When Buying a Business, Don't Ignore Its Digital Assets

By Christian Nellemann

For anyone buying a business, a company's value is determined by both its tangible and intangible assets. One intangible asset that brings a lot of value today is a company's digital presence. Digital assets include websites, domain names, blogs, media libraries, and even social media accounts. If a company has a digital infrastructure already in place, it will have more value; however, if a company lacks that infrastructure, it's perfectly legitimate to let this influence the negotiations.

Here are five steps to help you get a better handle on a prospective acquisition’s digital assets:

1. Take an inventory of the business’s digital assets.

Any active websites, blogs, social media accounts, YouTube channels, domain names, images, and videos should be noted. Once you have a clear picture of all the digital assets owned by a company, you can then begin to assess the value of each asset.

2. Assess the value of the company’s website.

First determine how well the website represents the company's brand or acts as a lead generation or sales tool. Can visitors navigate it easily? Is it appealing to the eye? Does it clearly communicate the business’s offering? Are there prominent calls to action to help convert sales?

Next, analyze how well the company site performs in search engine rankings. Google terms you imagine customers searching for and see how high the site ranks in the results. The top five site results receive the majority of the traffic, so if the site does not rank high, some potentially costly search engine optimization (SEO) work might be necessary.

3. Check if the company is currently using social media.

Social media is a great way to engage with existing customers and catch the eye of new ones. Key things to consider: How many followers does the company have on each social network? How often does the company post? What level of engagement (likes, comments, shares, etc.) are the sites receiving from customers?

If the company does not have a social media presence, check if its competitors do. You can use a competitor's social accounts as a benchmark to judge how social media marketing could benefit the business. If competitors have seen a lot of success, you’d do well to follow suit; and if they don’t appear to have put much effort into social media, you may have just identified a potentially uncontested marketing space.

4. Find out what original media assets the business owns.

Does the company have any corporate videos? Are the images on the website stock photography or has the company commissioned its own photos? Stock photography doesn’t bring a lot of value and you always run the risk of the images turning up on another site --such as an advertisement for a male hair-loss formula (true story). However, if the company has original imagery, this won't be an issue and it will save you having to spend money on things like employee headshots or other corporate photography.

5. Look ahead for potential marketing roadblocks.

It’s also important to check for things that could hinder marketing down the line. There are lots of opportunists out there buying up company names, website domain variants (.co, .uk, .net, etc.) and Twitter handles to sell for a profit. If the company doesn’t own its domain name, but someone else does, you need to know this sooner rather than later as it could present a real reputational risk. These risks range from similar sites/profiles which lure potential customers away from the business, to fake or parody social media accounts which may misdirect customer inquiries or damage public perception of the brand.

If after you've assessed a company's digital assets, you determine there are areas that require action or improvement, this could cost you a fair amount of money and should be reflected in any offer you make for the business.