How Digital Due Diligence Can Make or Break Your Private Equity Investment Game!

Are you an aspiring Private Equity or Venture Capital investor?  Do you want to jump into buying and selling businesses?  If that’s you, then I have a question:  How is your due diligence process?  Do you have a way to explore value creation or destruction from digital aspects of a business?

Well in this week's episode of Making Billions, I bring on my Dear friend Antonella Pisani.  Antonella is the Founder and CEO of EyeFul Media.  They work with private equity and venture capital investors to conduct digital due diligence on companies.  You’re gonna want to listen all the way to the end where Antonella reveals some of the key areas to focus on as well as how she saved a client from suffering a 40% decline in their potential investment.

Buying companies, finding hidden value from Due Diligence, and avoiding 40% losses are all skills we need in our pursuit of Making Billions. Making Billions.

WANT TO LEARN HOW THE BEST INVESTORS MAKE MONEY? SIGNUP FOR OUR NEWSLETTER:
https://mailchi.mp/d41cfc90bd9f/subscribe-to-newsletter

Subscribe on Youtube:
https://www.youtube.com/channel/UCTOe79EXLDsROQ0z3YLnu1QQ

Connect with Ryan Miller:
Linkedin: https://www.linkedin.com/in/rcmiller1/
Instagram: https://www.instagram.com/makingbillionspodcast/
Twitter: https://twitter.com/_MakingBillons
Website: pentiumcapitalpartners.com

[THE GUEST]: Antonella Pisani has more than 25 years of marketing and digital experience. Prior to starting Eyeful, she held VP and SVP roles at companies including Proflowers, Guitar Center, JCPenney, and Fossil where she managed annual marketing budgets up to $100 Million. 

[THE HOST]: Ryan is a Venture Capital & Angel investor in technology and energy. He achieved industry-beating placement growth in his first 5 years in the industry. 
                                                                                                             
DISCLAIMER: The information in every podcast episode “episode” is provided fo

Support the show

DISCLAIMER: The information in every podcast episode “episode” is provided for general informational purposes only and may not reflect the current law in your jurisdiction. By listening or viewing our episodes, you understand that no information contained in the episodes should be construed as legal or financial advice from the individual author, hosts, or guests, nor is it intended to be a substitute for legal, financial, or tax counsel on any subject matter. No listener of the episodes should act or refrain from acting on the basis of any information included in, or accessible through, the episodes without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer, finance, tax, or other licensed person in the recipient’s state, country, or other appropriate licensing jurisdiction. No part of the show, its guests, host, content, or otherwise should be considered a solicitation for investment in any way. All views expressed in any way by guests are their own opinions and do not necessarily reflect the opinions of the show or its host(s). The host and/or its guests may own some of the assets discussed in this or other episodes, including compensation for advertisements, sponsorships, and/or endorsements. This show is for entertainment purposes only and should not be used as financial, tax, legal, or any advice whatsoever.

Transcript

Ryan Miller  
My name is Ryan Miller and for the past 15 years have helped hundreds of people to raise millions of dollars for their funds, and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, and the show will give you the answers, so that you too can enjoy your pursuit of making billions. Let's get into it. 

Are you an aspiring private equity or venture capital investor? Do you want to jump into buying and selling businesses? Well, if that's you, then I have a question for you. How is your due diligence process? Do you have a way to explore value creation or destruction from digital aspects of a business? Well, in this week's episode of making billions I bring on my dear friend Anthony Ella pesonic. And sanella is the founder and CEO of iPhone media. They work with private equity venture capital investors to conduct digital due diligence on companies. So you're gonna want to listen all the way to the end, where as Antonella reveals some of the key areas to focus on, as well as how she saved the client from suffering a 40% decline in their potential investment, buying companies finding value from due diligence, and avoiding 40% losses are all critical skills we need in our pursuit of making billions. Here we go. 

Hey, welcome to another episode of Making Billions. I'm your host, Ryan Miller. And today I have my dear friend  Antonella Pisani. Antonella is the CEO and founder of Eyeful Media. Her company has been ranked in the Inc 5000 as an elite digital marketing agency that conducts digital due diligence for private equity investors just to help them complete their own due diligence on digital assets. So what this means is that Antony Ella and her team at Eyeful Media understand how to help you find the problems and the profits in any digital business that you want to buy. Antonella, Welcome to the show. 

Antonella Pisani  
Hey, thanks for having me, Ryan. It's been, it's been great. Getting to chat with you over the last few days. And looking forward to spending this afternoon with you. 

