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Henry Wells, Managing Director and Head of Duff & Phelps’ UK M&A Advisory practice, spoke to Travel Weekly about the effect COVID-19 has had on M&A activity in the travel industry.
Henry commented on the decline of M&A deals across Europe, “In Q2, there were only four deals and that’s been the lowest quarter on record. So even if you go back to the 2008/9 global financial crisis, the lowest number of travel deals in Europe then was seven in one quarter.”
He added, “One of the things I often get asked is, ‘Is this the worst crisis ever and is it like any other crisis?’ And I’m not that old, but I was around in 2000, and I was around in 2008. And the crises were both very different. This time, businesses in the travel space, all of a sudden, went from not only no revenue, they went to negative revenue with a negative working capital model. That’s cash out. And that is unprecedented.”
Despite the slowdown in deal activity, Henry continues to advise clients on possible M&A deals and provides businesses with advice on what’s required to manage during the COVID-19 pandemic.
Henry continued, “We’ve then got a number of buyers with strong balance sheets, who are sitting there saying ‘I wanted to buy this sort of business pre-COVID-19 (and) I still want to buy it post-COVID-19, so I’m just going to have to think a bit differently as to how I structure it and how I pay for it.’ Those deals will still be going ahead.”
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