When considering IT-related intellectual property during technology due diligence, websites and domain names have been on the radar for many years at this point. However, in the age of social media and networking, it’s important to also review a target’s assets in these areas. This includes Twitter handles, individual and corporate accounts on LinkedIn, blogs, corporate Facebook accounts, Instagram and Pinterest accounts and accounts at whatever new social media outlet has risen to prominence in the last five minutes.
There are three reasons that social media is an important IT due diligence consideration. As usual, in this article the target company is referred to as TargetCo and the acquirer as AcquiringCo.
Use the Accounts to Gain Insight into the Company and Staff
During the company research phase of IT due diligence, it’s helpful to review the TargetCo website, press releases and job postings in order to gain a basic understanding of the company. Once you’ve gotten a high-level overview, social media accounts can provide additional detail.
For example, if TargetCo has a corporate Facebook account, you may find articles, conversations with customers, etc. You might better understand customer satisfaction with the company’s products, and what the customers consider to be the most important features.
You can check the LinkedIn profiles of TargetCo’s key personnel. You may identify personal connections to these staff members that you can utilize for references. You can also determine how much experience the IT staff has with the TargetCo technology.
Blogs are another great resource. Corporate blogs can show the history of product development at TargetCo, such as new releases and features. If the blog allows comments, you can use this as another way to gauge the concerns and satisfaction level of the company’s client base. Personal blogs of key IT staff members might provide a view of company culture.
Note that all of the research I’m describing involves publicly available information. Recently, there have been discussions of due diligence requests for company emails, employers requesting Facebook logins and passwords and other similar overreaching. Requests such as this have no place in a standard IT due diligence effort.
Identify Them to be Sure They’re Turned Over
In addition to the general knowledge you’ll gain by identifying and reviewing TargetCo’s social media accounts, you’ll also be in a position to list them as assets to be acquired in the transaction. AcquiringCo must be sure it has rights to these accounts after the deal closes. You may find that TargetCo has a popular Facebook page, but that it was started by an employee. If the account is an important part of the marketing plan, you’ll probably want to get the due diligence legal team involved to be sure TargetCo addresses the ownership issue.
This process will also identify the employees that manage these accounts. If social media is important revenue driver for TargetCo, and all of the company’s social media efforts are handled by a single person, that should be noted. An oversight in this area might lead to this employee being considered for termination after the transaction, with the result of terminating successful marketing efforts at the same time.
Identify Potential Hidden Value
One of the goals of IT due diligence is to identify assets of TargetCo that may have more value as part of AcquiringCo. This usually involves new products under development or other assets that can be combined with existing resources at AcquiringCo such as an underutilized data center.
Social media assets can also have significant untapped value. For example, if TargetCo has a Twitter account with thousands of followers, but the account hasn’t been leveraged to market the company’s products and services, this can be a great resource for AcquiringCo’s marketing department.
Conclusion
Just as social media has a growing impact in many areas of everyday life, so has it changed due diligence. Including social media and networking assets in your technology due diligence review is now an important and necessary part of the process.