Ryan Miller  
Yeah, it's wonderful to have you I mean, doing digital due diligence is phenomenal. We're gonna get into that you're not gonna listen all the way to the end. I'm going to hopefully ask if I asked nicely, maybe Antonella will share with us some of her secret, secret sauce on how she helps people. And from all of her wisdom and insights over 26 years of doing this, she's really gonna help us drill down on digital assets and how not if you have one, how to get better, and if you don't have one, how to set it up correctly. But before we get into that, maybe you can walk us through a little bit. I mean, you've been doing this for a long time, your wisdom is there, your experiences there and your clientele is there. I would love to know, how did you become an expert in this field? 

Antonella Pisani  
Yeah, for sure. It's um, it's been a long journey. So I got involved in digital super early and started building websites in 1996, pretty much when that internet was in its infancy. And even before that, got involved with marketing back in high school, was really, really fortunate and got to intern at Transworld Snowboarding magazine was one of the interns working on as an event for them and got a lot of great marketing experience there. Fell in love with copywriting had the opportunity to be in some of their magazines and things like that. And then, like I said, it was actually my work study job, I had no idea that was going to lead to a career in digital and after that had had the opportunity to work for some great brands. So proflowers Guitar Center, and JC Penney fossil a really nice mix of kind of private companies, public companies, and then private equity backed as well, including some that are backed by folks like Bain Capital, Liberty Media and, and other kind of top notch organizations

Ryan Miller  
That is cool Transworld magazine. I remember reading that when I was a kid, I was obsessed with Transworld Thrasher, and Guitar World magazine. So those are guitars and skateboarding that was. So you're a little bit of the magic behind my joy is as a younger man. And so where did it go from there? 

Antonella Pisani  
Yeah, from it. So after a long career on the corporate side, I ended up taking a year off, I've been doing a lot of turnaround work. And anyone who's done that knows the intensity. So I ended up traveling and then got into consulting somewhat accidentally, a friend who owns a digital marketing agency here in town is on the advisory board of a company and, you know, suggested I joined them. So you know, the last six years, we've been building an agency been in the top 11% of the Inc 5000. List. The last couple years, we've been on AdWords fastest growing agency list, given a number six. And number five is a women-led organization. All 100% off a word of mouth. So really a tremendous journey. We've got folks in the 16 states right now, over 20 cities, really fortunate to be experiencing this kind of growth. 

Ryan Miller  
Yeah, beautiful. Well said. So here you are, you're hustling, you're building Eiffel media, you're doing these wonderful things. You got private equity investors, venture capital, people, all kinds of professionals are saying, hey, I want to buy this thing. But I got to make sure that when I open the kimono, so to speak, and do I like what I see. And sometimes to the untrained eye, that's not always obvious. So you get called in from big investors who say, Hey, can you take a look at this, you understand digital assets, SEO, all of these things? Is there value being created? Are they as good as they claim to be all of these things that investors want to know? And so I'm just curious, do you have an example of maybe a company that you worked on? You did some due diligence and maybe walk us through some of the results there? 

Antonella Pisani  
Yeah, for sure. So we are really fortunate we work with a number of big PE firms, as well as some smaller guys as well. And they do bring us in one of the things that's really unique about us as an agency is we only use experienced talent. So it's folks with an average of 13 years of experience and so they trust our team. Obviously anytime a PE person or investor in general was putting money into a company like they they need to know that they've got the right team on board, one of my favorite case studies and I don't know if you want me to share my screen here. 

Ryan Miller  
Yeah, please, for those of you on YouTube, you're gonna see a little bit of magic for those of you listening, keep listening and then go to YouTube. But either way, yeah, please share. 

Antonella Pisani  
Yeah, for sure. So we actually did a case study on this. And I would say most of the time, when we're digging in, like, we find that it's primarily upside, but every once in a while, we find some things that concern us a little bit, and we bring it to the PE firm and, and highlight some some risks for them. So this one company we were looking at was really focused on organic search or SEO. So for those of you that aren't familiar with the terminology, it's really when you go to Google, and typically you've got the paid ads up at the top, and then the majority of the pages is organic search, you know, it's really interesting, because when we first started looking at it, we were like, Wow, these guys really solid, they had very high domain authority, meaning like, people really respect the site, we had seen organic traffic climbing in a steady fashion. So that looked really good. We were seeing links from really reputable sources. So all of these things that on the surface looked awesome, right? And to the kind of untrained eye, you would think, okay, let's check this one off, it looks really good. But we kept digging deeper, just knowing the importance of of these evaluations. And we found some things that concerned us that it was really, you know, it's called anchor text. But really what it is, is the words that are being used when they link to your website, and most websites will see that the majority of their links tend to just use the brand name, the name of the site. So let's say you're Transworld Snowboarding, a lot of the links from say Transworld Snowboarding instead of like, something very niche and specific. And so we saw a lot of these things that that we flagged as a concern, just thinking that, you know, because of the importance of organic search to the really to the valuation, like it felt like something that can be penalized really quickly. And so, you know, we saw some things in the data that just didn't feel great. We actually flagged it to the PE firm before, we were fully done with the analysis, because we wanted to make sure that that they knew that we felt like there was some smoke there. And so this was one of the maybe like two or three deals that we've ever said, hey, look, I wouldn't necessarily feel comfortable pulling the trigger on this. And so we went back, because, like, it's always scary looking at this and making a recommendation, so maybe not invest in something. And so we actually went back just to see like, did we make the right call, because, you know, you can lose sleep over that. And what we saw was actually that that non brand traffic, so meaning keywords that are more likely to drive new business, so anything outside of that brand term, it it actually dropped 40% or more since we had done the evaluation. So we felt like it was the right call it was, you know, it's always scary making that call, but we were really confident in our recommendation to them. So I think this is probably one of the most extreme cases that we've seen. But it shows it shows how important it is to really dig be below the surface, because that surface level data, like everything looks pretty phenomenal at the time, man. 

