Mark Pestronk
Q: I own a midsize agency with a small number of employees and a score of independent contractors. As an aging baby boomer, I am looking toward the next phase of my life, and I need to decide among the various options available to me. Those options include selling the business and retiring; merging it with another agency whose owner can run both businesses; keeping the business but having a trusted employee run it for me and pay me profits; turning the clients over to another agency in return for a commission split; or shutting it down. How can I decide?
A: The first part of my advice is to pick the option that would pay you the most money in retirement while relieving you of the stress of running the business. Once you do so, the second part of my advice is to work part-time selling travel -- but only if that is what you enjoy.
So, how do you get the most money with the least stress? The answer is either selling your agency or merging it with another agency whose owner can run your business. Of the two options, selling or merging, the former is more common and usually more successful.
If you don't have a buyer in mind, here is the order in which you are likely to find a suitable candidate:
First, turn to the owner of a larger agency whom you trust. Typically, such an owner would be a colleague from your association, consortium, co-op or franchise. Over the years, several such organizations have established "matching" programs for members who are sellers or buyers. Even if there is no program, you can take the initiative in finding a match.
Second, if you have a host agency, your host's owner may well be interested in acquiring your agency. Indeed, some host-IC agreements give the host a right of first refusal or an option to buy the IC's agency.
Third, consider a referral from a broker that specializes in travel agencies, such as Innovative Travel Acquisitions. Brokers can almost always find interested buyers.
Fourth, some agency owners sell to a long-time employee or group of employees, and that can be a successful path to retirement if the employees have the funds to pay the purchase price, or if you are confident that they can run the business profitably enough to pay you from the profits.
You mentioned merging, which is defined as two companies combining into one company. Mergers do not automatically result in payments to the merging parties, unlike a sale by a seller to a buyer. In any case, in my experience, mergers are quite rare.
You also mentioned turning the agency over to a trusted employee in return for periodic payments out of the profits, sort of like a retirement pension. With this option, the seller has to worry that the employee may not produce enough profit to pay the purchase price.
I would rule out the option of simply shutting it down. Although that is what many travel agency owners apparently do, I see no reason to do so, unless you have no business left.