The due diligence review (DDR) is a basic part of the travel agency acquisition course of action.
There are five meaningful objectives:
1. clarify deal-breakers, which, if unresolved could preclude pursuing the transaction any further:
• Company personnel engaged with conflicting, outside interests
• Financial commitments – employment contracts, leases from past acquisitions, liens, etc.
• Legal/Regulatory issues- lawsuits, client complaints
– Quality of work
– Questionable accounting
– Questionable expenditures
2. Verify representations received from the seller, such as meaningful assumptions made about employees, compensation, systems, meaningful statistics.
3. acquire a more detailed understanding of the business:
• Types of clients
• Business mix
• supplies of revenue
4. acquire information vital to negotiating the transaction:
• Salary and assistance information for employees
• Inventory of furniture and equipment
• Inventory of computer systems and software
5. clarify possible change issue or areas of focus:
• Compensation and assistance issues
• Technical and workflow course of action issues
The DDR is designed to assist the Due Diligence Manager (DDM) in efficiently planning, executing, and reviewing the planned transaction. Following a uniform DDR is basic to the successful completion of the review and will ensure that:
• A consistent approach is used by all due diligence team (DDT),
• A standard output (format) is produced for each DDR, and
• The duplication of information gathered or requested of the owners is deleted.
The DDM is responsible for the overall planning and final review of all work and the development of the final report.
PHASE I: Meeting/conference call with Deal Owner, Acquisition Manager and DDM
• Communicate overall vision and strategy of the DDR.
• proportion information that has already been obtained to eliminate the duplication of data- gathering efforts.
• clarify DDT members.
Reporting: Recap the discussion/decisions and provide a copy to each party.
PHASE II: Meeting/conference call with Acquisition Leader, DDM and DDT Members
• proportion new information.
• Review the need for confidentiality with acquired firm contacts and external supplies (i.e., media).
PHRASE III: Meeting with DDM and Firm Owner and/or Main Contact
• Review the DDR.
• Provide the list of items that the firm will need to produce.
Reporting: The DDM will complete the recap of each call.
PHRASE IV: Data gathering course of action begins with the DDM, Team Members, and Firm Owner & Contacts
• Complete the due diligence data gathering (DDM, Firm owner/firm department contact).
• Complete the “Summary Report” memo (sustain team member).
PHRASE V: The DDM completes the Final Report and provides it to the Deal Owner and Acquisition Leader.