As baby boomers are hitting their mid-sixties, the rate of travel agency acquisitions is accelerating. Innovative Travel Acquisitions, Inc. has its finger on the pulse of the market and have now completed 602 successful closing transactions since our inception in 1991.
The market changes from year to year. Sometimes it is a buyer’s market, sometimes it is a seller’s market. Sometimes it is pretty neutral. Right now, we are in a strong seller’s market and for those considering a sale, it is all about the last 24 months of sales! Anything beyond that is inconsequential.
But selling an agency can be difficult and dangerous. With so many transactions under our belts, we know what makes deals go south; here are our top six reasons.
- Inflexibility. You are not selling a piece of china. A business is a living, breathing thing, and you need to be flexible in structuring the deal. If you are set on receiving $X and not a dime less, you likely will be left out in the cold. In fact, a deal for $X-Y plus an earn-out could make it into a much better deal than you originally thought. The key here is to be flexible in your terms and be open-minded.
- Not knowing the buyer. Face it, you are in a relationship with the buyer. Get to know them as best you can. You will be working with them through a personal, emotional, and complex transaction. Possibly you will be working with them long after the deal closes. Know who you are getting into bed with.
- Not believing time is of the essence. It is. A better deal may come along. The buyer may have second thoughts, or something outside of your control may impact the sale—Zika Virus anyone? Strike while the iron is hot and make the deal.
- Negotiating to win every point. Every transaction is a game of give and take. You are not going to get every single thing you ask for in the deal. Just deal with it and be flexible. Know your primary points and hold true to them; but be willing to deal.
- Nitpicking the small stuff. So many deals go south because of someone nitpicking a minute detail. Maybe you have a company van that you wanted to keep and the buyer wanted to buy. You want to keep the new Macbook Pro but the buyer wants ALL of your computers. The small stuff has a way of derailing deals. Stop nitpicking.
- Not retaining an expert. Most of us do not buy and sell businesses every day. We consistently preach to our clients how they need an expert to guide them with their travel plans. Why on earth would you assume you knew enough about travel business sales, travel business law, and travel business accounting to do it on your own? You will need a competent business advisor to structure the deal for you to make sure you are getting the best value. You likely will need an attorney to advise on the legal structure of the deal. And finally, an accountant to look at the books to make sure there are no hidden surprises in the books. Yes, it will all cost money (usually borne by the seller) but it is money well spent.
So what if you are buying an agency? Next time I will discuss the six benefits of buying an agency! Stay tuned!
Innovative Travel Acquisitions, Inc. president Bob Sweeney and staff have completed more than 600 acquisitions of tour and travel related businesses since their inception in 1991. Bob has been in the brokerage industry for 21 years. He is a proud member of ASTA, NTA and many other known industry affiliations. Known as “the Matchmakers for the Travel and Tour Industry” ITA is available to answer any questions you may have by contacting them via phone 800-619-0185 or by sending an e-mail to firstname.lastname@example.org.