Ryan Miller  
So I see a chart there. Where was it that you made the recommendation on this estimated traffic trend? 

Antonella Pisani  
So it was right around here? So it was kind of like it was the last week and then it just just started? downward slide. 

Ryan Miller  
So you were able to uncover certain things. So you, I'm just assuming, keep me honest. So you had a client, they approached you. And you said, Hey, we're interested in this business, it probably, you know, strategically in their thesis, everything seems to fit, we just got to make sure that there's value created, or at least the value we expect to be created is possible with this company, they call you in special teams you do your research and say, I don't think this is gonna give you is that? Is that a pretty fair assessment? How that went, 

Antonella Pisani  
when we present findings to different firms. We're typically saying, Hey, here's your top five upside items, here's your top five risk items, they tend to balance each other out more often than not, we're seeing the upside, you know, when there is that risk? So I just want to know, like, how painful is it going to be to to fix this. 

Ryan Miller  
And you're able to do that almost like hiring a very thorough housing inspector, if your home flipper to say like, Hey, like, I'm a home flipper, I'm not a construction person. But maybe I bring someone who just understands how the best in class is done. And that's, you know, how close or how far away are we from that, and what's going to be required, and then I'll decide whether I get, you know, some some type of consideration for those things. But either way, you got to do your due diligence, there's legal due diligence, there's financial due diligence, and in your case, there's also digital due diligence. So from all of your experience and Antonella. I'm just curious. I mean, thank you for sharing that story. You know, you've done this, you've been doing this for more than two decades. What advice can you give our fans around the world that you can help them maybe some areas of say, where's it Where's value created or destroyed? And these companies some of the stuff that you look for me, walk us through some of those, those hot tips that you've been able to find helpful for investors? 

Antonella Pisani  
Yeah, how do they do that? You know, my favorite little book is called The Go Giver. I don't know if you've read that one. But it's all about creating value and giving value and so happy to share a few different things. These are just some of the things that we tend to look at pretty quickly. Because it's just enough below the surface, or it's just things that that the P firm needs to know about really quickly. You know, one thing that surprises us is a lot of these companies, especially where they're a little bit still immature and marketing. They don't actually they own their Google Ads account. So they've hired an agency that set it up for them. But something in the contract is written that the agency actually owns the account. And the reason that that really matters is it kind of takes the power away from the client and the company, because what happens is if they want to make a switch to a different agency to change out their partner, maybe they're not getting what they want from that agency. It's a little bit of a handcuff, because now, the new agency actually has to rebuild the entire account. You've lost the history, Google's history, right, what they've learned, especially if you're using any sort of algorithmic getting some of that logic that all gets wiped out. And so that's one of those questions that firms should should very quickly ask and understand if the company that they're evaluating actually owns their own data, it shocks and how often it comes up that they don't. So I think that's a quick win. 

Ryan Miller  
Owning your own data is critical. So if you hire a third party agency, just make sure in your contract that the the ads belong to you, which is really not so much the account, but the data that gets generated within that account, you got to make sure that you are the rightful owner of that data does that? 

