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Travel Bulletin - - CONTENTS - Bruce Piper

hel­loworld’s $14 mil­lion ac­qui­si­tion of a 50% stake in its as­so­ciate mem­ber MTA Travel sees a sig­nif­i­cant ex­pan­sion of the com­pany’s as­pi­ra­tions, giv­ing it a foothold in the bur­geon­ing home-based agency sec­tor. Fig­ures from the an­nounce­ment of the deal gave a rare in­sight into the op­er­a­tions of MTA Travel, which was founded in 1991 by Roy and Karen Mer­ricks. The pioneer­ing pair have built the busi­ness into a pow­er­house which last year turned over al­most $170 mil­lion through its net­work of about 350 mem­bers across the coun­try. The Mer­ricks should be thrilled at the deal, which sees them sell the stake at a very re­spectable mul­ti­ple of 7.3 times the com­pany’s earn­ings - along with an op­tion to sell the rest in five years time. “We feel this is a very pos­i­tive thing for ev­ery­one in the com­pany, both our mem­bers and staff, and with this part­ner­ship we have the op­por­tu­nity to grow MTA in a very pos­i­tive way,” they said. CEO Don Beat­tie will re­main in con­trol of the com­pany’s day to day busi­ness along­side the Mer­ricks fam­ily, while Hel­loworld’s board noted the deal gives the com­pany a “sig­nif­i­cant foot­print in a sec­tor that is ex­pe­ri­enc­ing ac­cel­er­ated growth, both in Aus­tralia and glob­ally”. Hel­loworld also looks set to fur­ther ex­pand its bricks-and-mor­tar strat­egy, an­nounc­ing plans for a two year ‘co-in­vest­ment’ pro­gram in which it will pur­chase up to 25% of se­lected fran­chisees. Pay­ment will be in the form of Hel­loworld shares, and the com­pany promised it would “leave the fran­chisees to run their busi­ness,” with­out tak­ing a board or man­age­ment role. The pro­posal could be com­pelling for mem­bers who are look­ing to their longer term exit op­tions, while at the same time en­sures par­tic­i­pat­ing mem­bers re­main in the Hel­loworld fold. The value of the prospec­tive ac­qui­si­tion will be as­sessed based on the fran­chisee busi­ness’s re­sults over the last three fi­nan­cial years, the qual­ity of its client list, longevity of con­sul­tants in the busi­ness and sales of Hel­loworld pre­ferred prod­ucts. Any fu­ture sale of the re­main­ing 75% of the fran­chisee busi­ness to a third party will be sub­ject to “unan­i­mous share­holder ap­proval” which will not be un­rea­son­ably with­held. It will be in­trigu­ing to watch the take-up of this new op­tion, which ceo An­drew Burnes said would roll out over the next two years. It has the po­ten­tial to move Hel­loworld closer to the Flight Cen­tre model of own­ing its own stores, with Burnes say­ing it’s “part of Hel­loworld’s strat­egy to align the in­ter­ests of Hel­loworld Limited and our re­tail agency net­work”.

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