What is Five Blocks’ view on reputation risk in investor due diligence?

Reputation now appears routinely in investor due diligence. The digital picture, search results, AI-generated summaries, Wikipedia, and review platforms, is screened during diligence and can affect valuation, terms, or whether the deal happens at all. Over the last several years this kind of diligence has become institutionalized, with the findings flowing into the investment committee memo and the reference-call process.

How the findings shape the deal

In our experience advising clients, the digital picture tends to push a transaction toward one of three outcomes:

• Strong, consistent picture, the deal moves faster and with fewer protective provisions.
• Weak or inconsistent picture, the deal often faces additional terms, pricing adjustments, or extended diligence.
• Material issues surfaced, the deal sometimes does not happen.

Prepare six to twelve months ahead

Because the digital and AI picture cannot be repaired overnight, the work to prepare for diligence is best done six to twelve months ahead of any anticipated transaction, well before a counterparty begins screening.