The general economy backdrop is bolstering a healthy mergers and acquisitions scene in travel, experts told last week’s Elman Wall Travel Directors’ Summit.
Jason Katz, a partner and private equity investor Kings Park Capital, said: “The backdrop us very positive. Everyone looks at the industry and sees lots of trends that point to long term growth.
“The UK is in good health and with an ageing population and online distribution there are lots of things driving it. Clearly some prices of recent transactions have been eye watering. Not every business deserves those kind of valuations.”
Martin Robinson, chairman of Inspiring Learning and previously chief executive of Center Parcs Europe, agreed. “It’s much better trying to do deals, whether buying or selling, in a positive consumer environment.
“Ordinary people are probably having the best time now for a number of generations with low inflation rates. These people have a lot of income which they now regard as disposable which they are spending on holidays.”
Robinson said in tough economic times the people with the best businesses tend not to try to sell because they fear not being able to realise the true value in a difficult market.
“There are good businesses and bad businesses. A lot of people with bad businesses have been tempted to try and sell and a lot of people with good businesses have tried to get value. I would rather be a seller than a buyer at the moment but it’s a pretty good environment for both because there is a lot of money around.
“I’ve bought a couple of businesses this year, it’s been a very active year. For anyone in the room thinking about selling, it’s a great time to sell.”
Robinson said the private equity sector has evolved into three board segments with the big guys at the top sprinting ahead due to their relationships with the banks, small niche players who are also doing very well and the rest in the middle. Robinson warned sellers to beware players in this middle area who he said was very competitive. “It gets pretty nasty,” he said.
Robinson said there are times when there is a mismatch between what buyers and sellers are looking for from a deal and he warned although it is a great time for M&A activity in travel, it is not going to last forever and the way the market it going could “precipitate the bursting of the bubble”.