Due Diligence in the age of social media

It is fair to say that social media and its many platforms is a constantly evolving beast. When considering purchasing a business or acquiring business assets, particularly in transactions involving IT related intellectual property, it is common practice to ensure that domain names and email addresses are in check. However, in the age of social media and networking it is essential to undertake a thorough review of a target’s social media presence, particularly any blogs, LinkedIn, Twitter, Instagram, Facebook and Pinterest accounts. Ensuring that comprehensive due diligence is undertaken in the social media space can give you valuable insight about a target as well as identify areas of risk that have potential to impact the commercial negotiation of a deal.

Thorough due diligence of a business’ social media assets allows valuable insight about the business, its staff and its general interactions with its customer base. For instance, if you are looking to acquire a business and its key employees, the LinkedIn profiles of staff members is a useful source of information. You can establish the network of connections that staff members have as well as obtain information about skills and references. It is also ideal to examine a business’ Facebook page to see what feedback has been received from consumers as well as gauge overall consumer satisfaction with the business and whatever products and services it offers.

By undertaking social media due diligence you will be in a position to assess what assets are of value and would be desirable to be included in the transaction. It will also bring to light the question, ‘who owns and has the rights to operate any relevant social media account?’ For instance, if a corporate Twitter profile was established by an employee outside of the scope of employment, who actually owns the account and its 30,000 followers? This is not a question that you want to be asking as an afterthought.

Ultimately the importance of social media to any specific business will depend on how engaged a business is with social media as a marketing or networking tool. That is why it is key to ensure that its value is identified and assessed at the outset. As a general rule, IT and social media due diligence should go hand in hand with overall due diligence.