How do I check what a travel agency for sale really earns?

A travel agency’s statements can look strong while the earnings behind them are uneven. Commission arrives on different schedules, trips get cancelled and one advisor may bring in much of the income. Your job in diligence is to see which earnings are real, which are still to come and which depend on people or contracts that might not stay.

Tie the statements to the books

Ask for commission statements from each major supplier and from any host or consortium, then match them to bank deposits and to the income in the financial statements. Gaps are not proof of a problem, but each one needs an explanation. Have your accountant help you, and see the difference between SDE and EBITDA.

Received, owed and recalled

Separate commission the agency has already been paid from commission that will arrive when clients travel. Ask your lawyer how the future part of the commission is handled at closing. Check how cancellations and changes are handled, because suppliers can take back commission already paid.

Spread the earnings

Look at earnings by advisor, by supplier and by season. If one advisor, one supplier or one busy month carries most of the income, a flat total may hide that. Ask the owner what would happen if that advisor left or that supplier changed its terms.

• Supplier and host statements for each period you are shown.
• A schedule of future travel with the commission still to come.
• A record of cancellations and any commission taken back.
• Earnings split by advisor, supplier and season.