Twitter, Facebook, YouTube, Instagram, Pinterest, LinkedIn, Google+,Tumblr, Slideshare…
The catalogue of popular social networking sites continues to grow as more and more consumers – both individual and corporate – sign-up by the millions.
But how can social media be used to bolster M&A?
In addition to the fairly obvious answer that social media can be used as an effective promotional and marketing tool, as noted in Part 2 of our series on social media, technology-driven analytics are quickly becoming a hallmark of companies’ M&A deal-making processes insofar as they facilitate pattern recognition and trend analysis. While this benefit is not unique to analysis of social media data per se, data analytics are particularly useful in the social media context given the sheer volume of information to be aggregated and digested. In the realm of social media, it is difficult to imagine how preparing spreadsheets and using traditional deal evaluation methods could suffice. And this is where the synthesizing, pattern-recognition and predictive capabilities of data analytics come in.
JR Reagan, leader of the Deloitte Analytics HIVE, was interviewed as part of a recent article in the Wall Street Journal and explains it like this:
When it comes to M&A, the key is to focus on those analyses, data and insights that could influence the M&A decision rather than on the broader universe of data. Sometimes data analytics is merely interesting; other times it can reinforce or change a decision. Good analytics focuses on what is relevant to the current decision.
But is social media relevant and does it make for ‘good analytics’?
If specific questions are asked and answered, data derived from social media is absolutely relevant. Executives are constantly on the look-out for ways of drilling deeper into data to inform business decision-making at various stages of the M&A lifecycle, and the type of unconventional data that can be garnered from social networking sites provides a veritable wealth of information for analysis. As an information source, however, it is important to bear in mind that social media is effectively an outlet for people’s opinions. While some may argue that this does not make for ‘good analytics’ because the resulting data may be unreliable, the reality is that such unfiltered commentary can prove to be an extraordinarily valuable information source.
At a minimum, social media data analytics can be leveraged to improve M&A by either challenging or reinforcing data derived from other information sources, thereby resulting in a more defensible basis for making key M&A decisions.
Sara Josselyn (firstname.lastname@example.org / +1 416.203.4463) is a lawyer in Norton Rose Fulbright’s Toronto Corporate and commercial practice.