Business Travel M&A Poised to Double in 2025

Merger and acquisition activity in business travel is buzzing and “on top” right now. I believe we will double the number of 2024 M&A transactions this year. 

What’s Driving M&A activity?

It’s a confluence of both buyers and sellers, demand for technology innovations to maintain competitiveness and company valuations increasing.

Strategics (travel companies), private equity firms (financial acquirers), family offices (high net worth individuals and families) and non-travel related companies (financial institutions) are the core buyers in the market. 

Strategic sellers are mainly owners in their late 60’s, 70’s looking to retire. Younger sellers are looking for an opportunity to take money off the table.

In business travel you can grow a business much faster through acquisitions than you can through organic growth. If you want to grow, scale and be a global player in corporate travel, you need to make acquisitions.

Strategics have cash on the balance sheet. PE firms have an abundance of cash that must be deployed or risk having to return it to their investors. The U.S. stock market is at an all-time high. Combined, you have the makings for massive buying and selling activity. 

Strategics Are Biggest Acquirers in 2025

We will continue to see large deals like the Amex GBT and CWT tie up. Recently the U.S. and the UK government have put the brakes on the acquisition. I believe the new U.S. administration will eventually green light the deal.  

Heavily funded tech driven TMCs Navan, TravelPerk, Itilite, Engine will continue to make acquisitions to build out their global footprint. Investors will continue to back the innovative TMCs to help them make acquisitions as they know their big advantage over legacy TMCs is their technology stacks. 

Innovation and Tech Driving M&A with AI leading 

Another driver of business travel acquisitions is innovation and technology. Buyers in the market understand that if they want to compete with the tech funded TMCs and stay relevant, they need technology.

Artificial intelligence, automation products, fintech services and sophisticated booking tools are the technology innovations that will be implemented the most in 2025 by travel managers, TMCs and companies in business travel. 

The biggest technology impact in business travel in 2025 will be AI on the agent and customer service front. We will start to see a shift, a downsizing of agents, as AI and automation comes into the global travel industry. The largest expense for TMCs is staff. 

AI will enhance agent workflows in 2025 and then start replacing agents in 2026 as the AI advances and travelers get more comfortable engaging with bots.

AI will never fully replace agents; it will just reduce agent headcount each year. This is not doom and gloom as my TMC M&A buy-side clients tell me that their biggest problem they have is finding and keeping employees.

This should be good news for the most talented agents. 

A New Acquisition Model in Business Travel

Steve Singh, the historic founder of Concur and now an investor with venture capital firm Madrona Partners, is developing a unique acquisition strategy in business travel. 

Madrona is funding business travel tech startups (Spotnana, Otto, Troop) and then integrating them with Direct Travel, a top 10 TMC that Madrona and an investment group acquired. 

Steve’s vision of the “Perfect Trip,” is driven by a buildout strategy combining both investments and acquisitions that will enable Direct Travel to compete with the new tech driven TMCs.

It will be interesting to see if the travel tech startups remain independent, are acquired by Direct Travel or are all merged into a new entity to go public.

An advantage this business model creates is that travel tech startups housed inside a TMC can not only help the TMC innovate but they can sell their services as SaaS to others in the industry. Think an Amazon web services model for TMCs. I believe we will see this combined investment and acquisition strategy emulated by other entities in business travel as it creates a more valuable company by combining assets.

Acquisition Valuations Rise Gradually

A slight increase in company valuations is a third driver of market activity. 

TMC sellers, business travel agencies, are currently looking for 5x to 7x earnings before interest, taxes, depreciation and amortization vs. the traditional 3x to 5x EBITDA. Buyers willing to pay these multiples are bringing would-be sellers to the table for the first time in years. 

B2B business travel technology companies that have transactional revenue models are looking for 5x to 8x EBITDA multiples to sell. 

B2B business travel technology companies with 100 percent SaaS recurring monthly or recurring annual revenue models are looking for 7x or greater EBITDA or a low single-digit multiple of net revenue. 

Now is a better time than ever to participate in business travel M&A. Will the good times continue? Yes, I believe M&A activity will stay hot for at least another 9 to 12 months throughout 2025. This heightened activity will ultimately double 2024 transactions.