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Bloomberg Law Reports Guest Article: Buyer Beware - Social Media Due Diligence in M&A
Debra Gatison Hatter
Over the last few years, communication has advanced tremendously due in part to new and improved technology. One of the major advancements in electronic communication has been the creation of social media sites (e.g., Facebook, Twitter, MySpace, LinkedIn, YouTube, and various interactive blogs). Through the use of social media, individuals as well as companies disseminate information to a widespread audience instantaneously. As a result of these capabilities, many companies have incorporated social media into their business strategies to promote their products and services to existing and potential customers.
This was likely a driver in Twitter’s acquisition of BackType, a social analytics company that helps brands and agencies understand the business impact of social media in order to make more intelligent business decisions.1 Moreover, in the spring of 2011, it was reported that 77 percent of the Fortune Global 100 companies use Twitter, 61 percent have a Facebook page, 57 percent use YouTube, and 36 percent use corporate blogs.2 These numbers will continue to rise as more companies are forced to integrate social media into their businesses to remain competitive within their respective markets.
Along with the benefits of social media in business, there are also pitfalls. Some of the legal issues include trademark infringement, employee misuse, securities law violations, and negative publicity. This article describes some of those pitfalls from the perspective of a buyer seeking to acquire or partner in an M&A transaction with a target company that utilizes social media.
Excerpt from Bloomberg Law Reports, Jan. 26, 2012. To view the full article, click the PDF linked below.
PDF - Buyer Beware: Social Media Due Diligence in M&A (Hatter, Thomas)
1 Leena Rao, Twitter Acquires BackType, Tech Crunch (July 5, 2011).
2 77% of Fortune Global 100 Companies Use Twitter, The Realtime Report (Mar. 18, 2011).