Darrell Wade, the co-founder of adventure travel company Intrepid Travel, has revealed he will sell 20% of the business in order to fund acquisitions ahead of a potential sharemarket float.
Wade, speaking with SmartCompany editor Amanda Gome in an extensive interview published today, says the company has been extensively restructured in the last five months to ensure Intrepid is strong enough to withstand the economy.
"I think it is going to be a very long brutal road ahead," Wade says.
"While we've had a business that's been anticipating this relatively high growth rates of 25% to 30%, we can't assume that's going to happen. So we can't build in that expense, if you like, of catering for that growth.
"That's been a bit of a painful period. Having said that I think we're through it, and that's probably why we're back in to profitability stage now."
Wade has cut labour costs by asking some staff to take 12 months leave without pay, while around 70% of the staff in Intrepid's Melbourne head office have taken wage cuts.
"I haven't yet told them if and when or how we're going to repay it. And in due course we'll do that as well and put a bonus on top."
Wade says the decision to sell 20% of the company is designed to provide a foundation for future growth. He says Intrepid will be very choosy about finding the right investor.
"Obviously cash that is on our terms, it's not cash that we need so we're just putting the terms there, and if they take it, they take it."
His is also looking for an equity partner that has "other value-adds they can put on to the table" such as strategic advice or new business opportunities.
"Whether it's some advice in terms of strategic or structural advice or whatever, which would particularly come from an investment house... or whatever; or it could be a travel partner, a travel industry player, where there's commercial opportunities that are linked into it."
A float is off the cards for now.
"We've put the float back for a couple of years because it's not going to be a good time to list in the next two years. So we think we'll do a pre-IPO capital raising now, make some acquisitions in the next 12 months, get those bedded down, and then list after that."
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