In conversation with Ian Finlay, CEO of Specialist Tours

In May 2015, Panoramic sold its stake in specialist tour operator, Specialist Tours Limited, in a secondary buyout. The sale generated another strong return on investment for Panoramic in the two and a half years since it invested in the company to deliver a roll up of specialist travel brands.

The business is led by chief executive and entrepreneur, Ian Finlay, the former MD of Tui’s Educational division.

1. Could you describe the funding requirement that you experienced in 2013?

My situation was a little different to other investments that Panoramic has made in that it was a management buy-in. I had found a business that I wanted to buy Andante Travels, which delivered expert, guided tours to worldwide destinations of archaeological interest and I approached three private equity firms with a business plan to create a portfolio of specialist travel brands.

2. Why did you choose to partner with Panoramic then? What was most important to you at that time?

Agreeing the right deal was of course important but the three offers that I received were comparable. I felt that I could work well with David Wilson at Panoramic and that made the difference. It goes without saying that a good relationship with private equity investors requires an alignment of vision and shared objectives but from my past experience of building businesses, I knew how important it was to work with people that I liked, respected and enjoyed meeting at the boardroom table.

3. In May 2013, Panoramic invested £1.8m in Andante Travels, the UK market leader in archaeological travel. What happened next?

We executed our business plan, successfully growing turnover and profitability. This involved expanding into new markets, notably the US; and acquiring two further businesses, Historical Trips and Archaeological Tours, in 2014.

Our growth was rapid. At the time of our investment in Andante Travels, we were seeing revenues of just over £4m. This had more than doubled to over £9m by 2015. We now provide a service to almost 5,000 holidaymakers a year, visiting more than 80 destinations.

4. How did you integrate the three brands successfully?

It was relatively easy to integrate Historical Trips as the business was small and still at start up stage. I think the fact that Panoramic were supportive of the acquisition of this business at such an early stage of development is indicative of their flexible and pragmatic approach. It proved more challenging to integrate Archaeological Tours, not least because the business is based in the US meaning a 7-hour flight and five hour time difference.

Panoramic has always played a useful devil’s advocate role and I found it helpful to work with people who could challenge and test our view as a management team. We completed two acquisitions together but we assessed perhaps 10 businesses and their role in deciding which to rule out was extremely valuable.

5. You have experienced rapid growth in a short space of time. What challenges did you face?

Staffing was probably one of the biggest problems that we faced as the business expanded. This is inevitable when you are acquiring owner-managed businesses and unfortunately we found that some people had to exit the business, which can be painful. We needed to find the right people with the appropriate blend of skills and experience to manage what quickly became a much larger business. Panoramic was instrumental in helping us do this.

6. What else did Panoramic bring to the table?

The investment from Panoramic enabled us to make those acquisitions, increase our headcount and enhance our marketing. But their support went beyond the provision of capital. I valued their pragmatic forward-looking perspective, and importantly their lack of bureaucracy. That would have proved inhibiting in an entrepreneurial, fast growing business.

7. You previously sold a business, Travel Class, to First Choice in 2006. How did that experience influence the decisions that you made this time?

The business that I sold in 2006 was also private equity backed so I had experienced that relationship before. When I bought Travel Class, I actually changed my mind about which investor to partner with half way through the deal process. That decision proved to be the right choice for the business longer term and it taught me the importance of the right chemistry and fit. It is critical to work with someone you trust, respect and like.

8. Panoramic sold its stake in May 2015 to Kings Park Capital and management. Why did you make this choice?

With Panoramic’s help, we had grown the business to more than double its size and in 2015 we felt the time was right to take Specialist Tours to the next level. For us this means investing significantly in five to six acquisitions over the next few years; and that meant we needed more capital than Panoramic was able to provide. The timing was right for both parties – Panoramic made a good return and management was able to reinvest, as well as take some cash out to derisk their personal positions.

We didn’t run an auction but spoke to two parties. We had offers from both and chose the people with whom we felt we could work best.

Exit planning can go wrong. Management and private equity are not always aligned in their thinking, particularly in the context of a secondary buyout where management is rolling over a portion of their investment and valuation is always going to be a sensitive issue. There were points that could have been contentious when we went through our secondary buyout, but I had no difficulty talking these through with Panoramic in a mature and considered way.

9. Where do you intend to take the business next?

There is still huge growth potential in the business and we have set ourselves ambitious goals. We intend to pursue our active acquisition strategy – I am currently assessing a number of live opportunities, with the intention of completing two to three acquisitions this year. While working with Panoramic we developed a strategy to establish a sales office in the US that would sell all our brands. This is now working well and driving a high level of sales. Within two to three years, I envisage it will be time to start considering an exit and where we go next!

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