Amex GBT: Patient Capital at 35,000 Feet

If you had made a list in 2020 of sectors investors were meant to avoid, business travel would have been right up there. Flights grounded. Conferences cancelled. Half the corporate world discovering Zoom backgrounds and pretending they preferred them.

The assumption was simple enough: business travel was finished. Or at least permanently smaller.

Which is why this week’s deal deserves a closer look.

Investment firm Long Lake has agreed to buy American Express Global Business Travel – Amex GBT – for about $6.3bn in cash and take it private at $9.50 a share. Not a distressed rescue. Not a bargain-bin clean-out. A full-scale take-private in a market where borrowing still isn’t cheap and investors supposedly hate anything cyclical.

And that’s the bit worth paying attention to. Because Long Lake clearly doesn’t think it’s buying a fading travel business. It thinks it’s buying something much more dependable than that.

Probably closer to infrastructure than travel.

What Long Lake Is Really Buying

At first glance, Amex GBT sounds like a slightly upgraded travel agency. Flights, hotels, expense management, all the usual corporate admin nobody enjoys doing themselves.

But that undersells what these businesses became after Covid.

Before the pandemic, corporate travel management was often treated like background admin. Companies had policies, but half the staff ignored them, bookings were all over the place, and finance teams mostly gave up trying to track where money was leaking.

Covid changed that quickly.

Suddenly companies cared a lot more about where employees were, how they travelled, what it cost, whether trips were necessary, and how quickly they could get proper reports if borders closed again. Travel stopped being “book the cheapest BA flight and hope for the best” and became a tightly managed corporate process involving approvals, tracking, reporting and someone inevitably asking why Dave flew business class to Birmingham.

That shift matters because it changes the quality of the revenue.

Long Lake isn’t betting that everyone goes back to flying three times a week. It’s betting that once a multinational plugs a platform like Amex GBT into finance, HR, approvals, expense systems and reporting tools, replacing it becomes a serious operational headache.

And investors love operational headaches. At least when they belong to someone else.

Business Travel Didn’t Disappear – It Consolidated

One thing the pandemic did exceptionally well was wipe out weaker operators.

Smaller travel-management companies struggled. Some merged, some shrank, some disappeared while everyone was distracted baking banana bread and pretending Teams calls counted as social interaction.

What survived were the large platforms with enough scale to invest in technology and embed themselves properly inside corporate systems. Amex GBT ended up firmly in that category.

The business model shifted too. The old pitch was basically: “We’ll help you book travel slightly cheaper.”

Now the pitch is much broader. Instead of just booking trips a bit cheaper, the platform sits inside finance, HR and procurement, enforces policy, pulls data together, and makes the whole process less chaotic than it used to be.

What it really sells now is convenience. Once a global company has spent years building its travel operations around one platform, very few finance directors wake up thinking: “You know what would make this quarter more exciting? Replacing the entire travel system.”

That’s a very different business. And from a financing perspective, a much more interesting one.

Where the Finance Brain Kicks In

Underneath all the travel branding, Amex GBT makes its money in a fairly dependable way. Companies pay to use the platform, pay to manage bookings, and pay for all the extra bits wrapped around it. And because the clients are large corporates rather than individual travellers, the income turns up steadily rather than in dramatic bursts.

That matters because those fees also come in different forms: per-booking charges, ongoing management fees, and recurring software charges for access to tools, data and support.

Investors are much happier backing a business that brings in regular income from hundreds of companies than one relying on a handful of blockbuster moments or booming holiday seasons.

You can see why Long Lake likes it.

The important point is that the income now comes from large companies using the platform every day, not from hoping for a boom in business-class travel. For all the talk about avoiding cyclicals, that kind of steady income is hard to turn down.

And this is where the structured-finance angle starts to creep in. The same things equity investors like – recurring fees, lots of large counterparties, contracts you can actually read – are exactly the things lenders like too. You can imagine plain term debt against those cashflows, a revolving line on receivables, and, if anyone feels energetic later, something more structured on top.

From Booking Flights to Running the Process

The other thing Long Lake is clearly buying is how much of the process Amex GBT now sits inside.

Years ago, corporate travel mostly meant someone booking a flight, expensing a hotel and losing at least one receipt before accounts started asking questions. Now the systems sit much deeper inside large organisations.

Trips need approvals. Budgets need checking. HR teams want to know where staff are. Finance teams want spending data, and sustainability teams want carbon reports nobody fully understands but everybody still has to produce.

And somewhere in the middle of all that sits the travel platform, not just booking tickets but running more of the journey: planning, approvals, bookings, tracking, expenses and audit. And once a company has spent years wiring those systems into procurement, expenses and internal policy, changing provider becomes the sort of project everyone agrees should probably happen “at some point”, right up until someone asks who’s going to manage it.

At which point the conversation usually dies immediately.

Why Private Equity Likes This Kind of Business

There’s also a reason this deal is happening away from public markets.

Public investors like businesses they can explain quickly. Airlines? Easy enough. Hotels? Fine. Software companies? Everybody loves a software company.

Amex GBT sits awkwardly in between several categories at once. Part travel business. Part software platform. Part corporate services operation. Not especially glamorous in any direction.

That can leave businesses like this slightly stranded in public markets. They generate decent cash, keep growing steadily, and still, nobody gets particularly excited about them. Private equity firms often see opportunity in that.

Long Lake doesn’t need the business to become fashionable. It just needs the income to keep turning up consistently while the company keeps embedding itself further inside large organisations.

It also gets to make longer-term decisions without having to explain every investment as a quick win for the next quarter’s numbers. Spend more on product. Tidy up pricing. Improve contract quality. Make the cashflows better, even if the reporting looks a bit untidy for a while. That’s often much easier to do in private than in public.

And there’s probably a broader point here too. Investors spent years chasing flashy growth stories while dependable businesses were sitting in the background getting on with making money.

Corporate travel management turns out to be very much in that category.

What This Says About the Industry

Step back a bit and the deal looks like a small vote of confidence in the grown-up version of business travel. A few years ago, the consensus was that Zoom had killed it and anything attached to planes and hotels was damaged goods. That has plainly turned out to be too simple.
Business travel didn’t come back in exactly the old shape. It became more selective, more scrutinised and more managed. But that has actually helped the firms sitting inside the process. If companies travel less casually but manage what remains much more tightly, the platforms overseeing that spend can become more important, not less.

That’s really what Long Lake is buying. Not a nostalgic bet on everyone going back to 2019.A bet that the post-Covid version of corporate travel is more disciplined, more systematised and more financeable than the old one.

The Last Word

There’s something quite amusing about one of the more interesting, structured finance stories of the week involving expense claims and airport lounges.

But the deeper you look at this deal, the less it feels like a bet on travel itself.

Long Lake is really betting on routine corporate behaviour. Large companies still need people to travel. Clients still expect meetings. Sales teams still enjoy conferences with suspiciously generous dinner budgets attached.

And companies increasingly want all of that managed properly rather than left to chaos and a pile of delayed receipts.

That’s what Amex GBT now sells.

Not optimism about packed business-class cabins forever. Just a business sitting quietly inside large companies, collecting steady income while everyone else debates whether business travel is dead.

For something most people still think of as a travel agency, that’s not a bad position to be in.