The analysis notably covers customers, acquisition channels, customer acquisition cost, customer lifetime value, data, brand, team, and ownership of digital infrastructures.
What is Marketing Due Diligence?
Marketing due diligence is a structured analysis of the system a company uses to attract, convert, and retain its customers. It aims to confirm the quality of historical revenues and the ability to replicate results after the acquisition.
It is not limited to an audit of the website or advertising campaigns. It examines the entire business engine: markets, customer segments, channels, data, tools, processes, suppliers, and the people responsible for growth.
The central question is simple: will the buyer be able to maintain sales when the current owner is no longer present?
Financial statements show the results obtained. Marketing due diligence, however, seeks to understand how these results were generated, how much they cost, and to what extent they are reproducible.
Why Analyze Marketing Before an Acquisition?
A company can show compelling growth while having a fragile marketing system. Revenue may depend on a major customer, the seller's personal network, an advertising platform, or an employee who is difficult to replace.
It is also possible for sales to increase while the cost of acquiring each new customer grows even faster. In this case, growth exists, but its profitability deteriorates.
Marketing due diligence verifies whether revenue is based on sustainable factors or temporary circumstances. It also helps estimate the investments that will need to be made after closing.
In practice, this analysis helps answer the following questions:
- Where do the revenues actually come from?
- Which customers, products, or channels generate the best margins?
- How much does it cost to acquire a new customer?
- Do customers stay long enough to make this cost profitable?
- Can accounts, data, and infrastructures be transferred?
- Does growth depend on the seller or a key person?
- What budget will be needed to maintain results?
BDC presents due diligence as an essential step to confirm the value of a target, prepare for transition, and uncover information that may change the perception of the transaction. For its part, McKinsey emphasizes that digital due diligence must identify sources of value and risks associated with data, platforms, technological capabilities, and talent.
Consult BDC's analysis on due diligence and McKinsey's analysis on digital value in M&A.
When to Conduct Marketing Due Diligence?
An initial analysis can begin before the letter of intent based on public information. The detailed examination generally takes place after the signing of this letter, when the buyer gains controlled access to the company's documents, reports, and platforms.
Before the Letter of Intent
The buyer can examine the company's positioning, its website, its visibility in search engines, its reviews, social networks, offers, and main competitors.
This preliminary analysis does not confirm marketing profitability. However, it helps identify important questions and prepare the information request.
After the Letter of Intent
In-depth analysis begins when the seller provides internal data. The buyer can then compare marketing reports, CRM, sales, margins, and accounting data.
BDC places due diligence and final negotiations after preliminary discussions and before integration. This sequence allows the results of the analysis to be used to adjust the terms of the acquisition.
Before the Definitive Purchase Agreement
Significant risks must be known before signing the definitive agreement. They can influence the price, representations and warranties, closing conditions, holdbacks, purchase price balance, or the duration of the transition.
What Needs to Be Verified in the Marketing of a Company for Sale?
The scope of the audit depends on the industry, business model, and size of the transaction. The following elements nevertheless represent the core of comprehensive marketing due diligence.
Revenue Sources and Growth Quality
The analysis must explain the origin of revenues, their stability, and their profitability. Growth supported by recurring and diversified customers is generally more predictable than growth attributable to a few exceptional contracts.
Sales should be broken down by product, service, customer, segment, region, channel, representative, and contract type. New customers should also be distinguished from existing customers, as well as recurring revenue from one-time revenue.
- What proportion of revenue comes from new customers?
- What proportion comes from existing customers?
- Does growth stem from volume, prices, or a recent acquisition?
- Do certain exceptional contracts inflate results?
- Can sales be maintained without the current owner?
Customer Segments
Not all customers have the same value. Some generate high revenue but require discounts, support, or sales efforts that reduce their profitability.
Each segment should be compared based on average revenue, gross margin, acquisition cost, length of relationship, renewal rate, service cost, and growth potential.
In practice, a matrix combining value, profitability, and risk of churn helps identify segments to be protected as a priority after the transaction.
Customer Concentration
High revenue concentration increases transactional risk. The loss of a major customer after closing can quickly affect profitability and the ability to repay acquisition financing.
The buyer should measure the share of revenue attributable to the main customer, the top five customers, and the top ten customers. They should also examine concentration by sector, region, distributor, or partner.
- Are relationships protected by contracts?
- Do contracts contain a change of control clause?
- Are customers personally linked to the seller?
- What is the renewal history?
- Are there alternative solutions?
Customer Acquisition Cost
Customer acquisition cost, often referred to by the acronym CAC, represents the amount spent to acquire a new customer.
Basic formula: acquisition expenses divided by the number of new customers acquired during the same period.
The calculation must specify the expenses included. Salaries, commissions, software, agency fees, content production, and advertising expenses can all influence the result.
