The founder of Andrew Barnett Merger and Acquisition Consulting Firm has successfully handled the risks connected with M&A. It is difficult to blend two corporate processes and cultures. Andrew has good experience in working with different sectors before launching his own business in South Florida. He knows and offers unbiased opinions, which is why lots of private firms across different sectors approach Andrew for assistance. They even follow Andrew Barnett on Tumblr
Andrew and his team use proven due diligence methodologies. During the research, if any loopholes get identified it helps their clients make an educated decision. For example, hotel purchase is not easy even for seasoned real estate investors. Imagine how challenging will it be to buy real estate along with its operating business. The team employs a systematic approach including analysis and performing comprehensive due diligence. It helps the buyers to manage the information depth efficiently while operational within constricted deadlines.
Due diligence checklist for hotel acquisition
Step 1 – Acquisition opportunity
Accumulate the following information as much as possible
- A detailed description of the specific hotel’s physical features.
- 5 years of historic operating outcomes in detail & current operating budget.
- Historic & planned capital project’s summary.
- Competitive hotel analysis.
- Property condition assessment.
- Property Improvement Plan [PIP] requirements.
- Major agreements copy [franchise, management, major leases, and more].
- Environmental report of Phase I.
- Other asset details like zoning, easements, excess land, and development approvals, etc.
Step 2 – Make an offer & negotiate
A potential purchaser will need to contest with the successive offering rounds. If the first offer gets through then the purchaser will need to negotiate the contract terms for purchase & sales. The purchaser needs to be aware of their vision associated with the asset, investment parameters, and pricing. During the negotiation, there will be changes in purchase pricing, which can affect investment underwriting. The step 1 analysis data will allow the buyer to make adjustments confidently.
Step 3 – Due diligence phase
After the APS or ‘Agreement of Purchase & Sales, the buyer has 30 to 45 days for performing legal due diligence. It is a timeframe that differs as per the asset’s complexity. The due diligence report includes –
- Real estate structure and details
- Market dynamics
- Asset strategy
- Revenue analysis
- Operation analysis
- Capital investment
- Investment analysis
- Legal tasks
At the end of the due diligence phase, the buyer will need to waive the remaining conditions.
Step 4 – Closing
Vital tasks before the closing date include –
- Finalize and implement a debt funding agreement
- Hand-over planning and operation integration with buyer’s organization
- Employment contracts
- Change in supplier and service contracts
- Replacement or approvals for hotel branding and management
- Transfer of title
- Closing adjustments
It is time to plan a celebration with the staff and interact with the suppliers and the customers.
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