Due Diligence Acquisition Process of Travel Agencies

The due diligence review (DDR) is a critical part of the travel agency acquisition process.

There are five key objectives:

1. Identify the critical factors that, if not resolved, could prevent the transaction from proceeding:

• Company personnel committed to conflicting external interests

• Financial commitments – employment contracts, leases from previous acquisitions, bonds, 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 wages and benefits for employees

• Inventory of furniture and equipment

• Inventory of computer systems and software

5. Identify potential transition issues or focus areas:

• Compensation and benefit issues

• Technical and workflow process issues

• Other

The DDR is designed to help the due diligence manager (DDM) efficiently plan, execute and review the planned transaction. Following a standardized RDD is critical to successfully completing 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 holders is eliminated.

The DDM is responsible for the overall planning and final review of all work and the development of the final report.

PHASE I: meeting/phone conference 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 the members of DDT.

Reports: recap discussion/decisions and provide a copy to each party.

PHASE II: Meeting/Phone Conference with Procurement Leader, DDM and DDT Members

Goals:

• Share new information.

• Review the need for confidentiality with acquired company contacts and outside sources (ie, the media).

PRAYER III: Meeting with DDM and Owner Company and/or Main Contact

Goals:

• Review the DDR.

• Provide the list of items that 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 company owner and contacts

Goals:

• Complete due diligence data collection (DDM, business owner/business department contact).

• Complete the “Summary Report” memorandum (support team member).

SENTENCE V: The DDM completes the Final Report and provides it to the Business Owner and Procurement Leader.