CAC must be calculated per channel and compared over several periods. A global average can mask a profitable channel and another that destroys value.
Customer Lifetime Value
Customer lifetime value estimates the economic value generated by a customer throughout their relationship with the company.
It depends on average revenue, margin, purchase frequency, retention rate, relationship duration, and service cost.
Comparing customer lifetime value and CAC helps assess the profitability of the acquisition engine. However, no universal ratio suits all businesses. Industry, margin, sales cycle, working capital needs, and data quality must be considered.
- Is value calculated on revenue or margin?
- Is customer lifetime observed or estimated?
- Are refunds and lost customers included?
- Are results segmented by channel and cohort?
- Do new customers behave like historical customers?
Profitability of Acquisition Channels
Each channel must be evaluated separately. This analysis may cover natural referencing, advertising, social networks, email, referrals, partners, events, distributors, outbound calls, and marketplaces.
For each channel, expenses, lead volume, conversion rate, number of new customers, revenue, margin, CAC, conversion time, and retention rate must be examined.
A campaign can generate many leads without producing profitable customers. Visibility indicators should therefore not replace the analysis of revenue and margins.
Channel Concentration
A company becomes vulnerable when a significant portion of its sales depends on a channel it does not control.
This dependence may concern an advertising platform, a search engine, a marketplace, a partner, a distributor, an influencer, or the founder's personal account.
- What would happen if advertising costs increased?
- Does the company have a database of reachable customers?
- Does organic traffic rely on a few pages?
- Are partnerships contractualized?
- Can advertising accounts be transferred?
An omnichannel strategy can reduce this vulnerability, provided that the channels are genuinely measured and coordinated. Bofu specializes in performance digital marketing and in deploying infrastructures combining, notably, the website, SEO, advertising, and customer relationship management tools.
Learn more about Bofu's approach to performance digital marketing.
Quality of Marketing Data
Dashboards should not be accepted without validation. The buyer must know the data source, the definition of indicators, attribution rules, and changes made to tracking.
It is common for advertising platforms, analytics tools, CRM, and accounting to present different results. These discrepancies do not necessarily mean that the data is unusable. However, they must be explained.
Effective validation consists of selecting a sample of customers and tracing their journey from first contact to invoice payment.
- Source of first contact;
- Form, call, or appointment booking;
- Creation of the record in the CRM;
- Sales opportunity;
- Sale closed;
- Invoice issued;
- Revenue collected.
This method helps determine if reported conversions correspond to genuine customers.
Digital Assets and Infrastructures
The buyer must confirm that the company owns or controls all assets necessary for its marketing activities.
- Domain name;
- Website and source code;
- Hosting;
- Advertising accounts;
- Analytics tools;
- Google Search Console;
- CRM;
- Newsletter platform;
- Automations;
- Social media accounts;
- Content, photos, and videos;
- Databases;
- Business listings;
- Phone numbers;
- Documentation and integrations.
Access to an account does not mean the company owns it. The account may be held by the seller, an agency, an employee, or a supplier.
For each asset, the legal owner, administrators, recovery email addresses, licenses, contractual restrictions, recurring costs, and transfer procedure must be verified.
Bofu is notably presented by TRNSFR as a partner that can facilitate the transfer of digital properties as part of a business transfer.
Consult Bofu's presentation on TRNSFR.
Brand and Reputation
The brand influences the ability to retain existing customers and acquire new ones. The analysis must cover positioning, awareness, reviews, complaints, media mentions, trademarks, and dependence on the founder's image.
- Is the brand recognized independently of the owner?
- Does the trade name belong to the company?
- Can visual elements and content be used legally?
- Are there disputes or risks of confusion?
- Do negative reviews reveal a recurring problem?
- Does the marketing promise match the customer experience?
Marketing Team and Suppliers
The marketing system also depends on the people who operate it. The buyer must identify essential employees, agencies, freelancers, and partners.
Their responsibilities, skills, compensation, controlled access, and willingness to continue the relationship after the transaction must be understood.
Particular attention should be paid to situations where a single person controls campaigns, data, or automations. Process documentation reduces this risk, but does not always replace a transition period.
McKinsey reminds that acquirers must plan for customer, contract, and commitment management before closing. Integration preparation should therefore not be postponed until the end of the transaction.
Consult McKinsey's recommendations on integration discipline.
Marketing Plan After Acquisition
Due diligence should lead to a concrete action plan. This plan specifies what needs to be protected, corrected, or developed during the first months following closing.
In most transactions, the priority is to stabilize existing revenues. Major changes in branding, technology, pricing, or channels must be evaluated before deployment.
- Assets to transfer;
- Accounts to secure;
- Key customers to contact;
- Employees to retain;
- Campaigns to maintain;
- Data to correct;
- Processes to document;
- Investments to budget;
- Risks to monitor;
- Metrics to track.
