Use social media and the Web in the due diligence of an agency acquisition
By Carissa Newton C
autions alert us of potential hazards all around us. From road signs that signal icy bridges, to warning
labels of choking hazards, to sirens announcing turbulent weather, they prepare us to avoid or deal with danger. In the acquisition process, conducting due diligence alerts both buyers and sellers to potential risks. Proper and thorough research will help to uncover the true identity of an agency and sound an alarm if there are hidden risks. Many agents rely on a broker or consultant to conduct due diligence on their behalf. But most agents are not being guided by an intermediary with a defined process to follow. They often neglect this critical step or halfheartedly approach it because they simply
think they cannot afford to perform the extensive research like a consulting firm.
With today’s technology, however, there is a wealth of information available on the Internet and much of it can be accessed for free. If you cannot afford a consultant or want to save time and money before involving one, you may consider conducting your own due diligence using these tools.
Search Engine Queries (Google/Bing/Yahoo) Perform keyword searches on the owners, carriers, key employees and competitors in the area. You can also set up Google alerts for your keyword searches so any new information posted online is sent to you via email. Often
you will find information that may not be published on the company’s website. It may start to paint a picture of how the agency operates. Are their customers happy? Have they won any awards? Are they endorsed or affiliated with any associations? Have they been involved in any lawsuits? Do they sponsor and give back to their community? Information on these searches can be pretty extensive and telling since there are many sources on the web publishing content and it can be tough to manage the shelf life of that information.
Background Checks and UCC Lien Searches A company is only as strong as its leaders and financials. Be sure the principals have clean backgrounds that are free of any outside encumbrances. Those can be found using Uniform Commercial Code (UCC) searches. Although some information is available to the public, you may have to pay a small fee to access it. Background checks may also reveal inconsistencies or red flags where you need to research further such as legal issues or customer complaints.
Social Media Sites (Facebook, Twitter, Yelp, and LinkedIn) Social networks blatantly and subtly tell many stories. You can visit them to gauge what people are saying about a potential agency or buyer. Is it positive? Negative? Are they flying under the radar with little to no information available? What are they out there posting? What’s being said about them?