1. TRAVEL M&A AKA “channeling your inner Gordon Gecko”

2. 2 Framework Focus for presentation is…  Why Buy? Aka “Assimilate or Conquer”  TMC Valuations aka “You want how much?”  Terms of purchase aka “Show me the Money!”  Due Diligence aka “Swimming naked with sharks”  Sample acquisitions  Lessons learned

3. 3 Conquer vs. Assimilate ConquerAssimilate Consolidate Supplier Agreements Bottom Line Synergies In place team known to Clients Rapid Growth Less HR, partner, ex-owner headaches No supplier dilution Hire/Train own team Steady Growth?

4. 4 You want how much? Methods of Valuation: 1. Ask the owner method 2. Percentage of Sales 3. Multiple of EBITDA (Earnings + Interest + Taxes + Depreciation + Amortization) x Multiplier (2x to 5x) Implied Value 4. Multiple of EBITDA plus/minus exceptional items - Owners compensation - Value of Assets - Discontinued business lines - Advanced earning potential due to synergies - Integration costs - NPV of future revenues

5. 5 Payment UpfrontEarnout Payment made by acquirer at the time of purchase based upon agreed valuation. Can be in cash and/or stock. Good: can lock in a key target Good: GDS will often front some of the money. Bad: Do you have the money on hand? Bad: Acquirer has 100% of Risk. Payment paid in installments, generally based upon performance. Good: Funded by acquiree's operations Good: Shared performance risk. Bad: Many acquiree's need the money now. Bad: Can be deal breaker… Special Note: Who gets Accounts Receivables and when?

6. 6 Swimming naked with the sharks Things to consider when conducting due diligence: …Do their books balance? …Are there any outstanding future obligations? Is the A/P figure accurate? What about Debit Memos? …Will key suppliers bless the transaction? Do you need them to? …Any lawsuits? Is company in compliance with all applicable laws? …Any employee grievances? Are grievances filed by key employees? …Are clients under contract? Since they likely aren’t, what is strategy to retain them? Do their clients like you? …Why does the owner really want to sell?

7. 7 Case Study 1: RegionalTMC Location: Same area as your primary location Air Volume: $10,000,000 GDS: Different GDS, 1 year remaining. Nominal (if any) GDS revenues. Corporate/Leisure split: 50% Corporate, 50% Leisure. Almost all Leisure done by Independent Contractors. Airlines: Number 1 airline is preferred carrier. Overlap for number 2+. EBITDA margin (2008): 12% Sales decline in 2009: 35% Profitable to date in 2009: No Leases: 2 years remaining. Average lease cost of $1.75 sq ft/mo. Management Team: Family owned, principal wants to stay for indeterminate time.

8. 8 Case Study 2: Super RegionalTMC Location: Outside of your core area Air Volume: $85,000,000 GDS: Your GDS with 3 years on contract. Net revenue/segment ~$1.70 Corporate/Leisure split: 95% Corporate, 5% Leisure Airlines: Number 1 airline not preferred carrier. Overlap for number 2+. EBITDA margin (2008): 8% Sales decline in 2009: 20% Profitable in 2009: No Leases: 4 years remaining. Average lease cost of $2.00 sq ft/mo. Management Team: 3 partners in equal shares, 2 want to stay.

9. 9 Lessons learned 1.Very clear agreement with prior owners on what responsibilities will be…and what they won’t be. 2.Due diligence in all deals. 3.Excessive communication with new employees. 4.Know when (and how!) to cut losses.