t's not supposed to be a good thing to
be in the middle of a situation. But Bob Sweeney is in the middle
and he's doing fine because his company is a travel industry
brokerage that hooks up people looking to sell travel agencies with
those looking to buy them.
Sweeney's firm, Innovative Travel Acquisitions (ITA) of Roswell,
Ga., has arranged more than 400 industry marriages since its
founding in 1991. Up until a few years ago, it would broker three
or four mergers or acquisitions a month -- but that pace has
tripled. In December, ITA handled the sale of 11 agencies, with
another half-dozen scheduled to close by last week.
Sweeney says the typical seller owns an agency that is neither
small enough to carve out a modest niche nor big enough to carve
out a big market share.
"The average seller runs a midsize corporate agency," he says.
"It probably has 10 to 100 employees and does between $10 and $50
million a year. These are the ones that are getting squeezed, just
the way it happened in retail hardware and in pharmacies."
And the buyers? Sweeney says they're both outsiders and
insiders, but the outsiders tend to be different from those in the
industry's earlier days.
"You don't see many doctors' or lawyers' spouses getting into
the business anymore," he says. "The new entrants tend to be fewer
but more sophisticated, maybe former corporate executives who got a
nice check when they were laid off in their early 50s."
ITA stays in touch with outplacement firms and human resources
executives to identify many of these people.
Another source of new blood comes from outside the country. "We
work with immigration law firms to identify people who want to buy
businesses in this country. If they do that, they get on a fast
track in terms of immigration."
Many of the buyers from within the industry run agencies looking
to increase well beyond the $50 million that Sweeney says is a
watershed mark.
"If they're in the $50 million range and want to grow to, say,
$100 million, acquisition is the way to go."
One path to this kind of growth is to use a "cluster" approach
in which the buyer expands initially within its own state or
region.
Sweeney thinks the current pace of mergers and acquisitions will
last for two or three more years and then settle down. During that
period, he says, there are some outstanding opportunities for
growth-minded agencies.
More information about Innovative Travel Acquisitions can be
found at www.travelbusinessbroker.com.