What is digital marketing & website due diligence?
Digital due diligence covers many different areas, from digital security and compliance right through to the online performance of the ‘digital footprint’ of a company….It’s website, social media presence, online advertising, email marketing, sales and leads funnels, amongst others.
It’s this digital footprint that is the focus of our due diligence work. It’s an area that we specialise in and we have performed many in-depth website and digital marketing due diligence projects for a number of UK private equity firms. Both for their existing portfolio companies and potential target companies. Marketing can sound subjective, so our digital tools, testing procedures and advanced reporting, add a numerical value to previously untested and costly activity.
With an increasing number of deals exeeding 10x EV/EBITDA (over 60% last year in the US according to Pitchbook) it’s vital for PE firms to utlise all potential levers of growth. Online sales and marketing optimisation, especially in mid market deals, is often underutlised and offers significant opportunities going forward.
The value of this type of digital analysis is increasing with the growth in the online presence of most companies, indeed Bain see this clearly “For diligence into a particular company, web scraping provides indicators of market share and growth momentum, such as web-traffic analysis”.
Further to this, savvy PE firms are starting to wake up to the potential and directly applying it to the marketing of their portfolio companies. According to Jim Howland, a Managing Director and Operating Partner at Morgan Stanley Capital Partners “Increasingly our value creation plans focus on working to accelerate top line growth by adopting a more sophisticated marketing strategy and making material investments in the function.”
The results of the due diligence work that we conduct always identifies new opportunities for growth and highlights areas of friction that require fixing. Being armed with this powerful knowledge and implementing it on portfolio companies has led to significant online performance improvements for our clients.
The Correlation Between Digital Adoption & Performance
A recent report by Mckinsey highlighted the strong negative correlation that nondigital company cultures have on economic performance. It’s worth noting that along with an aversion to risk and restrictive mindsets, a lack of digital culture is an accurate indicator of suboptimal company performance. Rather than viewing these situations as being negative, our approach targets the opportunities that are available once due diligence has been conducted and lays out a clear implementation plan to move forward.