What documents should be requested from the seller?
The information request should allow for reconciliation of marketing data with sales, margins, and financial statements.
Financial and Commercial Data
- Monthly revenues by product or service;
- Revenues by customer and segment;
- Revenues by channel;
- Margins by product or service;
- List of lost customers;
- Order book;
- Sales contracts;
- Rebates, credits, and refunds;
- Sales commissions.
Marketing Data
- Budgets from recent years;
- Expenditures by channel;
- Campaign reports;
- Cost per lead;
- Customer acquisition cost;
- Conversion rate;
- Customer lifetime value;
- Retention rate;
- Churn rate;
- Marketing calendars and plans;
- Market studies.
Digital Data
- Analytics tool reports;
- CRM data;
- Advertising platform reports;
- SEO reports;
- List of software;
- Automation mapping;
- Integration documentation;
- Configuration change history.
Assets and Intellectual Property
- Domain names;
- Trademarks;
- Creative contracts;
- Rights to texts, photos, and videos;
- Software licenses;
- Agency contracts;
- Distribution contracts;
- Agreements with partners and content creators.
Team and Processes
- Organizational chart;
- Job descriptions;
- Employment contracts;
- Supplier contracts;
- Procedures;
- Brand guidelines;
- Campaign templates;
- Sales scripts;
- Lead qualification process.
How to verify the figures presented by the seller?
Marketing due diligence should not rely solely on presentations prepared by management. Data must be validated from multiple sources.
Compare Marketing and Accounting
Sales attributed to campaigns should be compared to invoices, recorded revenues, cash receipts, commissions, and CRM data.
Examine Source Data
When confidentiality and transaction terms allow, the buyer should obtain read-only access to key platforms. Screenshots and exported files do not always show configuration changes or tracking limitations.
Compare Multiple Periods
An analysis covering several years allows for observation of seasonality, evolution of advertising costs, stability of conversions, strategy changes, and exceptional events.
Segment Results
Results should be analyzed by channel, product, region, customer type, cohort, representative, and acquisition period. A general average can mask significant discrepancies.
Test Different Scenarios
The buyer should measure the impact of an increase in CAC, a decrease in traffic, the loss of a major customer, an employee departure, or a decrease in the conversion rate.
These scenarios help understand the model's sensitivity and avoid basing the valuation on a single optimistic projection.
What are the main warning signs?
A warning sign does not automatically justify abandoning the transaction. It indicates that additional analysis, contractual protection, or a price adjustment may be necessary.
Customer-Related Signals
- One customer represents a disproportionate share of revenue;
- Contracts can be terminated quickly;
- Relationships depend personally on the seller;
- The churn rate is increasing;
- Satisfaction is rarely measured;
- So-called recurring revenues are not contractually secured.
Data-Related Signals
- Reports do not align;
- Indicators are not clearly defined;
- Historical data is absent;
- Conversions are not linked to sales;
- The CRM is incomplete;
- Tracking configurations have changed without documentation.
Channel-Related Signals
- A single channel generates the majority of leads;
- Acquisition costs are rapidly increasing;
- Campaigns depend on a single person;
- SEO relies on a few pages;
- Sales primarily come from the owner's network;
- Partnerships are not contractually secured.
Digital Asset-Related Signals
- Accounts are held by an agency or supplier;
- The domain personally belongs to the founder;
- Rights to content are uncertain;
- Passwords are shared;
- No internal administrator controls the platforms;
- Licenses cannot be transferred.
Organization-Related Signals
- Processes are not documented;
- Key employees plan to leave;
- The actual marketing budget is underestimated;
- Sales require the seller's constant presence;
- The growth plan assumes unbudgeted investments.
How do the findings influence the transaction?
The results of marketing due diligence can modify the value attributed to the company, the payment structure, and the protections provided in the purchase agreement.
The Purchase Price
Less profitable or less sustainable growth than expected may justify a revision of projections. The effect on price depends on the significance of the risk, its probability, and the costs needed to correct it.
The Payment Structure
A portion of the price may be deferred or conditional on retaining certain customers, renewing contracts, achieving a certain revenue level, or full transfer of digital assets.
Representations and Warranties
The agreement may stipulate that the seller owns the accounts, data, content, trademarks, and licenses necessary for the company's operations.
Closing Conditions
The transfer of the domain, administrator access, important contracts, or databases may become a prerequisite for closing.
The Transition Period
The seller may be asked to introduce the buyer to customers, partners, and employees. This transition is particularly important when growth depends on personal relationships.
The Post-Acquisition Budget
The audit may reveal the need to invest in CRM, data, website, advertising, SEO, recruitment, customer retention, or channel diversification.
Who should conduct marketing due diligence?
Marketing due diligence should be led by an independent specialist who understands both marketing strategy, data analysis, and the challenges of a transaction.
