A former Lastminute.com managing director has blamed growth expectations of City investors for the way plcs buy up other companies only to ruin them or close them down.
City to blame for deaths by acquisition, says former Lastminute boss
A former Lastminute.com managing director has blamed growth expectations of City investors for the way plcs buy up other companies only to ruin them or close them down.
Speaking during a filming day ahead of this year’s Barclay’s Corporate Travel Forum John Bevan said impressing the city through acquisitions was one way of hiding low growth.
Bevan came into the Lastminute.com group through its final one of 13 buyouts – of Online Travel Company (OTC) – in a frenzied period of acquisitions when it was publically listed.
“There are so many private companies that buy stuff for the hell of it. They go out and buy companies that kind of make sense or for a specific reason.
“But often they strip out the heart of it and keep just a tiny bit. A lot of the acquisitions at lastminute.com like OTC – there is not a single thing left of it. That was a £55 million acquisition.
“There is pressure from financial institutions that invest to see return and one of the ways of hiding slow growth is by buying businesses. That’s what Thomas Cook did, as we now know.
“It’s not just in travel. If they cannot get the growth out of the industry because we are in a difficult period, they go out buying. Organic growth is more sold in the long-term.
“My experience at lastminute.com was I joined through acquisition, the last of 13 they made, and look now; every business, with the exception of Holiday Autos, has either been closed down or sold off, and not that successfully.
Bevan is now running specialist operator SpaFinder in the UK as its managing director having joined from a spell at closed user group deals specialist Voyage Prive.
Andrew Stewart, chief financial officer at Hotelplan, the Inghams parent, said merger and acquisition activity in travel has been stifled in recent years by unrealistic valuation expectations from owners.
“They are over-valuing their businesses and probably putting off a potential acquirer so I see a lot of businesses going down the organic route, which is what we are,” he said.
However, travel senior partner and accountancy giant Deloitte, Graham Pickett, said he was seeing some realism creeping into the M&A market.
