Perception is reality. And now more than ever, how your online presence is perceived is crucial. What’s the first thing you do after you meet someone in a business context or learn about a new company that you’re interested in? You do an online search and check out their website, social media presence, and reviews. This first impression may determine if you move forward and pursue or back away.

Private equity firms (PEFs) and other types of buyers and investors are doing the same thing for businesses in which they’re interested. It’s called Digital Due Diligence.

What is Digital Due Diligence?

As PEFs and other types of buyers scope out potential investment and/or merger and acquisition (M&A) opportunities, they perform detailed due diligence on their target companies to ensure they’re making a sound investment. Areas they investigate include commercial, financial, and legal. But increasingly important are the digital and online aspects of their targets.

Digital Due Diligence is likely to include online security and compliance for your particular industry as well as your online footprint: your website, social media presence, online advertising, email marketing, sales funnels, and online reviews (Yelp, etc.). In short, it’s every activity that your business is involved in online.

And this is key: Their first impression of your business most likely comes from your online presence.

As a business owner, you need to make sure your website is professional and eye-catching, showing evidence of online engagement. Your company’s online footprint, or lack thereof, can affect the initial perception of the company and potentially, its value and attractiveness.

Why Your Company’s Online Footprint Matters

PEFs are increasingly using web data to gain a competitive advantage when researching prospects. The Bain & Company’s Global Private Equity Report 2017 says that to gain comprehensive insights, PEFs use web research to complement traditional research: “From scraping social media sites to mining e-commerce traffic, some PE firms are starting to take advantage of new digital data sources and advanced analytical tools, such as website ease-of-use and amount of access to information, social media postings, customer reviews, and other web data.” These days, having no online presence can be an indicator of poor company performance.

PEFs mine social media data to determine how well known a company is among customers and potential customers. They may use online customer reviews to glean insight into their sentiments about the business: “One due diligence of an amusement park company analyzed reviews on TripAdvisor to confirm primary research and understand the company’s competitive position.”

To sum it up: Your digital presence impacts the value of your business!

Will Your Company Stand Up to Digital Due Diligence?

A company’s digital presence can now be listed along with other business value drivers which include growing revenue and profits, strong management and market share, reputation, quality products and services, and documented processes and procedures. 

Some areas online that investors may be looking at:

  • Website design and conversion performance
  • Sales funnel tracking
  • Search engine rankings
  • Paid search and display advertising campaigns statistics
  • Social media presence and customer engagement
  • Customer reviews
  • Email marketing

An ineffective website, or a lack of online presence in general, can hinder the scouting process and cause buyers to overlook a company. It’s not worth their time if your company’s website is not user-friendly, mobile-friendly, or doesn’t provide the information they’re looking for.

What Can You Do to Improve Your Company’s Online Presence?

  • Be attentive to your presence on Google My Business, Bing Places for Business, or other review sites.
    • Alert: These sites are automatically collecting and posting information about your company for everyone to see!
    • Claim your listings on these sites.
    • Ensure that all the information is accurate and up to date.
    • Actively manage any reviews or comments.
  • Take some time to upgrade your online appearance.
    • Treat it as you would do periodically with your physical location.
    • Make sure you’re providing the best web design and social media experience for your visitors – whether it’s potential customers, current customers, or potential investors.
    • Remember, anything that increases customer engagement also increases sales, profits/cash flow, and business value.
  • Perform an audit and see how you stack up to your competitors online.

As a business owner with an eye towards selling in the future, your company’s online presence needs to be considered as part of your pre-sale diligence. A strong digital footprint will ensure buyers’ interest, increase business value, and help you achieve the best possible outcome. Your collective online presence is a representation of your company’s brand and should be carefully managed, along with every other aspect of the company.


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