From the publisher

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”.