Mergers and acquisitions can be exciting. If there’s a great offer on the table, people can be tempted, or even pressured to rush into a deal. However, due diligence is important – and that goes beyond just checking legal and financial affairs. In this article we’ll explore 10 things you should be looking out for when scoping a business acquisition opportunity. These are all things that you can do yourself at any stage of the process –but please do ensure you make the checks before signing on the dotted line!
- Social Media: Myth or Reality?
Some companies will pitch themselves as having a mass social media presence and that this is a great selling point. You can debate the value of social media all you like, but for some people that is an attractive proposition. But, one thing that most don’t take into account is whether the social audience is a) real, and b) actually interested in the brand.
There’s a couple of ways to do this – first see if anyone actually likes, comments or shares the business in questions Facebook posts, and check to see if anyone retweets them on Twitter. Next, head over to Social Bakers and use their fake follower check app to get a score on a Twitter account.
If you value social, this is definitely worth checking out.
- Offline Marketing
Offline marketing may be slightly underrated these days, but it still holds massive value. So, find out if your potential acquisition has marketing assets that you can use. For example, do they have exhibition stands, promotional merchandise, outdoor advertising creative and so on.
This could be a huge cost saving and give you a kickstart when you take over if this is all in place.
- Staff Quality
Many businesses are only as strong as the staff they employ. Look into the background of each of the staff members to find out what they’ve done and where they come from. Also ask to see evidence of development reviews, training plans, and other staff engagement initiatives. Consider checking the public social media accounts of the staff also to make sure there are no major dissent issues.
This all helps you ascertain staff quality, but also staff development and engagement – all of which are massively important.
- Google Issues
Many sites have issues with Google penalties. Google rolled out their Penguin algorithm again this month for instance – meaning that many businesses are unable to rank well for certain terms. This kind of restriction on a website is a big deal and can be expensive to rectify. Use free online tools to look at the backlinks and search presence of your potential acquisition. If anything looks dodgy then you should start asking questions. Another key indicator is if the business doesn’t show up first in Google for it’s own brand name.
- Email Database
Any company worth their salt will have a customer database. They should also have been emailing this database to keep them updated with company news and promotions. Ask to see what activity has been undertaken. If you can get hold of the email stats you may find some interesting information. For example, if you’re looking at acquiring a company with 500 regular customers, but only 20 of them regularly open company newsletters and 300 have unsubscribed from receiving information you may have a few concerns!
These digital tips are things that often get missed during the acquisition process.. Not all of them are essential, but they are all worth checking so that you go in to any potential acquisition with your eyes open.