Debbie Potts, founding director of travel M&A specialist Summit Advisory, said buyers were sharpening their focus on travel as owners, many of whom put off plans to sell their businesses due to the pandemic, now look to move on after weathering the Covid storm.

"Over the last year, post-Omicron, the M&A landscape in travel has been defrosting," she told delegates at Wednesday’s Xeinadin/Elman Wall Leaders in Travel Summit (19 April).

Potts also touched on some of the reasons for people choosing to sell up, revealing the CAA’s proposed changes to the Atol scheme were giving some business owners second thoughts about carrying on if the reforms necessitate significant changes to the way in which they have to operate their businesses.

Potts said interest was coming coming largely from international sources. "Most of our discussions are with international trade buyers," said Potts. "We simply can’t rely any more on UK plc to source buyers for our sellers."

Potts also warned private equity investors were "still largely sitting on the sidelines", but stressed: "Travel M&A is gaining momentum. Buyer appetites are building – expect to see a flurry of announcements later this year. There are many deals currently bubbling under the surface."

Sectors with active sales activity, said Potts, include business travel, inbound travel, outbound package tour operating across both summer and ski, self-catering, educational activity travel, safari, and travel tech.

Potts said buyer appetite was being driven by access to new customers, markets and destinations, as well as an ongoing process of internationalisation, and a prevailing view it is only through acquisitions that buyers can "fast track their own post-Covid recovery and deliver their future growth plans".

Other factors, said Potts, include favourable exchange rates and ensuring targets have the necessary local expertise and talent to allow them to take a hands off approach, as well as evidence of sustainable profitability and cash flow. "If satisfied, they will pay fair multiples – [but] not eye-watering ones, not yet," said Potts.

’Safety in numbers’

Turning to sellers, Potts said after surviving Covid, it was no longer about "doing deals at any price". "The deal has to be right," she said. "This includes, more than ever post-Covid, the cultural fit and the chemistry."

However, she said potential sellers were still looking over their shoulders. "Covid may have been the mother of all stress tests, but they wonder if the father might be just around the corner such as a global banking crisis," said Potts, who added the CAA’s proposed changes to the Atol scheme were being cited by a number possible sellers.

Other potential sellers include would-be retirees. "Some sellers planned to retire back in 2020, and they’ve been waiting a very long time since," said Potts. "More have joined that queue.

"Then there are the owners seeking security and future greater opportunities for their businesses and people, as well as a job or consultancy role for themselves through a full or partial sale, or a merger with a bigger, stronger, richer parent. Basically, a safety in numbers scenario with a trade buyer that gets their business more than they feel a purely financial investor might."