The Impact of the Economy

Microcosm of a market — FBO network puts acquisitions on hold; looks internally


“We also frequently are able to acquire a good name and a reputation, so we have not yet consolidated under a single marketing banner. If we were to resume growth and get bigger, we might revisit that decision because we understand the benefit of the brand.”

Along with branding, Ross says the company is placing an emphasis on cross-training of personnel and management across the network.

A return to the acquisition market is the plan for Ross Aviation, he says, but it gets back to when does the market turn around. “We’d like to return to a sensible acquisition program, but first we have to establish a bottom. We have to find a situation where fuel volumes don’t just keep declining.”

FBO values today
Putting acquisitions on hold was not only due to the investment climate drying up, but also due to changes that have made the FBO marketplace itself hard to put a value on right now, says Ross. And this period follows one in which many in industry speculated that some companies were overpaying in the FBO acquisition arena.

Says Ross, “In some cases they were way too high. I think that the correction has occurred with a vengeance. Right now, what basically is going on is an absence of transactions.

“It would be hard to appraise an FBO right now. So much of the value is determined by what happens in the future versus what has happened in the past.

“I think there will be a return and a recovery of volumes. My guess is that multiples will be lower in the future than in the past, and that probably is an appropriate change. Part of the reason for that change is because banks will be much less aggressive in supporting FBOs. I don’t think that it’s a case of them having a bad experience with FBOs; but because in general they’ve been pulling their horns in.”

For FBOs who might be considering selling out in the midst of the downturn, Ross cautions that this is probably not the time to exit the business. Either way, expect the process to be lengthy, he says.

“I would say, they might want to consider talking to me and others. The process takes a long time and by getting to know a number of folks they would be able to find a suitable purchaser. I would recommend they deal with people who have been in the industry.

“They need to decide if they want to stay in the business to a partial extent – take some money off the table but stay active in the business. That is something that we can provide.”

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