These days, social media presence is in itself an asset. That is why it should be included in your due diligence when you’re sizing up a company you’re trying to purchase. If you’re a business owner, it is one thing that you have to consider if you want to take your company’s valuation a notch or two higher. However this aspect of due diligence doesn’t get nearly enough attention, especially considering the fact that digital will only grow in importance in the future. Recognizing this gap in the knowledge of most buyers and business owners, Domenic Rinaldi discusses this topic on the show with John Vuong, the owner of Canada-based Local SEO Search, Inc. Tune in as John discusses at a high level the components of digital presence that buyers need to pay attention to prior to closing an acquisition deal.
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John Vuong: Gauging The Value And Potential Of A Business’ Digital Assets
We’ve spent a fair amount of time in previous episodes covering the topic of due diligence. There’s one area of diligence however, that doesn’t get nearly enough attention. That is social media due diligence. Understanding the value of a company’s digital, social media presence and their assets are critical to understanding how the company stacks up to its competition and what the immediate prospects for that company are. If a company doesn’t have a real focus on social and digital marketing, it is losing ground fast. I am talking with John Vuong, the Owner of Local SEO Search based out of Toronto, Canada. John and his firms specialize in helping companies maximize the value of their social media assets. His company has also gotten involved in helping buyers and sellers conduct due diligence on a company’s digital footprint.
As a buyer, you will want to understand the strengths and weaknesses of a target company’s social media assets. As an owner, it’s smart to get your arms around this well and advance of considering a sale so you can maximize the value of your business. We break down at high level components around website design, conversion performance, sales tracking, SEO rankings, ads performance, social media presence, reviews, what role that plays in your company’s health and email marketing. Social media and digital are only growing in importance. Understanding the value of this asset is critical to evaluating the overall merit of a particular acquisition.
Before we get into this episode, if you want to avoid the common deal pitfalls and the risk of losing substantial dollars, you need to know how ready you are to buy a business. I believe proper preparation is so critical to your deal success. We have published a catalog of free resources to help you be better prepared. You can access these resources at K2Adviser.com. Being prepared is critical to ensuring that you maximize returns and minimize risks. Thank you for being here. I hope you enjoy the show.
John, welcome to the show.
Domenic, thank you for having me. I’m excited to be on your show.
You’re all the way from Canada.
I’m in Toronto, Canada.
I’m excited to dive into the topic, which is relevant. We’re going to talk about social media due diligence and digital due diligence that buyers should be doing as they’re contemplating an acquisition. Along the way, owners, what they should know about their social media presence. Before we dive into this topic, maybe you could give everybody a quick background on yourself, how you got into this space and what you’re doing.
I started a digital agency that focuses primarily on Search Engine Optimization, SEO back in 2013. I bootstrapped it to forming a team to deliver across global companies that need full service SEO. Prior to that, I spent years in advertising sales from traditional advertising sales to online performance base to then working at Yellow Pages. It’s where I got a good footprint of understanding who I wanted to become, who I wanted to target in service and who I ultimately wanted to be known as in terms of that trusted source adviser for SEO. That’s a little bit about myself. We service people that are interested in SEO. This is a deep dive to uncover what due diligence is required when you’re purchasing a business in terms of that digital landscape. All your asset pieces that are included from the website, social media platforms, reputation, as well as the LinkedIn profile, everything needs to be in alignment so that you understand what you’re getting yourself into.
You took my first question, which is what is social media due diligence. You hit on a lot of it. It’s your website, social media platforms, LinkedIn, Facebook, all that stuff, the reviews that you have, your email marketing, how you track things. I’m excited to dive in. Why should it matter? When a buyer is contemplating, acquiring a business, they have so much on their plate. They’ve got to look at the financials. They might have environmental issues. They might have other requirements that they’re looking at, including getting a bank loan. Why is the social media piece so important and something not to overlook?
