Mergers and acquisitions: wise words for travel managers

mergers and acquisitions

The accepted wisdom in mergers and acquisitions (M&A) is that stability is what helps deals go through. That wisdom has been turned on its head in the past year after first Brexit and then the unexpected election of Donald Trump as US President made for uncertainty worldwide.

Yet a look at recent M&A activity makes it clear that there is an enormous appetite for getting deals done. In 2016 there were more than 17,000 deals around the world worth an impressive $ 3.2 trillion.

With many Western economies looking as though they may be drifting towards stagnation, chief executives are finding organic growth harder to come by. This is why M&A is suddenly looking so attractive: chief execs are looking at potential synergies to cut costs and boost profits or as a way to enter new markets.

But M&As can often cause headaches for travel managers, who have to think about how to merge two potentially very different travel program and related policies.

1. Merging different travel cultures

Making sure that the two travel cultures can merge successfully is crucial for a change to travel policy and can result in unhappiness among travelers.

Think about the cultures of the two businesses. Sometimes, they are similar and integrating them is not much of a challenge; yet large businesses often acquire smaller rivals and the differences in mindset can be enormous. Forcing the acquired company to adopt the travel rules of the acquirer, particularly if done quickly, can create issues.

2. Consolidating different TMCs

In many cases, the acquired company will have an incumbent TMC that may be different from that of the acquirer and the contract may need to run to its conclusion. Consider extending the TMC contract on a rolling basis until the contract of the acquirer is up. You can then run an RFP for the combined business.

Some companies go on acquisition streaks, fueled by readily available capital from the markets. Reviewing travel arrangements every time a new unit comes on board is likely to be a waste of time. Instead, wait until the company pauses for breath and then think about consolidating.

3. Adapting to different travel patterns

For travel managers, acquiring a company can also mean acquiring different travel patterns. An acquired manufacturing unit may make all its components in Indonesia. Think about how your existing preferred airline partners can help with these new routes so that you can meet targets. If your existing airlines have poor coverage, think about adding a new carrier to the mix.

4. Getting buy in from the top

As with other integration projects, merging two travel programs into one is going to need senior management support, especially if the two travel policies are widely different. Try to gain support and help from the CEO or CFO in the communication process but be aware that they will have many trickier integration problems to worry about.

5. Dealing with your travelers

Listen to travelers from both sides. If you are running traveler focus groups, get travelers from the two companies together at the earliest possible opportunity to find out what they expect. In a world of traveler centricity, this is now more important than ever.

6. Take a step back

Sometimes, as with other areas of company integrations, starting with a blank sheet can be a better idea than trying to force something different into an existing policy. Travel managers often do not take the time to review their existing policies so what better time to do this than after a merger or acquisition.

The frenzied M&A activity of the past two years looks set to continue. In January, activity reached an 11-year-high. As a result, travel managers will increasingly find the process of integrating two travel programs on their desks.

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