Organize diligence around questions that can change price, financing, closing conditions or the decision to proceed. A large data room is not the same as a reconciled investment case.
HVS’s July 2026 transaction guidance emphasizes organized financial information and early disclosure of property-improvement plans, renovation history and deferred maintenance. Those are useful starting points, but the buyer should independently test the seller’s interpretation. (publications.hvs.com)
What should the buyer request?
| Workstream | Recommended evidence | Decision it supports |
|---|---|---|
| Revenue verification | Monthly accounts, PMS exports, channel statements and revenue reconciliations | Whether reported sales and booking mix are reliable |
| Operating expenses | Payroll detail, staffing schedules, vendor contracts and departmental results | Whether normalized margins are achievable |
| Forward demand | Booking pace, group contracts, deposits, cancellation terms and customer concentration | Whether forecast revenue is supported |
| Physical condition | Property-condition assessment, equipment history and costed remediation | Capital budget and completion timetable |
| Contracts | Management, franchise, leases, systems and major supplier agreements | Transferability, continuing costs and exit restrictions |
| Taxes and insurance | Buyer-specific analysis, quotations, claims history and assessments | Post-acquisition owner costs |
| Closing liquidity | Receivables, payables, deposits, inventory and prepaid expenses | Working-capital adjustments and opening cash |
Environmental diligence deserves its own workstream. EPA identifies All Appropriate Inquiries as a process relevant to qualifying for certain CERCLA liability protections; recognized Phase I standards can support that process, but an environmental report is not a building-condition survey. Have environmental counsel and the consultant establish the required scope and timing. (epa.gov)
Recommended output: maintain an issue register with an owner, evidence status, estimated cash effect, deadline and proposed resolution. “Report received” should never be the final status of a material issue.