by Lisa Merriam
Brand and marketing due diligence are vital to establishing the true value of any investment, but it is rarely done well, if at all. If you don’t do adequate brand and marketing due diligence, you put your investments at risk.
Due diligence failures leave information gaps that can prove costly. You wouldn’t skip looking at a target company’s financial statements, tax or legal exposure, patents, operations and management team. Yet too many due diligence strategies skip branding and marketing.
- Professional VC investments are successful just 23% of the time
- PE portfolio companies are 10 times as likely to go bankrupt as non-PE-owned companies
- Between 70% and 90% of M&A deals fail
Bad luck and bad timing account for some of these failures, but inadequate due diligence is behind too many of these unpleasant surprises and unfortunate turns. Adding brand and marketing due diligence to your process will help you better value an investment and better your chances of making sure it pays off.
What is brand and marketing due diligence?
Brand and marketing due diligence takes a comprehensive look at these vital areas:
- Brand value and brand value drivers
- Customers
- Product
- Competitors
- Marketing and promotion
- Sales and marketing structures and processes
We have created this checklist for a comprehensive marketing due diligence process that you can add to your existing approach.
Brand value and brand value drivers
“Brand is one of the most valuable assets of any company, for B2B as well as consumer businesses,” says Presciant founder, Dr. Joanna Seddon, who is also the creator of the Brand Z global brand ranking study and current CEO of the Marketing Accountability Standards Board. “Decades of research across the globe and across industries demonstrates that the brand asset makes up between a quarter and a third of the value of the Fortune 500. Anyone doing due diligence on any company should take brand into account.”
Here is what to cover in a strategic brand valuation assessment:
- How does the brand create value by driving customer preference and purchase?
- How well does the brand deliver on what customers care about today and in the future?
- How do other stakeholders (employees, vendors, distributors, regulators, investors, etc.) see the brand?
- Where is the brand underperforming, where there are gaps and opportunities to meet wants and needs that the brand is currently missing?
- What makes the brand different or special?
- What current and future needs are no competitor brands currently addressing?
- What is its ability to grow into new categories or geographies?
- How much financial value does it add today?
- How much incremental financial value does the brand have the potential to untap?
Customers, buyers, and users
- Who are they?
- How many customers are there? What is the market size?
- In both big ticket B2C, B2B, and B2G, purchase decisions may involve more than one person—who is involved and what are their roles?
- What do they care about? What are their pain points?
- What products or services are they currently using?
- What do they want that they are not getting?
- What can the company do to increase customer satisfaction and retention?
- What trends and influences may impact the future?
- How does the company capture, measure, and share insights about all of the above?
Product and/or service
- What products and services does the company offer and what are the features and benefits?
- What market share do they have?
- Are sales growing or not?
- What is the pricing structure and margins for their services?
- How does the company select and develop new offerings?
- What additional products and services can the company provide to increase sales?
- What is the product lifecycle for current products?
- What is the pipeline for product enhancements? What are the opportunities and risks
Marketing and promotion
- What is the distribution structure for products and services?
- How impactful are their marketing messages?
- What media are they using? Are they exploiting the potential of digital and social marketing enough?
- Are they neglecting marketing investment for the long-term in favor of short-term promotion and price cutting to boost this quarter sales?
Sales & marketing organizational structure and functions
- How are the sales and marketing teams structured?
- What are team roles and responsibilities?
- How do the teams interact, share, and collaborate?
- What is the C-level and boardroom engagement with marketing leadership?
- What is the turnover in the sales department?
- How are they measuring success? What actions are they taking from measurement findings?
- What sales enablement strategies and tools are in place?
Competition
- Who are the main competitors?
- What are the major competitive threats for the future?
- How do the company’s products measure up against competitor products?
- How do competitors brand and message about their products?
- What is their reputation in the market?
- What are their strengths and weaknesses?
- How do they promote and market their products?
- How do they price?
How long does brand and marketing due diligence take?
Depending on the scope and depth of your process and the size and complexity of your target investment, brand and marketing due diligence could take a few weeks or many months. Some companies do a quick brand and marketing audit early in the process and do a deep dive once they become more serious about the deal.
If your team does not have adequate brand and marketing expertise, you might want to reach out to experts to help you. Look for a partner that has a solid process, all the right models and tools, and a track record of success in the brand valuation and marketing due diligence field. You will save time and money, filling material information gaps, and get insights that can make or break a deal and power profitable results.
We can provide you with immediate insights and guidance, and welcome your call.
+1 646-318-4318