It’s because of the brand. If you’re acquiring a company, you want to know what other people are thinking and saying as well as the competitive landscape. You want to understand what has been accomplished in the last years to build up to a point where they want to sell the business. What is the reputation? What foundation did they put? How much emphasis and effort did they put into the website creation, forming the profile of becoming a thought leader, authoritative figure? How much inbound traffic are they getting as opposed to a direct traffic or referral traffic? You want to uncover a lot more to understand. Are there still leads that are coming to the website that is predictable, inbound leads versus you still need to pay for all the traffic? That’s a huge component to understand. When you’re buying a business, you want to project years down the road if it’s going to be worth it to purchase or start from the foundation.
From my perspective, it is so much easier to have leads coming inbound to your company than having to hire salesforce, train them, manage them, sent them, motivate them, have them go out and find leads. That’s not to say that’s not an important component. If you could be generating inbound interest on a regular basis, what a big step up that is and a head start you have. I do want to say though to the show audience, buyers in particular who are looking at businesses. It’s because a company doesn’t have a great social media presence that doesn’t mean you shouldn’t do that deal. It could mean that there’s a tremendous opportunity for you. What you need to be looking at is, are there material things that would make it hard for you to grow the business and then maybe you need to pass? If they have it invested, that could be a tremendous opportunity.
There’s a lot of growth potential for people that haven’t invested a lot of money in their digital assets. That’d be the website profile in terms of building their influence in the marketplace, in the industry niche or locale or their social platform. Let it be Instagram, Twitter, Facebook, LinkedIn. If they vast a lot of time and effort into creating an established brand recognition to then generate more invalidly traffic as opposed to paid traffic, there’s a major difference in terms of perception as well as lead source and quality leads as well. By doing due diligence, you’ll uncover what the upside is and what was accomplished. If there are gaps that you can invest in to take it to the next level to 2X, 5X, 10X, that business will be way worth a lot more. When you want to exit the next time, you can reap a huge amount of rewards on it.When you're buying a business, you want to project 3-5 down the road if it's going to be worth the purchase. Click To Tweet
Let’s break down each of these areas one by one, if we can. Let’s start with the website. What are the biggest things that a buyer should be looking at as it relates to the website when they’re trying to assess what the ownership has been built there?
There is a lot of web archive content as well as different stages of the design aspect. You can go on Google and see if it was transformed multiple times, at what year, what stage and what it looked like prior. What were they trying to sell? How do they pitch it? What is their go-to-market strategy? Did they pivot along the way? It’s the messaging. There’s the profile of links you want to uncover. What inbound or outbound links were established? Did they do a lot of press releases? Did they get a lot of recognition through association, speaking, book sales, shows, whatever it may be to get some inbound links to build your credibility? What is the content being put out there that is sticky, evergreen? Are they established in the brand?
Maybe they’ve already been published on some of the larger press sites like Medium, Inc., Entrepreneur, Forbes. You don’t know that until you do due diligence. It’s all about reputation as well. What is their reputation look like? Case studies, white papers, all that on third party sites. Not under their own existing website. What’s more important is what had other people took the time to say on third-party platforms like Google and Facebook. If there are review sites specific to their industry, take a look at that. Dig deep into what’s positive, what’s negative and why.
What traffic is coming to the website? Is it organic? Is it paid traffic? What’s the trend of that traffic?
If you can get the full profile of Google Search Console, Google Analytics, you can dig deep and do a full audit on how long people stay on your website. What countries are residing? Which devices? What are some of the key search terms along? Are they staying? Are they converting when they come to the website? If it is organic traffic or not, what is the conversion rate from the traffic that is getting out there? There’s social traffic, referral traffic, direct traffic. There are a lot of different sources out there. You can get all the refinement from Google Analytics when you dig deep.
Assuming that an owner is not going to give a buyer access to their Google Console to see all of this, it’s possible for a company to pull reports. Print up those reports and deliver those to a buyer so they can get a sense for what the traffic trends have looked like, what the split is between organic, paid search and things like that.
You don’t get the full insight if you don’t have full access. There’s software out there that can predict. These are the software we use for competitive analysis. When we take on a client to do an SEO campaign, we flip the five major competitors in their local and industry specific that we want to compete with. Figure out what are the trends, traffic sources, keywords that people are going after. What is lacking in their existing assets so that we can go after potential opportunities as well?
