By Glenn Hayward, CEO at Com Laude
The percentage of mergers and acquisition transactions has risen sharply in the past year. Partly driven by a recovering economy, the value of global deals in 2021 reached $5.1 trillion, up 34% from 2020 to surpass pre-pandemic levels and reach a five year high. The good news is that the trend suggests another supercharged year for deal-making in 2022 as dealmakers worldwide increasingly look to digitalise their businesses.
However, the primary focus for organisations during this surge in M&A activity is to ensure transactions are completed as smoothly as possible. A consequence of this is that critical digital assets, such as a company’s domain name can often take a backseat, presenting bad actors and cybercriminals with ample opportunity to take advantage of any vulnerabilities that come from changing roles, responsibilities, systems and services.
A company’s domain name portfolio can become the Achilles heel of the M&A process if not handled correctly. In order to mitigate the threats of intellectual property infringement and abuse, reputational damage or cyber-attacks, we’ve outlined some actionable insights around domains for those businesses embarking on M&As.
Account for domain ownership
When a business is going through an M&A, there will inevitably be a consolidation of teams. As responsibilities change hands, domains can often be forgotten about in the transition. This can lead to domain registration rights leaving with the person who originally registered them, or with the registration remaining with an old (now defunct) email address from the acquired company.
Organisations must ensure this handover happens early on to prevent these domains falling through the cracks. Equally, it is crucial that the domain registrant transfers ownership to a group email address at the new entity so that multiple stakeholders are alerted when a domain may be expiring or needs attention. Not only will this give the brand watertight protection but avoiding these slip-ups will raise stakeholder awareness for having a robust domain strategy.
Secure domain names before announcing an acquisition
An M&A is an exciting time, and it’s tempting to shout about the new acquisition and a potential new company name whilst it’s in progress, but businesses cannot afford to get carried away. Cyber-squatters will be ready to jump on domain names that aren’t registered in advance of the announcement, holding them hostage for an extortionate price and causing a serious headache for the new business that now needs to get them back ahead of the official brand launch.
Prior to announcing details of an M&A, businesses need to conduct an audit of their future domain portfolios and ensure that all potential online real estate is spoken for. By registering these domain names in advance, organisations can safeguard against any costly (and ultimately inconvenient) re-acquisitions of the name.
Domain names can cost less than £1, but they can be sold on for hundreds of thousands if they’re desperately needed by a brand. Take the example of TikTok: two friends anticipated that the app would become a popular brand, so they bought the domain tiktoks.com for $2,000 just after TikTok’s launch. TikTok’s parent company offered $145,000 to the pair to buy that domain, however upon their refusal to give it back, the brand was forced into lengthy and costly legal processes for its re-acquisition.
The lesson is clear: stop and think about your domain portfolio and ensure all potential domains are registered and accounted for before you rush to make a very public announcement.
Putting in place a robust domain name strategy
A lack of knowledge both about how vital domains are to business infrastructure and the potential implications that neglecting them during an M&A may have has often been why businesses make mistakes. When domains are held by cyber squatters, the effects can be felt across the entire organisation, from seriously impacting online trading through to phishing scams that target customers and ultimately damage brand reputation.
Small brands need not think they are exempt from being targeted; when they are, the attack could be even more damaging with a smaller pool of funds to combat mistakes. All businesses must remain vigilant and protect themselves against the increasing threats during an M&A.
Listen to the experts
When planning for future business acquisitions, organisations can help to mitigate these issues by ensuring they have a corporate domain portfolio manager on hand to ensure domain portfolios are watertight throughout the transition. With their guiding hand they can advise on the key domains that need to be acquired ahead of time, and ultimately mitigate the substantial costs that can be incurred by needing to get a domain back.
With cyber squatters always on the lookout for a quick buck, businesses going through an M&A need to be one step ahead, covering their back from the start with a clear domain strategy. There are many pieces to the M&A – make sure domains don’t end up being the missing piece that prevents the perfect picture.