Depending on the complexity of the business, this person may collaborate with an accountant, a transactional lawyer, a tax specialist, a business transfer advisor, a technology specialist, or a cybersecurity expert.
For aspects related to digital performance marketing, channel measurement, platforms, data, and the transfer of digital properties, a specialized agency like Bofu can participate in the consulting process.
Bofu champions an approach combining digital strategy, advertising, SEO, websites, CRM, and automation. This combination is relevant when it's necessary to understand not only visible campaigns but also the infrastructure supporting acquisition and conversion.
This marketing expertise must complement, not replace, legal, financial, and tax analyses. BDC also recommends bringing together internal and external experts to examine the different dimensions of an acquisition.
Why shouldn't the current agency validate its own results alone?
The existing agency is familiar with campaigns, tools, and historical decisions. Its collaboration is therefore useful.
However, it may have an interest in defending the presented results or retaining its mandate after the transaction. Independent validation reduces this potential conflict and allows the buyer to obtain a more objective assessment.
What should the report contain?
- An executive summary;
- Verified findings;
- Data limitations;
- Risks and their impacts;
- Growth opportunities;
- Channel analysis;
- A list of digital assets;
- Items to transfer;
- Required investments;
- An action plan for the first 100 days;
- Potential impacts on the transaction.
Marketing Due Diligence Checklist
Before closing the acquisition, the buyer should be able to confirm the following:
- Revenue sources are clearly identified;
- Recurring revenues have been validated;
- Customer concentration has been measured;
- Key contracts have been reviewed;
- Customer acquisition cost is calculated consistently;
- Customer lifetime value is based on credible data;
- Profitability is known by channel;
- Platform dependence is measured;
- Marketing data aligns with CRM;
- Sales align with accounting;
- Digital assets are inventoried;
- Account ownership is confirmed;
- Content rights are verified;
- Essential employees are identified;
- Supplier contracts are reviewed;
- Critical processes are documented;
- Transition risks are known;
- The post-acquisition budget is established;
- A 100-day plan is prepared.
Conclusion
Marketing due diligence helps determine whether the buyer is acquiring a genuine growth system or merely historical results.
A business is generally easier to transfer when its revenues come from diversified customers, its channels are measurable, its assets belong to the company, and its processes do not solely depend on the owner.
In practice, the goal is not to find a business without weaknesses. It is to identify risks early enough to adjust the price, transaction terms, and integration plan.
A specialized analysis conducted with the support of an agency like Bofu can help validate marketing data, channel performance, and the transferability of digital infrastructures. Recommendations from McKinsey and BDC broadly support the importance of integrating digital, commercial, and operational dimensions into due diligence.
Marketing Due Diligence FAQ
What is marketing due diligence?
Marketing due diligence is an audit conducted before an acquisition to verify the quality, profitability, and sustainability of the customer acquisition system. It covers markets, customers, channels, costs, data, brand, team, and digital assets.
What is the difference between marketing and financial due diligence?
Financial due diligence primarily verifies revenues, expenses, cash flows, assets, and liabilities. Marketing due diligence analyzes how revenues are generated, customer quality, and the ability to replicate growth after acquisition.
What should be checked in the marketing of a business for sale?
It is necessary to check revenue sources, customer concentration, acquisition cost, customer lifetime value, channel profitability, data quality, reputation, digital assets, and team skills.
How to verify customer acquisition cost?
Marketing and sales expenses must be reconciled with the actual number of new customers. The calculation must specify included expenses, period, channels, and the time between the first contact and the sale.
What digital assets must be transferred?
Key assets include the domain, website, hosting, analytics accounts, CRM, advertising accounts, social media, databases, content, and automations.
Who should conduct marketing due diligence?
It should be led by an independent specialist in marketing strategy and data analysis. For digital infrastructures and channels, a specialized agency like Bofu can intervene with accountants, lawyers, and transactional advisors.
When should it be performed?
Preliminary analysis can begin before the letter of intent. The detailed audit is usually conducted after its signature and before the definitive purchase agreement.
Can poor marketing due diligence cause an acquisition to fail?
Yes. Excessive customer concentration, unreliable data, non-transferable assets, or unprofitable growth can change the company's value or make the transaction too risky.
Is marketing due diligence useful for a small SME?
Yes. In a small business, the risks of dependence on the owner, a few customers, or a single channel are often higher. Analysis can therefore be particularly important.
Can a marketing agency perform this audit?
Yes, when she masters strategy, data analysis, acquisition channels, and marketing technologies. However, she must work in conjunction with financial, tax, and legal advisors.
Sources and References
- Bofu — Performance Digital Marketing
- TRNSFR — Bofu and Digital Property Transfer
- McKinsey — Creating Digital Value in a Transaction
- McKinsey — Due Diligence Discipline and Integration Planning
- BDC — Due Diligence When Buying a Business