What Brett Mitchell CA learned from 15 acquisitions
Brett Mitchell’s mergers and acquisition savvy has helped make Intrepid Group the world’s biggest adventure travel company.
- Brett Mitchell CA has integrated more than A$150 million worth of assets from over 15 different acquisitions and mergers for Intrepid Group since 2008.
- Intrepid Group has four tour operator brands – Intrepid Travel, Peregrine Adventures, Urban Adventures and Adventure Tours – plus destination management company Peak DMC.
- He says a merger process requires accountants to ask the hard questions, but also to let go of egos. There has to be a benefit for both parties.
By Nina Hendy
Photography Julian Kingma
During a decade with Intrepid Group, Brett Mitchell CA has certainly honed his mergers and acquisitions (M&A) skills, working through the nuts and bolts of integrating more than $150 million worth of assets from over 15 different acquisitions and mergers.
The privately owned business is now the world’s largest adventure travel company. The next big challenge for Mitchell’s team is to help global chief executive James Thornton deliver on a plan to grow revenue from A$341 million last financial year to A$1 billion per annum by 2025.
Mitchell joined Intrepid’s Melbourne headquarters as group financial controller in 2008 and has since risen through the executive ranks to become regional director of Australia, New Zealand and Asia – a role he has held since February 2017. He leads a corporate finance and strategy team of 142 people across Australia and New Zealand.
Working with Intrepid lets Mitchell combine his passion for travel with his accounting expertise. “It really is a dream role,” he tells Acuity.
The company was launched in 1989 by Melburnians Darrell Wade and Geoff Manchester, who describe themselves as “a couple of bearded backpackers who hit on a good idea”.
Today, Intrepid Group is a collection of four tour operator brands – Intrepid Travel, Peregrine Adventures, Urban Adventures and Adventure Tours – plus destination management company Peak DMC, which provides management and product advice for other adventure travel operators.
The entire group offers more than 1000 trips across every continent, carries close to 300,000 customers each year, and globally has 1800 staff.
From its outset, Intrepid has had a focus on sustainability, developing local economic outcomes for communities by focusing on sustainable tourism. The mission remains the same: socially responsible travel, small groups and big adventure. But the skills required of the finance team have changed dramatically.
Know when a joint venture goes wrong
Perhaps the most challenging deal Mitchell has worked on at Intrepid was a strategic joint venture with Anglo-German owned polar cruise operator TUI Group. Following the tie-up in 2011, the Intrepid finance team spent two years bringing 21 operators together under the Peak banner. Then in 2015, Intrepid and TUI announced they had reached a mutual agreement to ditch the scheme, so they could best serve their respective niches within the adventure travel market.
“A lot of work went into trying to create consolidation. I think as a result, it made it hard to keep our eye on the customer for a while there. But at the end of the day, you can never, ever lose sight of the customer,” Mitchell says.
And he warns that while the numbers tell a story, they may not paint the full picture. “Accountants need to be curious. That means asking a lot of questions,” he says. “An accountant needs to develop that broader skill set that allows you to be curious about all the other strategic reasons of why they’re buying the business and why they’re merging the business.”
Drilling down during the acquisition process and asking the hard questions is key. This includes understanding the history of a company – not only in terms of financials, but also people and culture.;
A merger process requires people to let go of egos and recognise that you’re going to be a bigger business on the back of the process.”
Considering decisions from the perspective of both parties can help. “Always try and find win-win situations during a merger. It’s very easy to just look at your own business and your own side of the fence and try to negotiate the best for yourself. But ultimately, that doesn’t work,” Mitchell says. “Whenever you bring two companies together, you need to find those win-win situations so that all stakeholders are feeling good about it, and like they’re all on the same page.”
Post-integration, Intrepid Group measures the success of its acquisitions by analysing long-term sales growth KPIs. Sales, profitability and culture within the new business are also rigorously assessed.
“We have big plans to take our business global, and we’re growing quickly. The main challenge with that is remaining agile and juggling priorities,” Mitchell admits. “At the same time, the travel industry is also going through rapid change.”
In August 2017, Intrepid took a 50 per cent stake in Latin American and polar travel specialist Chimu Adventures in a deal funded from cash reserves. Since then, Mitchell has overseen the financing needed to launch a new cruising range for the European summer.
He says a key thing is to never rush a deal, as taking time to merge cultures and business systems can be the difference between success and failure.
“Many times, people underestimate the actual length of time a merger can take. Accountants need to be realistic about the work involved in a merger, and how quickly you can batten it down and move on.”
“My father told me that with a background as a chartered accountant, I could do anything later in life and take my skills anywhere. He was right.”
The travel bug bites
Travel is part of the job, which suits Mitchell down to the ground. “Most of our business is overseas, so we get together with other regional heads as a leadership group. And occasionally, I’ll tack on a holiday.”
He wistfully recalls watching a pride of lions lapping from the Zambezi River in Zimbabwe (the country of his birth), while holidaying on a houseboat there in 2015. “I love Africa and travelling to new destinations. I love the wildlife, the sunsets, the gin and tonics, and just the space.”
Mitchell grew up in Western Australia after his parents tossed a coin to settle their immigration plans. In Perth, his father landed work as a chartered accountant and proceeded to nudge his son down the same path.
