Interest high in selling and buying travel businesses

Interest high in selling and buying travel businesses

The travel agency sector is seeing increased activity when it comes to interest in business sales and acquisitions, according to an Auckland based accountant who specialises in the industry.

 

Paul Davies, of TA Accounting Ltd, says the past couple of months have seen a higher number of business owners than usual looking to sell their agencies, but there have also been enquiries from potential buyers. ‘This past week alone I have had people wanting to sell and also one interested in acquisition. There is definitely more activity than usual,’ Davies says. He says the trend is being driven by a buoyant travel market, helping a sense of profitability in the sector, along with the ‘generation factor’ and baby boomers wanting to exit their business.

 

‘The challenge for owners is to get the value out of their business. They are often making a good profit but are they going to get three or four times the earnings for the agency.’ He says one difficulty, especially for smaller travel agencies is a perception that the clients’ loyalty is with the owner. ‘It can be perceived as personal goodwill, rather than business goodwill.’

 

‘So people have to get the business growing in its own right, without being dependent on the owner. That way you can get someone from outside the industry to buy in.’ He says another way to go, and one which is usually successful is to bring a younger manager or consultant through from within the business. ‘That means training that person on the job to take over. And the previous owner may stay working and use their expertise without the same responsibility and commercial risk.’ Davies says opportunities certainly exist for new entrants in the sector – especially around specialisation. ‘People are looking at developing a niche and they are having success by doing that.’ Contact paul@taaccounting.co.nz

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