Iain Andrew, senior vice president of dnata’s travel division, said at the ITT conference in Ras Al Khaimah that there are “more opportunities than you can shake a stick at” in the UK, but that getting the right price is the challenge. “Some we can afford, some we can’t,” he explained.
He said dnata, which has most recently acquired cruise agency Imagine Cruising, looks at approximately one global investment opportunity every week, many of which are in the UK.
“It’s difficult for us to buy any more on the distribution side now. Because of competition clearance, it’s difficult to do anything more sizeable in the UK. But on the product side, there are a couple of opportunities,” he said.
He said he had a huge amount of respect for the UK market, which he described as being “several years ahead of where we are in the Middle East”. He cited the example of online travel agent Travel Republic, which dnata bought in 2012, as now powering all mobile websites and apps across the dnata group.
Andrew was speaking on a panel about mergers and acquisitions, where all speakers were asked how much they will currently pay to buy a business at the moment.
Andrew said, for the businesses dnata has acquired across Europe and the Middle East, the group has paid between four and nine times the company’s profits to purchase it. “I get very nervous when the [multiple of profits] is double digits. I prefer it to be below 10,” he claimed.
“We’ve looked at some very interesting ones recently, one metasearch and two start-ups, all of which have failed.”
Gareth Healey of PE firm Inflexion, said the average multiple of profits he’d pay for a consumer-facing business might be in double-digits, but that a “bolt-on” company might go for around eight times profit.
Panel moderator Peter Hemmington , head of M&A at BDO, told delegates that adoption of the internet, the rise of low-cost carriers and the emergence of new business models have contributed to “an extraordinary source of M&A activity” in the travel industry. “Travel is an industry in which you can make a lot of money if you’re a savvy investor and know what you’re doing,” he pointed out.
Dnata eyeing more UK buys
Register for free to continue reading
Get unlimited access to the latest travel industry news and analysis, comment on articles and sign up to newsletters.
Register for free
Already registered? Login here or below.
Having difficulty logging in? Try these tips, or contact support@ttgmedia.com