The Digital Layer No One Talks About

What happened to that company isn’t unique. It’s happening more often than we might think, even in nine-figure deals.

Attila explained that most investors continue to rely on the traditional pillars of due diligence: legal, financial, and commercial assessments. While these remain essential, they alone are no longer enough in a world where digital factors increasingly define a company’s value and risks. A company’s digital footprint – its online visibility, technical infrastructure, software ecosystem, and even search trends – can significantly impact performance. Yet, conventional due diligence frameworks often overlook these critical elements, a gap that can prove extremely costly.

To illustrate this more clearly, let’s look at a few real-world examples shared by Attila.

1. $175M investment with a Reputational Fallout: Frank x JPMorgan Case

In 2021, JPMorgan acquired a college financial planning scaleup called Frank for $175 million. The company claimed it had a user base of 4 million. What JPMorgan failed to uncover before the deal was that over 90% of those users were fabricated.

This oversight could have been avoided with a simple check of digital performance indicators, such as website traffic. A platform with 4 million users would typically reflect that scale in its digital footprint through sustained, high-volume web traffic. But the numbers didn’t support the claim.

It would have required just someone asking: Is their website even getting enough visitors to support that number?

2. The Rise and Instant Fall of CNN+

Another telling example is CNN+, the streaming platform launched by CNN. Many don’t even recall its existence because it was shut down within a month after consuming roughly $300 million.

Why did this happen? The launch was based on bold assumptions that CNN’s brand equity alone would drive subscriber growth and that audiences would be willing to pay for premium news content. However, digital data painted a different picture. Indicators of digital market demand were nonexistent. Search queries such as “premium news channel” or “exclusive news” averaged fewer than 100 searches per month, hardly a signal of scalable interest.

Yet no one appeared to ask the critical question: Is there sufficient digital demand for what we’re building?

3.When Digital Due Diligence Worked: M&A Case – A PE Miss in Real Estate

Not all stories end in regret.

A private equity firm was considering the acquisition of a hotel portfolio. The numbers looked solid, and an established real estate valuation company valued the deal at €82 million. The PE had a 5-year exit strategy in mind, which included doubling the average number of booked rooms. To ensure they saw any digital bottlenecks that could hinder their growth plans, the firm ran one additional check: a digital audit of the hotels through a process called Digital Due Diligence.

That’s when they discovered a silent bottleneck.

Bookings made online or through external platforms like Booking.com weren’t integrated into the hotels’ internal systems. The back office team had to manually enter every booking into the property management system. During peak season, this created fifty times the workload and massive inefficiencies.

DDD also estimated the time and cost required to resolve this issue: six months and €2.3 million to modernize the system. Thanks to this process, the buyers renegotiated the purchase price to €79.7 million and used the difference to fix the systems.

They walked away with a better deal and a property ready for scale.

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The Fourth Dimension of Due Diligence

The stories reveal a simple truth: the traditional three-pillar model of due diligence has a missing fourth pillar: the digital layer. We call this process Digital Due Diligence (DDD).

We’re talking about digital intent signals, demand modelling, customer journey mapping, risk evaluation of software – reports uncovered through data-driven market and technology audits.

Attila highlighted that relying solely on conventional due diligence today means more than overlooking red flags. It often means operating without full visibility. The good news is that these digital blind spots are identifiable, and the financial risks they pose are avoidable. It simply requires looking beyond the traditional checklist.

Don’t Fly Blind. When preparing for your next investment, consider this critical question:

"What might I be missing?"

Let’s begin the conversation from here.