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IT TAKES YEARS FOR COMPANIES TO COME TOGETHER AS ONE AFTER A MERGER OR ACQUISITION


THE CONSULTANT CHRIS POUNEY, DIRECTOR, SEVERNSIDE CONSULTING


Consolidation in the TMC sector is a concern, and is causing a lot of discussion among travel buyers, who at first may think of it only in terms of reduced competition, higher prices and less innovation However, while the annual BBT 50 Leading TMCs listing is still the starting point when companies begin to search for a new TMC, consolidation does allow new entrants into the top 50, and sees others rising up the list. Therefore it’s a a good opportunity for these companies to make a name for themselves. Some TMCs are buying a particular


expertise, such as when a major TMC bought two leading meeting & events providers recently. There is a technology angle as well: TMCs acquire competitors with their proprietary technology, such as online booking and back office – it is not just about the frontline travel servicing staff. It is worth looking at what you are buying. By purchasing a TMC, the buyer will acquire technology, staff, a client book and goodwill. A TMC can grow organically, of course, and pick up clients one by one or they


may choose to do it in one go, but that business could walk at any time. Looking at cultural fit puts buyers in an interesting position. Clients of an acquired TMC may have more reason to be comfortable about that takeover than clients of the acquiring company – the purchaser will absolutely not want to lose any of the clients from the acquired business. These events are incredibly disruptive; there are culture clashes and people get entrenched in their positions. It takes years for companies to come together as one after a merger or acquisition. From a buyer perspective, all this activity is a risk, but for those TMCs that are a bit smaller, it is a really big opportunity; they should be beefing up their sales teams and strengthening their marketing and messages because they could find themselves being invited to a lot more RFPs than they would have done. RFPs typically only function when


you’ve got five, six, seven interested parties and, if they’re all merging, you have to look further down the list to find them.


PAUL EAST, CHIEF OPERATING OFFICER, UK, EUROPE & AMERICAS, WINGS TRAVEL MANAGEMENT


Companies are increasingly reviewing their options. For some owners it is a desire to sell and for others there is a requirement to grow to get economies of scale, be that for strategic growth in a sector or entry into a new market. I think most are for economies of scale, but a few have been to secure new product or technology; whichever way you look at it, consolidation will continue. Considering the cultural fit when undertaking mergers and takeovers should be a key part of any due diligence, both by the buyer and seller, to aid integration, although I fear when there are external influences (venture capitalists), they do not pay so much attention to this. From monitoring some of the recent acquisitions and talking with colleagues in the industry, I think some will run smoothly while others will cause disruption, which could impact clients. However, I don’t think competition will push up prices; there is still such a wide spectrum of TMCs in the marketplace for companies to work with and they offer different products and solutions. Some of the activity is the coming together of TMCs of a similar size, but BTD and Gray Dawes have also acquired smaller businesses and I can appreciate the merits of both strategies. To make a difference in the mega TMC


pool, you would have to acquire numerous smaller TMCs and that would mean running multiple integration projects concurrently, which is time-consuming and labour intensive. Most recently, our acquisition strategy has been overseas, but Wings Travel Management will continue to look for the right business fit to acquire.


buyingbusinesstravel.com


2019


JANUARY/FEBRUARY


57


THE TMC


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