Due diligence review (DDR) is a critical part of the travel agency acquisition process.
There are five key objectives:
1. Identify critical factors that, if not resolved, could prevent the transaction from proceeding:
• Company personnel compromised with conflicting external interests
• Financial commitments – employment contracts, leases from previous acquisitions, ties, etc.
• Legal/regulatory issues: lawsuits, customer complaints
– Quality of work
– Questionable accounting
– Questionable expenses
2. Verify representations received from the vendor, such as key assumptions about employees, compensation, systems, key statistics.
3. Get a deeper understanding of the business:
• Types of clients
• Business mix
• Sources of income
4. Obtain vital information to negotiate the transaction:
• Information about salaries and benefits for employees
• Inventory of furniture and equipment
• Inventory of computer systems and software
5. Identify potential transition issues or areas of focus:
• Compensation and benefits issues
• Technical and workflow process issues
• Other
The DDR is designed to assist the due diligence manager (DDM) to efficiently plan, execute, and review the planned transaction. Following a standardized DDR is critical to the successful completion of the review and will ensure that:
• The entire due diligence team (DDT) uses a consistent approach.
• A standard output (format) is created for each DDR, and
• The duplication of information collected or requested from the owners is eliminated.
The DDM is responsible for overall planning and final review of all work and the development of the final report.
PHASE I: meeting/conference call with Deal Owner, Procurement Manager and DDM
Goals:
• Communicate the overall vision and strategy of DDR.
• Share information that has already been collected to eliminate duplication of data collection efforts.
• Identify DDT members.
Reports: recap the discussion/decisions and provide a copy to each party.
PHASE II: meeting/conference call with the acquisition leader, members of DDM and DDT
Goals:
• Share new information.
• Review the need for confidentiality with acquired company contacts and outside sources (ie, the media).
SENTENCE III: Meeting with DDM and Owner Company and/or Main Contact
Goals:
• Review the DDR.
• Provide the list of items the business will need to produce.
Reports: The DDM will complete the summary of each call.
SENTENCE IV: The data collection process begins with the DDM, team members, and the business owner and contacts
Goals:
• Complete due diligence data collection (DDM, business owner/business department contact).
• Complete the “Summary Report” memo (Support Team Member).
SENTENCE V: The DDM completes the Final Report and provides it to the Business Owner and Acquisition Leader.