“My father told me that with a background as a chartered accountant, I could do anything later in life and take my skills anywhere. He was right.” In his early 20s, with a Bachelor of Commerce, Accounting and Business Law from Curtin University under his belt, Mitchell took his first full-time role with PKF Chartered Accountants in Perth, where he completed the CA designation.
Three years later he packed his bags for London to take a job as group accountant with satellite communications company Inmarsat.
It was here that the travel bug really bit. London was an ideal base to explore Europe, and Mitchell’s role with the telco allowed him the flexibility to take off for some extended travel adventures.
During this period, he also gained valuable corporate finance experience as a group accountant. He led the team that prepared Inmarsat’s accounts for the company’s listing on the London Stock Exchange in June 2005. At the time, Inmarsat was one of the first ever companies under the International Financial Reporting Standards (IFRS) to be subject to the US Sarbanes-Oxley Act of 2002.
“That process taught me work ethic,” Mitchell says. “I thought I worked really hard, but until you actually go through the process of listing and see how many people are involved working towards a pretty tough deadline, it’s hard to describe how huge the task is.”
In early 2006, it was time for another big move – this time to his wife’s home town of Melbourne as chief accountant with National Foods. It was a role that gave Mitchell a real-world taste of the implementation of mergers.
Just a year earlier, the maker of Big M flavoured milks and other established Australian brands had been acquired by Philippines company San Miguel Foods. And less than a year later, National Foods was again bought out – this time by Japan’s Kirin Holdings. Mitchell left the food manufacturing group, now known as Lion Nathan, just as it was about to lob an ultimately successful bid to buy Dairy Farmers.
More M&A deals on the horizon
In the travel industry, events completely beyond management’s control can hit a business hard. The September 11 terrorist attacks in the US in 2001, the 2002 nightclub bombing in Bali, the 2009 swine flu pandemic and a string of natural disasters have locked Intrepid out of key markets for varying periods.
But this has only increased the company’s resolve to expand into new markets around the globe, in a very deliberate move to mitigate the risks, Mitchell explains.
He predicts there will be more M&A deals for Intrepid Group on the horizon, but notes that it is also time for organic growth to come to the fore.
“We are actively looking at new products and new markets all the time, and always looking to get deeper into the supply chain within our business,” he says. “The concept of Intrepid owning ships or boats, as we move further into the adventure cruising market with coastal ships, is an example of that.
“But our big focus at Intrepid is on brand investment, and telling the stories of our brands. Because the story of Intrepid is just getting better every day.”
Mitchell is optimistic that improved technology will empower his finance team to better analyse numbers and advise on the best strategic business direction for the business.
Intrepid Group’s customer relationship management system, combined with Google Analytics, paints an accurate picture of new growth markets, he says. The business is hiring more data scientists to analyse the customer experience and evaluate growth strategies.
“Technology has been a huge enabler for us to get quicker and provide better insights for our companies. And ultimately our job is to provide insights, not delay the communication of information.”
Brett Mitchell’s M&A tips
- Be realistic about how long it takes to merge two entities.
- Ask a lot of questions and make sure the symmetry makes sense.
- Play devil’s advocate by asking a lot of questions throughout the process.
- Let go of ego, and look for win-win situations throughout the process.
- Use digital tools and technology to analyse a potential deal, then advise management on the best way forward
Becoming a Certified B Corp
In December 2017, Intrepid Group became the biggest Certified B Corp in Australia.
B Corp Certification is granted by B Labs, a non-profit organisation headquartered in the US state of Pennsylvania to for-profit companies that meet its criteria for demonstrating they deliver a public benefit.
Eligibility is based on companies meeting B Labs’ required standards for verified environmental and social performance, public transparency, and legal accountability.
To gain and retain B Corp status, companies must enshrine the ‘triple bottom line’ principles of profit, people and planet into their constitutions, expand directors’ duties to require them to consider the interests of non-financial and financial shareholders, and report publicly on social and environmental performance – as well as financial indicators.
For a privately owned enterprise, such as Intrepid, that means committing to much more rigorous public reporting standards than would otherwise be required. B Labs carried out 23 audits on divisions within the Intrepid Group before granting it B Corp status.
B Labs also considers corporate giving and social responsibility programs. The Intrepid Foundation matches customer donations towards a variety of causes that align with its goal of supporting vulnerable individuals and communities through sustainable travel.
To qualify as a B Corp, a company must score a minimum of 80 points out of a possible 200. Intrepid made it over the line with a score of 82.7 points. Its chief purpose officer Leigh Barnes is responsible for leading the group’s commitment to B Corp values.
There are more than 2500 Certified B Corps in over 60 countries, including ice-cream maker Ben & Jerry’s, outdoor apparel brand Patagonia, and social media management platform Hootsuite.
Other prominent B Corps around our region include ASX-listed superannuation and investments manager Australian Ethical, hospital operator Aspen Medical, Byron Bay brewery Stone & Wood, and Christchurch-based disposable glove manufacturer Eagle Protect.
At a glance
In the year to 30 June 2017, Intrepid achieved 14.8% growth in group external revenue to A$341 million.A$10.7 million earnings
Earnings before interest and tax to A$10.7 million in 2017, up 1.9% on 2016 results. January 2018 was Intrepid’s biggest month ever, with sales exceeding A$45 million and growth of 29% on the prior period.
Source: Intrepid Group