Digital due diligence is a modern concept, but it’s essential for private equity (PE) organizations looking to dependably identify and quantify digital risks and upsides within an investment. It has an important conjunction with traditional business and technical due diligence in order to PE companies ensure all their investments contain a solid digital foundation – allowing them to improve growth, improve efficiency and eventually achieve larger exit worth.
Performing digital due diligence will involve assessing the company’s business online and potential through analysis of their website(s) and social media, marketing and sales platforms. Is considered essential to appreciate if the business is advertising directly through these kinds of platforms and what the goals of their websites are when it comes to marketing, e-commerce and lead generation.
A digital DD should be coupled with commercial, technology and encounter DD to realise a comprehensive breakdown of the target. This enables investors to gauge the company’s digital foundational principles of cybersecurity set-up and performance within the context of its business model, wider industry environment and competitive panorama. Digital KPIs and benchmarking, customer sentiment and experience, and more are typical key elements to include in the research.
A comprehensive digital due diligence will likewise look into the company’s adherence to industry conformity standards and security frameworks. For example , a healthcare company will probably be expected to comply with HIPAA regulations and will need to ensure their internet assets own adequate protection actions in place. This is assessed simply by conducting a substantial review of third-party software license compliance, a cyber risk assessment plus the ability to match industry criteria like PCI and CCPA.