Something that people rarely ask for is how is their company’s website performing compared to their top competitors. These are reports that companies like yours can pull. You can get a lot of information and see if you’re losing ground, where you’re losing ground and what you can do to make it up. It’s important stuff to understand.
Ultimately, it’s the 40. If you want to be known as a leader in the industry, branded stores for that specific keyword, service or product that people are seeking, you want to do your due diligence to see. This is what they say in the bite, the contract that they are known as, you Google it. See where they are ranking or not. Do your simple due diligence. There’s way more software for that, that can refine like geo-target requirement of different variations of keywords. You can then analyze to see if it makes sense or not to go ahead or if there are opportunities that you can uncover and go after when you do purchase the company.
Let’s move on from website and over to social media, your Facebook profile, LinkedIn, Twitter, whatever it might be. What should people be looking for there?
The brand is very important. How long has it been established? How active have they been across all social platforms? However, you need to also understand who the profile and type of client, that avatar that they are trying to attract in terms of their ideal customers. If it is images-specific, Instagram is huge. Pinterest is huge. If it’s a video, then you got to go to YouTube to see what kinds of subscribers are. If it is influence marketing, Instagram is huge as well so is Facebook. You can distinguish if that’s one of their major ways to generate a lot of traffic leads and customers, who has posted things on those social media platforms? How many followers do they have? How many shares, likes, comments on any of the posts? How engaged are the audience members? You can get an analysis by navigating a couple of scrolls into it like a couple of years of posts to see how active they are, how many followers, subscribers there are. How engaged is it? You can reference that data to the Google Analytics data to see if it translates to actual deliverables in terms of leads or customers wired.
When you talk about engagement, to bring this to life for folks a bit, are people responding, writing messages and commenting about posts, information, press releases or whatever it is? How engaged are they with the company? Are they passive and they follow but they’re not invested in that company?
There’s a big difference. Someone that likes a post or follows a company, they may not be customers. However, there’s the opposite. There are a lot of customers that aren’t even on social media as well. They don’t spend a lot of time on it. Understand your product, service and the industry specific. How many of them are on social actively seeking out your product and service? What’s the percentage like? How much new customers are coming from social media versus your website versus any sales reps or any other marketing channels that you have in place? Understand that you as a business owner is buying this new business, there are a lot of gaps and opportunities. You have to uncover and dig deep to figure out where can you pick your battles. Acknowledge how you can grow and scale your business to the next level.
Another thing about social media here is that we in our company have learned the hard way and not to fall into the trap of looking at traffic numbers. It’s great to see the traffic increasing. What matters is that traffic is generating leads and opportunities for the company. Connect the dots there, John. What should they be looking for there? It’s traffic but what should that company be doing to make sure that traffic is generating what it should be in return?
The most important thing is return investment and quality inbound lead ready to buy customers. I feel a lot of people are looking at a lot of the analytics completely wrong. They don’t put a lot of emphasis in what triggers people’s decision to convert into a phone call, a form inquiry or an actual sale. If it’s a product play, you can easily put tracking on conversion rate. Someone’s eCommerce credit card is tracking with the landing page. You know exactly how much people are spending based on how much money you’re investing in ad dollar spent. When you’re doing a larger service base, higher ticket item like a B2B business or service product business then maybe it’s a relationship play. It’s a longer process. Maybe it is followers, likes, shares that will then translate to potentially coming to your website that will check out your reviews, blog sources, your profile before they make an inquiry. These are the type of clients that you want to cultivate, which is a multi-touch point on a client and numbers. With traffic, I would drill down to revenues, organic traffic on your website that convert to real revenue that triggers phone calls, form inquiries or ready to buy customers.
You brought up an important point and that’s tracking. Whether you’re an owner of a business or you’re a buyer, it’s important that a company like John’s put in the proper tracking on all of your social media accounts and posts, so you know where that traffic’s coming from. Without the tracking, you can’t connect the dots. It’s one thing to promote and get traffic but you have to know where it’s coming from or you don’t know where to invest.
