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True Diligence : Assessing Reputation

Reputation is everywhere. Whether good, bad or indifferent, every business has a reputation and an initial glance doesn’t always reveal what lies beneath the surface.

It’s easy to form a view on a company’s reputation.  Do we know what they do ? Do we recognise their logo ?  Do we buy their products ?  Does their brand impact our communities or reach the people and issues we care about ?  How do they handle issues and who represents them ?

These elements give us an instinctive reaction to a brand but that can never be enough when it comes to understanding the genuine value and security of a company’s reputation, an essential consideration for any potential partnership, merger or acquisition.

Reputation is fragile, especially in the fast-moving world of social media combined with the transparency and insight we now have into the inner workings of a business.  One poor customer interaction or a misguided tweet has the potential to escalate nationally or internationally and can be hard to recover from.

Moving beyond First Impressions

To truly understand the strength and power of a reputation, we need to consider the multiple aspects that feed it, and that’s where True Diligence comes in.  Going beyond that initial instinct gives a realistic and honest picture of a company’s reputation, an essential measure if a partnership or collaboration is under consideration.

It’s essential to have a holistic approach. On the surface, the official perspective will undoubtedly convey high quality products or services –  but what’s going on behind the scenes ?  What is the volume of complaints or challenges and how are they handled?  Does customer service shine through as a beacon of excellence, with thoughtful, constructive solutions ?  Are employees willing and loyal ambassadors, sharing their honest perspective of a company they are proud to be part of ?  Does staff turnover reflect loyalty ?  How connected are leadership with customers and staff ?  How loyal are customers or can competitors easily lure them away ?  Does stakeholder and community engagement matter to this business ?  How does it happen and does it have an impact ?

Combine these factors with media and social media presence and you begin to get to the heart of a company’s reputation.

Fragility Versus Authenticity

Why does it matter?  First impressions do count, but only a deep assessment can uncover how a company reputation adds value to the business.  Growth targets succeed on the back of strong brands and reputations, and a deep insight into the resilience and multiple facets that drive this intangible asset is key to understanding the future strengths of a business.

Entering a partnership or acquiring a business without this understanding has the potential to devalue the acquisition – or to stall future growth so reputational due diligence should be an essential step in any such decision.

Contact us to find out how this key aspect of non-financial due diligence can inform your decision making.

Siobhán Lavelle, Cornelle Communications, Associate of Transaction Focus and True Diligence TM Ambassador.