Here’s how to prepare your travel agency for sale: Travel Weekly

petronk brand

petronk brand

Q: In his Legal Briefs column, “Assessing the Best Time to Sell Your Agency,” in the September 12 issue, he stated that the best time to sell is when you’ve had a year of strong financial results and have taken the necessary steps. to prepare your agency for a sale. You’ve already covered the topics of financial results, but what about the steps necessary to prepare your agency for sale?

A: Assuming you have had, or will have by the end of the year, a good year of earnings, here are the steps you need to take to facilitate the transaction and maximize the sale price.

Generally speaking, the larger the agency, the more likely it will have to do to prepare for the sale. In contrast, if you have a small agency with only a million or a few million dollars in gross sales, you can probably stop after the first three steps below.

• First, all agency owners must have clear and accurate income statements (also known as profit and loss statements, or P&Ls) and balance sheets, collectively called “financial statements.” Unless you have a large agency (ie over $10 million), you don’t need them to be trained by a CPA.

• Second, you must be familiar with your financial statements so that you can answer any questions from potential buyers. Nothing turns off more than salespeople who can’t answer basic questions like “What’s your cruise vs. hotel sales mix?” or “What are the long-term liabilities on your balance sheet?”

Fortunately, many or even most travel agencies use the Trams accounting system, which is designed specifically for the retail agency business and produces financial statements in formats that are fairly easy to understand and well known to travel buyers. industry.

• Third, make sure you maximize revenue by choosing preferred vendors that pay the highest commissions. Join a host agency or operate using a branch of a large agency that has at least some airline commissions, as well as agreements with suppliers that provide more than 10% on cruises, tours and all-inclusives.

• Fourth, try to put your largest group or corporate accounts under written contracts. This will make your business more attractive to buyers because accounts under contract are more likely to remain in place, even if the contracts give the accounts the right to terminate.

• Fifth, refrain from signing new long-term contracts with sellers or landlords. If you have Saber and sign a new five-year contract today, you’re probably dissuading almost all Travelport or Amadeus users from wanting to consider buying your agency.

• Sixth, cut back on any non-essential staff and other expenses so you can show a high profit margin. This is often the hardest step to take, as many agencies have loyal senior staff, but they may not contribute to your bottom line.

• Seventh, if you have a larger agency, train or recruit someone who can take your place in case something bad happens or you want to retire soon after the sale.

Leave a Comment