Carlson Wagonlit Travel last month completed the acquisition of Braintree, Mass.-based Preferred Travel, a travel management company that CWT said has $80 million in annual air sales.
Preferred Travel—which notably handles some of the volume for CT100 company General Dynamics—has 85 employees. CWT said Preferred president Liz Hatch will leave the company once the transition is complete, while the rest of the management team will report to CWT East Region senior vice president Sam DeFranco.
The bulk of Preferred Travel's business is comprised of corporate travel accounts in the Boston metro area, said CWT North America COO Jack O'Neill. "They have a few larger clients and a number of smaller ones," he said. "When you get past the top 50, the clients get relatively smaller."
Preferred operates satellite offices in New Orleans and Orlando, and some onsite operations. The company also handles meetings services and leisure travel, and will adopt the CWT brand name, O'Neill said.
O'Neill would not disclose the amount CWT paid for the acquisition, but said, "it's consistent with past acquisitions. It's the same economic factors that we apply in any acquisition, but it has to work for both parties."
Bob Sweeney, president of Alpharetta, Ga.-based Innovative Travel Acquisitions, which brokered the sale on Hatch's behalf, confirmed it was consistent with other travel agency acquisitions. "The multiples being paid for these companies are four to five times recast earnings," Sweeney said. "What the sellers have to realize is that the purchase price will be on what the seller delivers. It's not going to be based on what the buyer can make from the company without the back-office."
Sweeney sees more consolidation ahead. "The normal cycle is that businesses turn over about every 14 years, so about 7 percent of your pool typically turns over in the course of a year," he said.
The Preferred acquisition is CWT's first in North America since its 2006 buyout of Navigant International
(BTN, May 1, 2006), and further purchases are likely. "We continue to talk with a number of agencies who may have an interest," said O'Neill. "It's a business that is consolidating. We want to be one of the consolidators and not the consolidatee."