This is Marketing 101. It’s foundation. If you have a lot of different advertising forms, you need to know what’s working and what’s not. For a savvy business owner to want to sell at the peak, they will know all the metrics. For someone that’s looking to purchase, there are going to be gaps and opportunities that they have probably done a poor job that you can refine, get better and figure out what’s going to optimize your business to get real traffic that generates good potential customers.
The tracking requires then a good CRM or some contact management system so you could collect all that information. That’s probably the other thing that you want to be doing in your digital due diligence.
There are different types of tracking. The UTM code, which is the code that you can put on your website that tracks when someone lands on the website and all the actions until it goes to the actual contact form or the call number. That’s the most absolute way that you want to track a behavior of someone come to your website. When someone fills out form, it should automatically go to a CRM that allows for more of a funnel. Let it be an email drip campaign. It could be an email sequence, follow-up sequence, a lead magnet where you download a free marketing piece or whatever it may be. There are different polls. You need to segment your email database from active clients, prospective clients to cold leads.
This is marketing. There are a lot of different things that you can do when you start collecting information and data to better understand who your customers are, who you want to attract, who you want to be known as in your industry and what dollar figure. When you start segmenting all this and understanding which customers buy then segmenting how much are they spending. What’s the lifetime value of the customer? What was the acquisition cost of that customer? There’s a lot more detail that can be uncovered when you start doing things properly.
This is overwhelming. If you’re a buyer looking to buy a business, you’re not going to get all of these answers in due diligence. It’s impossible to do all of this. We could maybe take months to figure this out. An owner would need to let you into all of their profiles and accounts, which likely isn’t going to happen. The highest levels what John is talking about, you can certainly validate. You can figure out what the social media presence is. Is it driving traffic? Are you collecting emails as a result of that? John, isn’t one of the big goals to collect emails with people who opted in? Once you have their email in your CRM, you have a way to communicate directly.
You want to collect as much information from email, company name, telephone number, whatever it may be so that you can follow-up with a sequence. That database that you own is the lifeline of any type of business. That’s pretty much why you’re buying a business. Hopefully, they have a prospect database as well or lead source database. It’s worth a lot more to have warm leads that people have already reached out but they didn’t decide yet. Maybe it’s a 3, 6-month decision buying process. Understand and acknowledge the potential once you do things properly.
We’ve seen any number of clients dive in and try to understand what that client database is. That’s a big piece of what you’re buying. You make a good point with the perspective database. What have they done to cultivate future leads, especially if you’re in a B2B environment? We may not be buying now but they could be buying months or years down the road.
That big ticket item, it’s a relationship play. If it’s a small widget, that’s $50. It’s a very fast, easy conversion rate. With that $20,000 deal or a $50,000 deal, it takes a lot longer for it.
John, how about reviews? What can buyers and owners be doing about tracking their reviews? What diligence goes into understanding what the public thinks of that company?
Reputation management is so critical. First off, if you’re about to buy a company, Google the brand with reviews next to it. It gives you all the sites, third-party sites of where the reviews exist. You can check all the reviews, good and bad. Inquire during this due diligence phase what happened during this situation. Find out from the business owner like, “Give me a perspective of what’s going on in terms of your customer experience and customer service. Are you taking care of your customers? Are they loyal? What’s the retention rate? Why are they complaining? Why are there many negative reviews or positive ones?” It has to be genuine. My suggestion is if you haven’t already, start digging. If it’s all five stars, something seems fishy because no business is perfect. If it’s very negative and poor, find out if there is an opportunity there. Is it because they haven’t needed to approach all their clients to get reviews? That could be a huge opportunity for you to build a stronger, stable brand that will then cultivate way more leads coming in as well.Your website, social media profiles and other digital assets are so important in establishing your credibility in the digital landscape. Click To Tweet
We had a situation in a deal where after the deal close, it was found out it wasn’t disclosed. The owner of the business didn’t even know this. They didn’t even own some of their social media sites. They didn’t have ownership where the actual employees had ownership. They hadn’t done it under the company’s profile. How does ownership play into this? What can a buyer and an owner be doing to make sure that all of the assets are owned properly under the company brand and that they can truly be transferred?
