NOW is the time to start planning your exit strategy

By Judith O’Neill*

THE success of companies supporting home based travel agents is obvious and the enthusiasm of those individual entrepreneurs is well recorded.

However, I wonder what those individuals will do when they want to cease working? Presumably wind down their client base and gradually withdraw? Maybe the supporting companies have exit strategy plans for their members?

I think the “old” system of commission or contract agents working under the umbrella of a travel agency may have had a greater potential success rate for a “sale” of their client base to their umbrella travel agency.

This then brings me again to enquire and question what the vast majority of travel agents are planning for their exit strategy.

Like the majority of successful small business entrepreneurs, most travel agents see the sale of their business as the ultimate reward for the hard work they have put in and the risks they have taken.
What I am asking is: “Have you taken the necessary steps to maximise the value of your company and plan your exit?”

Having been involved in managed mergers and acquisitions of travel companies and the sale of travel agency businesses over the past 30 years; I have learned a thing or two about sales and mergers!

Prepare your business for sale

It is important to take a critical look at your company and identify any areas of weakness which a buyer could use against you during the sale process and therefore enable them to negotiate a lower sale price or, worse, cause the sale to fall through.
Weaknesses in your business may not be obvious to you or be difficult to recognise so I recommend an open discussion with your accountants and or advisers.
The value of a company or business is eventually based on future cash flow for the buyer, so you, the seller, need to focus on the fundamentals of your business and have a vision and strategy for the future. You need:

• Evidence of your credibility and the business’ ability to perform;
• Clear financial evidence of profitability over the last three to five years;
• Monthly financial and key performance indicator reporting data;
• Yearly formal budget with, preferably, actual performance monitored against monthly actual and budget;
• Evidence that the business is efficient and productive with benchmarked yield improvement;
• Evidence that customer relationships are clearly managed and customer data base / list is available;
• Demonstrable goodwill and brand awareness;
• Customer/client relationships that can be managed during a sale and transition process and into the future;
• Customer/client interaction, corporate contracts and agreements that are sound and industry standard;
• Employee/staff relationships that are managed to minimise loss of key personnel;
• Credit with suppliers that is excellent;
• Supplier contracts and agreements that are industry standard and sound;
• Most contracts (remember franchise agreements are not transferable) can be assigned to an acquirer if the company is to be sold;
• Employment conditions, salaries and benefits that are industry standard; and
• Due diligence files that are complete and up to date.

The objective of the buyer in undertaking due diligence is to uncover areas of risk that could create additional liabilities or costs after acquisition.

You will need to focus on maintaining the sales, profits and margins of the business during negotiations to ensure that the business meets or exceeds its forecasts and does not move backwards. And you will need to avoid:

• Failure to understand the sale process and the need for total confidentiality between broker, seller and buyer;
• Provision of inaccurate or incomplete information;
• Failure to disclose “bad news”;
• Failure to understand the approx-imate deal structure, particularly in tax outcome terms – entity (company) sale versus business sale;
• Failure to have prepared key employees with reasons to stay with the new owner; and
• Failure to understand the risks inherent in your business and how they can be mitigated.

Be Prepared!

Ensure you are structured appropriately and that you have an adviser who understands the sale process.

Additionally, you must have accurate information for disclosure to the potential buyer – particularly the “bad news”.

And finally, have a realistic assessment of what the company or business is worth. Remember, selling the company is quite different from selling the business (only).

The keys to a successful sale process are maintaining confidentiality, main-taining revenue growth, controlling the information flow, having clear and concise financial and marketing information available and having a sensible time frame.

Start preparing your exit strategy NOW!


*Judith O’Neill is a management consultant, business and corporate coach. She is the principal of Aspirations Consulting and is a graduate of the Australian Institute of Company Directors. Judith can be contacted on telephone (02) 9904 3730 or email: or visit