Merger and acquisition activity has been increasing in the travel technology world. Recent headlines bear out the trend and the figures back it up.
There are a number of companies focused on a travel technology roll-up that is seeing smaller players and some startups find a bigger home. But what is driving the increased activity? Are valuations more realistic and what are those acquiring companies and investors looking for?
Juniper Group, part of Vela Software, which is in turn one of six operating groups within Constellation Software, has made a string of acquisitions in recent months including Lleego and Vervotech. Vela, meanwhile acquired travel technology company Peakwork in April 2023.
Discussing the travel M&A trend, CEO Jaime Sastre described the acquisitions as “part of our core growth and development where we’re going to acquire strategic assets that have potential synergies with other companies we have. But we do acquisitions not just for synergies but because we are capital allocators, we have a philosophy of buy and hold forever.”
Each acquisition retains its own CEO with Sastre adding that Constellation’s belief is that software companies are “much better handled by independent CEOs that are not integrated into a large organization.”
He was joined in the PhocusWire Studio at Phocuswright Europe 2024 by Rita Lei, partner at MCF Corporate Finance, which advised Sweden’s Visit Group when PSG Equity became majority shareholder last year.
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She shed light on the different consolidators that exist in the market currently, including Mews, Lighthouse (formerly OTA Insight) and Guesty from those “more focused on top line and bottom line and maybe less focused on integration” to others more focused on synergies and “cross-selling to the existing customer base and expanding the product set.”
Picking up on the increased activity at the moment, Lei added that the gap between the “buy side in terms of valuation and sell side is narrowing,” explaining what is happening in the marke,t which is different to conditions in 2021 and 2022.
For Juniper Group there is no right or wrong time, according to Sastre, adding that the maturation of travel technology companies could also help explain what’s happening.
“We’ve been doing acquisitions since 1996, and we do as many as we can, as long as we can buy companies that we like. We have to like the company, the customers and the people who run the company,” he said.
Watch or listen to the the full session below with PhocusWire's Linda Fox to hear what Sastre and Lei have to say about travel technology companies surviving the pandemic, a resetting in terms of valuations and where they are placing their bets.