The CON-X 2023 Investor Roundtable in Mallorca brought together experts from the investment and advisory industry to discuss the current landscape and future trends. Moderated by Alex Gisbert of Fastpay Hotels, participants Henry James Wells, Partner and Head of Consumer finnCap Group; Morgann Lesne of Cambon Partners, Jan Frederik Valentin, Founding Partner ECP Investor; shed light on the role of advisors, the challenges of M&A transactions, the importance of selectivity and the factors that attract or repel investors. This article provides a summary of the main ideas shared during the roundtable.
During the roundtable, moderator Alex Gisbert's question on "What does advisor mean?" sparked a discussion on the crucial role advisors play in helping companies deal with various issues such as selling, buying, raising capital and making strategic decisions. Advisors provide expertise and guidance to senior executives, enabling them to position themselves for future ventures.
Selective approach to mergers and acquisitions
Participants acknowledged the current market activity, especially in terms of mergers and acquisitions. However, they stressed that while there is significant activity, it is not necessarily easy. Uncertainty about the future, especially in the post-COVID era, has made people cautious about long-term investments. Private equities, while brimming with capital, have experienced a decline in strategic activity. However, mergers and acquisitions remain an integral part of the travel industry story, and the creation of large companies is often the result of such transactions.
Combining small businesses for growth
Roundtable participants emphasised the prevalence of hyper-fragmentation and hyper-local companies in the industry. To create more attractive entities, they stressed the importance of combining small local companies to form medium-sized companies, which can then be acquired by larger companies. This trend towards consolidation has been a consistent feature of the travel industry, with deals involving companies generating between a few hundred thousand and a million EBITDA.
Factors influencing deal selection
The panellists also discussed the factors that attract investors and shape their decision-making processes. They stressed the importance of consistent growth curves that match investors' expectations. They stressed the importance of knowing the preferences of potential buyers or investors and tailoring presentations to their interests. Capitalisation tables, alignment of valuations, accurate metrics and realistic expectations were identified as critical elements for successful deals.
While recognising the importance of AI-based analytics in the financial world, participants stressed that each trade is unique and requires a customised approach. They stressed the importance of factors such as management quality, passion and drive as vital indicators of a company's potential for success. Investors and advisors rely on this data to assess the likelihood of achieving the desired results. Honest and realistic assessments, rather than telling clients what they want to hear, were seen as essential to effective advisory services.
The dominance of industry giants such as booking.com and Expedia casts a shadow over certain business sectors. However, participants stressed that there are always niches and opportunities that these giants do not venture into. Identifying untapped market segments, complex geographies or target price ranges can create space for smaller companies to thrive. They cited examples such as luxury vacation rentals, where large companies have struggled, leaving room for innovative start-ups.
The CON-X 2023 investor roundtable shed light on the multifaceted world of business advisory, highlighting the importance of advisors in helping companies make critical decisions. Selectivity, consistency and accurate metrics were identified as key factors influencing deal selection. While challenges exist, opportunities arise in combining small companies, targeting niches overlooked by industry giants, and aligning with investor expectations. As the investment landscape evolves, strategic guidance and an insightful approach will be crucial for companies seeking growth and success.