for CWT as they can exit their position. I was fortunate to meet many of the CWT innovation team members over the years. Talented people that worked hard to get the mother ship to innovate.

From what I’ve read on the deal, most believe that the deal will go through. I somewhat disagree. There is a possibility the U.S. government?doesn’t approve it as you’ve effectively got the #1 TMC acquiring #3. It seems lately the U.S. government is getting more interested in leveling the playing field.

Remember Sabre was denied acquiring?Farelogix? Let’s hope the AmexGBT/CWT deal goes through. The best part of this deal for buyers and sellers in the travel industry is the disclosure which is hard to come by in travel acquisitions.

The Deal

• CWT- B2B, Business Travel, Travel Agency, Transactional Revenue Model Acquisition EBITDA multiple: 7.6x 2024E EBITDA $570M Enterprise Value, cash + stock consideration

2024E $850M NET Revenue, estimate $70M-$80M EBITDA

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Direct Travel Acquisition

Direct Travel was acquired by an investment group led by Steve Singh, the former founder/CEO of Concur and partner in VC firm Madrona Ventures.

What’s interesting about this deal? A few things.

Direct Travel was built through acquisitions. Acquiring double digit TMCs from 2011-2021. The playbook. Acquire companies, build up scale, then sell when a great buyer comes along. ChaChing!

The investment group partnership behind the acquisition is a little weird. Per the press release there is a VC firm, a hedge fund, and a credit & insurance firm as backers. It would be great to see how this was structured.

The most interesting part of the deal? Madrona Ventures, one of the partners in the investment group is effectively buying customers for their 3 travel startups in their portfolio to gain traction. All 3 startups sell to corporate enterprises and TMCs. The business travel vertical is super slow to gain traction. Selling to TMCs can feel like you’re literally selling in the stone age. It’s so difficult to get TMCs to buy, especially novel innovations the 3 startups have brought to market.

Singh made a brilliant move and figured out a model to gain traction for the startups. Just buy the customers using institutional capital. The institutional investors I assume will get cash from the EBITDA put off by Direct Travel. Madrona Ventures the VC gets its 3 portfolio?companies potentially thousands of new paying customers. Win-win.

My guess? The Direct Travel deal was acquired at >7X EBITDA for all cash and or a large % in cash.

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NEW M&A Opportunity for TMC Sellers

Talking about TMCs, I have 1 new buy-side client that is looking to acquire a corporate/business travel TMC in the USA. Here is the buyer’s profile below. If your TMC meets the criteria and you would be interested in selling, reach out to me for a confidential conversation. [email protected]

U.S. TMC (Travel Management Company) in the Business Travel vertical

• Buying?- U.S. TMCs in Corporate/Business Travel
• Buyer is a family owned TMC looking to acquire a U.S. based TMC with >$100M GBV with positive EBITDA.
• Prefer TMCs in the East Coast, Southeast but open to all areas in the US.

Travel M&A Offers & Deals I’ve Seen Recently.

A few other offers and deals I've seen lately in the market.

B2C, Leisure Travel, Travel Agency, Transactional Revenue Model 6.2x 2023 EBITDA <$5M Enterprise Value, cash + earnout consideration ?

B2B, Travel Tech, Leisure & Business Travel, Transactional Revenue Model 7x 2023 EBITDA <$50M Enterprise Value, cash + earnout consideration

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