Here’s how to prepare your travel agency for sale: Travel Weekly

Q: In your Legal Briefs column “Determining the Best Time to Sell Your Agency” in the September 12 issue, you explained that the best time to sell is after a year of good financial results and taking the necessary steps have taken to prepare your agency for a sale. You’ve already covered the financial results, but what about the steps necessary to prepare your agency for sale?

A: Assuming you’ve had, or will have, a good year of profits through year-end, here are some steps you should take to facilitate the transaction and maximize the selling price.

In general, the bigger the agency, the more you’ll likely have to do to prepare for the sale. Conversely, if you have a small agency with just a million or a few million dollars in gross revenue, you can probably stop after the first three steps below.

• First and foremost, every agency owner must have accurate and clear income statements (also known as income statements or income statements) and balance sheets, collectively referred to as “financial reports”. Unless you have a large agency (i.e. $10+ million), you don’t need to have a CPA prepare them.

• Second, you need to be familiar with your financial statements so you can answer any questions potential buyers may have. Nothing is more daunting than salespeople who can’t answer basic questions like, “What’s your mix of cruises and hotel sales?” or “What are the long-term liabilities on your balance sheet?”

Fortunately, many, if not most, travel agents use the Trams accounting system, which is designed specifically for the retail business and produces financial statements in formats that are fairly easy to understand and familiar to industry buyers.

• Third, make sure you maximize revenue by selecting preferred suppliers that pay the highest commissions. Join a host agency or work with a branch appointment of a large agency that has at least some airline commissions as well as supplier deals that offer well over 10% off cruises, tours and all-inclusives.

• Fourth, try to put your most important group or company accounts in writing. This will make your business more attractive to buyers as contracted accounts are more likely to remain in place, even if the contracts give the accounts the right to cancel.

• Fifth, do not enter into new long-term contracts with sellers or landlords. If you have Saber and are signing a new five-year deal today, you’re likely to scare almost any Travelport or Amadeus user out of considering buying your agency.

• Sixth, cut all unnecessary personnel and other expenses so you can show a high profit margin. This is often the most difficult step as many agencies have loyal executives but they may not be contributing to your profits.

• Seventh, if you have a larger agency, train or recruit someone who could take your place in case something bad happens to you or if you decide to retire soon after the sale.