Direct Travel Snapping up Travel Agencies05/20/2014, 11:52 am

May 20, 2014 – Direct Travel is on the acquisition trail, and if you’re a small or mid-sized agency with a corporate customer base, Ed Adams wants you.

With a bankroll from a Wall Street private equity firm and a promise to keep agency staff in place, the former Navigant CEO has already bought five travel agencies, most recently Caldwell Travel of Nashville and Travel Destinations Management Group of Baltimore.

Adams, CEO of Direct Travel, is now talking to six or seven more agencies and is still open to a few more “well-run corporate TMCs that work in the middle-market space,” he said.

Interest from venture capital firms
Adams headed Navigant International, the first publicly-traded travel management company, which also grew rapidly by buying up several travel agencies. Carlson Wagonlit eventually bought it and Adams retired from the travel industry.

But private-equity firms’ growing interest in TMCs recently drew him back by offering an opportunity to do what he does best – and use someone else’s money to do it, Adams said.

Since the 2008 market crash banks have been hesitant to finance startups. But private-equity firms have been building up their cash and some view the recovering travel industry as a good investment.

Growing through acquisitions
Silver Oak Services Partners, a private-equity firm that focuses on business services, bought into Direct Travel three years ago when it was called Directravel. American Express this month also sold its business travel unit to a venture-capital firm.

“Private equity firms were pretty flush and looking for portfolio companies; that was the impetus for me to get back into this space,” Adams said.

He knows from experience that growing Direct Travel quickly through acquisitions “makes a lot of sense. The scale really helps drive profitability, and if you can leverage a lot of transactions you should be able to drive up your margins.”

The ‘right’ agencies
So who should give Ed Adams a call? Small or midsized agencies? East Coast or West Coast or in between?

“All of them,” Adams said, adding that all he really requires is a predominantly corporate customer base.

Adams noted he “grew up servicing the middle market customer” and understands the need for local representation and local service. He wants only to keep the staff and customers of agencies he acquires, not change successful business models.

Retaining staff and customers
“Our philosophy is that we keep your people on the street and engaged with their customers,” he said.

“We scale up by taking advantage of negotiating opportunities on the front end and eliminating duplication on the back end by centralizing IT and HR.”

For agencies planning to retire, selling to Direct will allow them “to take some chips off the table, protect your employees and keep your customers satisfied,” said Adams. “We will not upset the apple cart.”

Credit: Cheryl Rosen — http://www.travelmarketreport.com/content/publiccontent.aspx?pageid=1366&articleID=11039