Do you want to know the most overlooked area of due diligence? Hands down it’s got to be social media due diligence.
The high stake nature of mergers and acquisitions often places the business’ social media presence on the lower rungs of ‘most important matters to evaluate’.
While there are indeed more urgent aspects that should take precedence, completely overlooking the digital assets of a business is not wise.
Having a comprehensive overview of your target company’s social media assets provides you with additional information to discuss and potentially leverage during negotiations.
In order to highlight the importance of a business’s digital assets, we turned to the owner of Local SEO Search, John Vuong to give us the low down. Here are John’s top insights regarding social media due diligence during M&As.
Digital Asset Insight #1 Social media due diligence sheds light on a business’s digital footprint
In today’s tech-centric climate, businesses cannot dissociate themselves from their digital presence. Why? Because the business’ online footprint is rich and can tell a potential buyer a lot, including:
- Brand reputation
- Brand positioning among competitors
- Website and social media platform performance
- Monthly inbound traffic figures and potential leads
- Richness (or lack) of client database from email marketing campaigns
The existing online presence can be a great resource for the business generating sustainable revenue. Alternatively, a lack of a fully developed digital presence can present an opportunity for the buyer to really build and establish a solid foundation using their own strategies.
Takeaway: “If you’re acquiring a company everything needs to be in alignment in terms of the digital landscape from the website, social media platforms, to reputation, as well as the LinkedIn profile.”
Digital Asset Insight #2 Digital presence-absence could be a great opportunity
Don’t let the absence of a well-developed digital presence be a deciding factor to walk away from a potentially lucrative M&A deal.
The reality of the matter is that this can be a fantastic opportunity for you to step in, identify areas that need improvement, and raise the company’s online profile considerably.
By the time you’re done developing the social media side of the acquired business, the business may be worth much more than what you paid for it. And if your eventual exit strategy involves selling the business, this can work well in your favor.
Takeaway: “There’s a lot of growth potential for people that haven’t invested a lot of money in their digital assets.”
Digital Asset Insight #3 Try and get access to the target business’ Google Search Console and Analytics
Gaining access to the target business’ analytics will allow you to see key metrics such as how much traffic reaches the website, how much of it is organic, and how much is paid for.
You’ll discover where most of the traffic is originating from and from which devices so you can target your ads properly, as well as key search terms you can try ranking for.
This is vitally important as it can give you as realistic a picture as any of the amounts of work that may need to be done to bring the target business’ online presence up to standard.
It can also give you an idea of how much the business actually relies on its digital marketing for new leads.
Takeaway: “If you can get the full profile of Google Search Console, Google Analytics, you can dig deep and do a full audit on how long people stay on [the target business] website.”
Digital Asset Insight #4 Bring a digital expert onboard your due diligence team
It’s not enough to simply gain access to a target business’ analytics. You need experts to interpret the data for you, identify gaps and opportunities you can capitalize on, and make sense of the tracking metrics.
Sometimes a seller may not grant you access to their profiles and in this case, you will need a social media expert who can use an arsenal of resources to get you the online data you require.
Therefore, your due diligence team should also include a digital expert alongside the various other M&A advisory members such as an accountant and an attorney.
Takeaway: “You have to uncover and dig deep to figure out gaps and opportunities [in the target business’ digital presence] and find out how you can grow and scale the business to the next level.”
Digital Asset Insight #5 Don’t forget to check who actually owns the target business’ digital assets
One of the biggest mistakes that most buyers make is not verifying who actually owns the target business’ digital assets.
It’s not unheard of that a third-party company contracted to design and build the target company’s website and social media profiles may have ownership and even full access to the company’s online profiles!
You will want to make sure that when you acquire the business, you and only you will have full and total control over every digital platform associated with the company.
Takeaway: “Make sure there’s a clause that you can ensure that the seller owns all major branded digital asset pieces before everything’s passed over and sold on.”
Get the help you need
If you would like to discuss social media due diligence in greater depth, our team of seasoned M&A advisors is only one phone call away.
Sun Acquisitions boasts an experienced M&A team that can assist you with preparatory efforts whether you’d like to buy or are selling a business. Don’t hesitate to contact us.