April 24, 2024

BDO predicts more TMC mergers in 2022

Next year will bring more mergers in the TMC sector, according to an accountancy and business advisory expert.

Speaking to delegates at this week’s BTA Conference in Liverpool, BDO Partner Harry Stoakes said he expects to see more corporate travel businesses coming together in 2022.

Pointing to two recent deals – TripActions’ acquisition of Reed & Mackay and TravelPerk’s purchase of Click Travel – he said both commanded high prices which the previous owners would be “incredibly happy with”.

“If you’re a company with really good tech, like Reed & Mackay and Click, it can be a seller’s market as they both commanded very, very strong valuations indeed,” he said.

He said these deals show there is a huge wall of money in the US, which is now flowing through to UK targets.

“There’s never been a shortage of acquirers. In this market you have the luxury of lots of potential buyers. If the Americans want to call themselves tech businesses when they are really travel businesses and raise money at eye-watering valuations, it’s good news for UK business owners looking to exit.

“If you look at how good the UK has been at generating successful travel businesses with decent volumes, those UK business have added real substance to those US tech businesses and the exchange rate helps.”

He said for US buyers wanting to invest in Europe, the UK is still the most attractive option.

Asked if he would expect more TMC acquisitions, he said: “Recovery is going to take two or three years so it’s not going to be an instant bounce back and lots of companies have taken on more debt and their customers will be impacted in having to repay that debt.

“When you look at the landscape of this sector, this is still a very fragmented market so I think there’ll be more merger activity than private equity investing in one company.

“There will be more companies coming together to increase scale and have more resources to invest in tech, which is a must, and to try to increase their operating margins as a result.

“Last year was very, very low on transaction volumes but I think in 2022 we’ll start seeing that pick up.”