Antonella Pisani  
Well, they want to own the account, because what happens is they switch agencies, the company can then just go and fight the new agency, and the agency can just take over management, and then they just remove the old agency partner, otherwise, the whole thing needs to be recreated. So it is actually owning the account, and making sure the buildings running through the client, not through the agency, so that they don't skip a beat if they want to make a change. So that's a big one, I would say on organic, like organic search is a huge channel for a lot of people. And it's one that is really important, because it tends to blend down with customer acquisition costs, the better that the company is at work Ganic, the acquiring traffic, a lot of times people are looking at things like keywords, you know, percentage of traffic coming in from branded terms versus non brand, which we talked about is kind of those keywords that people use when they don't know your business, they're just trying to find your service. So it tends to be the customers take a look at that data, actually by page of entry where people are coming in. A lot of times, what we'll see and you know, people get enamored by traffic numbers, but there's a lot of traffic and it's like empty calories. And so what you'll see is sometimes a lot of traffic coming in on blog posts and things like that, that don't actually lead to sales. And so I really liked slicing the data and looking at 100,000 visits, how much of that is coming in on pages that will actually have a chance to convert versus stuff that makes me feel really good, because I'm getting traffic but isn't really qualified. So that's another thing to make sure that you take a look at data at that level, I would say for, you know, especially for E commerce companies, one of the quick wins is often looking at the affiliate channel, for those of you that aren't familiar with the term affiliate, but it tends to be, you know, your coupon sites, things like that. That's a channel where if you're trying to find budget to invest in and something else, something upper funnel, attracting new companies, or new customers to your business, a lot of times that can be kind of cannibalistic. And what I mean by that is you guys have all done it, you get into a website, you put stuff in your shopping cart, you're ready to check out and you see the little promo code button, and you go off and say, I'm gonna go find, I want a better deal who doesn't want a better deal. So you go and find that promo code, what happens is affiliate sites will all of a sudden, also launch a browser window that has the same website in it so that they can set cookie. And so what's happening is now they're taking credit for the sale, here's why that matters is you start not really understanding what is driving the sales. And so it can actually devalue things like paid search. So what you really want to look at is the difference between first click data. And lastly, I think what that means is, you know, most Google Analytics and a lot of web kind of Web Analytics platforms will use what's called last click, or last touch attribution, which is the last thing that touched my customer before they converted wins, right? That doesn't mean it's the channel that actually introduced your client to the website. So you want to look at that first click data, especially when trying to understand which affiliates are actually driving business to you versus just taking credit at the end. Because a lot of times, you can free up some marketing budget and redeploy that and get a higher ROI on that. So that's another thing we tend to look at. And then last, and I think this one's you know, it still surprises me that a lot of companies don't do this, you know, whether you're ecommerce and have like a high price point, or you're a b2b business lead gen, you know, a lot of businesses still sell through the phone, right, especially if they're sales reps. We've seen some ecommerce businesses that still have 10 to 30% of their sales happening through phone because it's a complicated sale, it's a high price point. And a lot of folks are still not very good at attributing phone sales back to the marketing channel. So if you think about it this way, let's say you're running paid search ads, and you're spending, you know, $1,000, you're getting a four to one. Based on kind of that online sales data, let's say 20% of your sales are coming in the phone, like you want to know that and you want to attribute that value back to your paid search investment. So you can invest more appropriately. So a lot of times that can actually unlock budget, that's still very profitable, but isn't being spent because the company just doesn't really understand their ROI. And so there's a lot of solutions out there when it's called invoca and other ones called call rail. So there's a lot of solutions there that you can track those phone sales back to a specific marketing channel, a campaign a keyword, any sort thing like that. And that can be a huge unlock for for kind of growing a business once you acquire it. So it's a good question to ask when you're doing diligence is, hey, you know, are you capturing phone sales or not, you don't need to get into, into the why. But it's, it's often a quick plan, once the sale was is.

Ryan Miller  
It really a lot comes down from data. And based on that data, you can really drill down on where value is being created or destroyed back to the original coming full circle on this moment. So as you can see, there is a lot of different areas that you can focus on. So before we wrap things up, is there any last minute comments or ways that people can reach out to you to connect with you know, we'd love to help.

Antonella Pisani  
You know, I can share our website if that's okay, it's Eyefulmedia.com which was eyeful media.com. We work with PE firms and VCs and in a lot of different ways. So sometimes it is the due diligence side, sometimes it's meeting a trusted partner to work with the portfolio companies. So we're able to partner with folks, sometimes even doing interviews of marketing personnel to make sure that you know, the right team is on board. So yeah, there's a lot of different ways department. 

Ryan Miller  
Awesome. I love that. So as we wrap things up, just to summarize, when you're buying a digital company, or investing in one, some of the key areas to look out for are paid search, look at how that's being done. Do they own their own Google Ads account? Do they have have they secured their own data, there's value in in that in controlling all the data that comes around your activities. The other one is organic search, you got to see where the traffic is coming from whether you do it or you hire someone like Antonella and her team to do that. affiliates can be a good strategy, but it does need to be managed, it's good within a certain parameter. And it can be a little bit of cannibalistic as Anthony Ella has taught us today. So affiliate marketing can be good. Just make sure that it is set up and structured in the way that does add value without destroying some of that. And then finally, if you have phone sales, if a lot of that company either that you have or a company you want to buy has, do they have any of those phone rail systems where they can collect a lot of data, you do these things, and you too will be well on your way in your pursuit of making billions.

Wow, what a show. I hope you enjoyed this episode as much as I did. Now if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guest even better. And make sure to come back for our next episode where we dive even deeper into the people the process and the perspectives of both investors and founders. Until then, my friends stay hungry. Focus on your goals and keep grinding towards your dream of making billions