This is what I see a lot for a lot of these business owners. They consult a business to build a website and create all the profiles. However, they don’t have full ownership. They don’t have full login details, admin access. My suggestion would be talking to the owner to make sure they have full access to every single asset piece from website hosting, domain, access, email, every single social media platform that’s out there with their brand. With that, people can tarnish your reputation. They can do anything. Sell your login details. Take control of it and do whatever they want. That’s the first thing I always do when I take on a new client SEO. Make sure everyone owns all their major branded asset pieces. In terms of due diligence, if they don’t even know what the access is, it’s very difficult for you to gain control because that’s a part of their brand. They should already know it. Make sure there’s a clause that you can ensure that they own everything before everything’s passed over and sold on.
Unfortunately, sometimes owners, depending on how involved they are in the business may not understand some of this. They may not know even some domains that they might have bought years ago. They had no idea that they own them. They had a media company buy them for them. It’s important to get your arms around all of your assets and make sure that you’ve secured them.
Digital asset is so important like a brick and mortar branded name search. It’s your brand name but on a digital landscape. Everyone’s spending all their time consuming information digitally. Your reputation online, URL, branded name search, asset pieces across websites, social, other party profiles are important in terms of credibility.
Digital and social media presence seems so imperative. I can remember years ago calling on clients in certain industries. They still didn’t think it was important to have digital and social media. Some old line manufacturing businesses who had a discreet client base didn’t think it was important. The world is changing. It’s important for every business to have these assets, control their name and their presence out there.
It’s so important to understand what you don’t know as well. They don’t have to understand this all but it’s like owning your company. When you own your company, you should know a lot more than the average employee. Get everything you can from every person in your company to disclose all the information that’s important for you to close on the deal. If you don’t know, inquire, talk to an expert, find out from people that do this on a regular basis to support you so that they’re on your side to make sure that it’s a clean process without any bumps on the road.
John, I know that’s how we came to know each other. You offer a service like this. You’ll do a social media diligence for an acquirer or do it for an owner who’s potentially going to put their business on the market.
We do a lot of SEO campaigns and audits to help clients and business owners to sell. They’re planning on selling to position them so that they can get top dollars. Someone that’s acquiring to do full audits on that brand to ensure that you’re doing as much due diligence, checks and balances to ensure that it’s a clean business altogether.
John, this has been tremendous information. Is there anything that we didn’t cover or any parting comments that would be important for the audience to understand?
In terms of digital presence, it’s very complex for a lot of people. That’s the only particular. SEO has a lot of touch points to ensure that you’re on that first page for a lot of the branded terms, as well with keywords that people may search for. If you’re not comfortable with it, there are people out there that are. There’s a book that you are a part of and I am a part of. I read it all the time, Who Not How. Don’t try to figure out everything you need to figure out. You, as a business owner, probably delegate. You’re probably the leader guiding the ship. There are experts out there that will support you along the line. Make sure that you reach out. If you’re not sure, ask. Find out if people in your team can help you. If not, reach out to a consultant or a specialist, someone that had gone through similar ropes, to make sure that it’s a smooth transition.
We say that all time. Hire specialists. It will save you money and heartache at the end of the day. John, thank you so much. If people wanted to reach you, how could they get ahold of you?
You can check out my website. It’s www.LocalSEOSearch.ca. We’re based in Toronto, Canada but we service clients all across North America, UK and Austin.
John, thanks for being here. I appreciate it.
Thanks a lot, Domenic.
Keep up the great work. Thanks. I hope you enjoyed this episode. If you enjoy our content, please remember to subscribe and review our show. I look forward to seeing you again on the next episode. Until then, please remember that scaling, acquiring or selling a business takes time, preparation and the proper knowledge.
About John Vuong
John Vuong is the owner and founder of Local SEO Search, a boutique agency from Toronto, Canada. He helps small and medium-sized businesses rank on Google and dominate their local market.
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