Moving From Family Control to Business Recovery: The Buyout of FRAM by Karavel

Abstract

Karavel Group is an online travel business that was backed by LBO France and recognized for the recovery of travel companies in difficulty. The company had spent millions of euros to acquire businesses that were no longer profitable. In November 2015, they set their sights on FRAM, a family travel business founded in 1949, whose brand maintained its high quality image despite its mounting financial difficulties since 2000. In the buyout, it appears that various factors motivated Karavel to invest recovery capital in FRAM, while FRAM was motivated by other factors to accept the buyout. Did FRAM make the wrong decision in selling to a company backed by an investment fund? This case study highlights the varied motivations that led the firms to conclude an offer, as well as the process of the offer and its consequences. It highlights key issues of patient and recovery capital and financial versus strategic value in buyouts of struggling family businesses.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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