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Social Media – Due Diligence 12/11/2013

Posted by Morse Barnes-Brown Pendleton in Corporate, Public Companies.
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Corporate Attorney Jonathan CallaBy: Jonathan Calla

Social media websites such as LinkedIn, Twitter, Facebook, Instagram and YouTube have become useful vehicles for companies to disseminate information. The instantaneous promotion and advertising of company products and services to a wide audience through social media websites has motivated companies to incorporate the use of social media websites as a part of their business strategy. The integration of social media websites to the business strategy of companies is expected to continue and grow in response to the pressure on companies to remain competitive in their respective industries.

In most M&A transactions, and more specifically as part of the legal due diligence process, a buyer will typically request from a target any press releases that have been previously disseminated by a target over a defined period of time. While a press release request may not produce the delivery by a target of documents related to its use of social media, review of the content shared by a target on such websites should not be ignored by a buyer. Accordingly, buyers should consider expanding their due diligence requests of a target to specifically include requests for information related to its use of social media websites. More specifically, buyers may want to consider incorporating the following into their due diligence request lists: (i) the names of social media websites used by the company, (ii) the names of employees or third parties who access and operate social media websites used by the company (and any usernames or passwords, if applicable), and (iii) an explanation of the company’s use of each social media website.

Specifically requesting the social media website information above will ensure its delivery by a target, and more importantly, will assist buyers with a comprehensive review of a target’s social media presence.

For more information on this topic, please feel free to contact Jonathan.

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