Microsoft Acquisition of LinkedIn

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MicrosoftAcquisition of LinkedIn

MicrosoftAcquisition of LinkedIn

Mergersand acquisitions are general terms used to refer to the consolidationof organizations or assets. Every day, investment bankers at WallStreet arrange merger and acquisition deals which could be worthbillions of dollars. Such transactions can make or make the fortunesof companies for decades or centuries to come (Bruner, 2016). Thisreport looks at one of the most recent transactions between Microsoftand LinkedIn. Microsoft Corporation acquired LinkedIn in June 2016.The report shall discuss the basics of the transaction, showing thestatus of the two organizations before the merger. In addition, itshall discuss the individual benefits that each of the organizationsbrought to the table, further indicating whether the transaction wasa success or a failure (Bruner, 2016). The acquisition by MicrosoftCorporation of LinkedIn is bound to be one of the most successfultransactions in history because it involves two giant companies andhas resulted in massive benefits for two companies

MicrosoftAcquisition of LinkedIn

InJune 2016, Microsoft Corporation and LinkedIn Corporations announcedthe conclusion of their definitive agreement. Microsoft acquiredLinkedIn in a deal that has been regarded as one of the mostexpensive tech deals in history. LinkedIn being the largestprofessional social network had an approximate membership of 430million users, with an estimated 100 million visitors each month, atthe time of the acquisition (Greene, 2016). The company’s revenueis from subscriptions sold to corporate recruiters that browse itsdatabase in search of prospective employees.

Inthe agreement, the companies agreed that Microsoft would acquire theentire LinkedIn shares for the price of $ 196 per share in anall-cash transaction totaling $26.2 billion (Greene, J2016).Considering that it had been a long time since LinkedIn share pricehad gotten close to its current $250 per share high on the market,this was considered a generous premium for the organization. In March2016, the share price had dropped to a $100 low, with no signs of anymethod to bring it back up (Greene, 2016).

LinkedInis considered the global leader in size and value in professionalnetworking, with apparent growth being realized in its business. In2015, the organization launched another version of its mobileapplication, a factor that has seen its membership engagementincrease drastically. It has also led to the enhancement of thesite’s newsfeed aimed at delivering improved business insights. Themanagement has also acquired an online learning platform, Lynda.comwhich has seen it enter a new market. The rolling out of a newversion of Recruiter to the company’s enterprise clients has alsonot been left behind in increasing the value of LinkedIn.

Accordingto market analysis experts from Forbes, they described the move asshrewd for both organizations. For one, integrating thebusiness-oriented social network into Windows or Outlook would proveto be a positive move for the software giant, while at the sameLinkedIn stood to gain from the stability achieved from the newlyacquired corporate umbrella.

Accordingto Mims (2016), the move was seen as the latest effort aimed atrevitalizing Microsoft. For the longest time, Microsoft has beenviewed to lag behind as other organizations made major shifts intechnology. With this in mind, the move is geared towards opening newhorizons for Microsoft’s Office suite and LinkedIn’s, both ofwhose niches are saturated. Before the connection of the two, workwas split into the tools that are used to get jobs done, in thiscase, programs on Microsoft Office, and professional networksconnecting the people doing the tasks (Mims, 2016). A deal betweenthe two organizations aimed to seamlessly weave the two functionstogether. In a nutshell, the professional cloud and the professionalnetwork have been brought together.

Arguably,the users of LinkedIn form the core of Microsoft’s demography. Inaddition, they offer the acquiring organization a long sought afterfeature, a network with which users identify. With this, the coreduty of Microsoft will be persuading the users of LinkedIn to adoptthe identity, while using it across its products as much as possible(Mims, 2016). Gaining access to these users and the huge amounts ofdata that they emit could end up yielding insights or products withinthe acquiring company that could see it monetize its investment inthe new company. LinkedIn could not be in a position to achieve thisby itself. An example is attending a sales meeting equipped withparticipants’ bios, or getting a supply of potential experts fromLinkedIn at any time the Microsoft Office receives a prompt that anindividual is working on a relevant task.

Reasonsfor Skepticism

Someanalysts have considered the move as one of the most unwise in thefield of mergers and acquisitions. This has especially attractedmassive skepticism owing to the fact that Microsoft has been engagedin a number of acquisitions prior to the LinkedIn takeover. Theprice, for one, has highly been criticized owing to the fact that at$26. 2 billion, this is the largest acquisition that Microsoft hasever undertaken. In the past, Microsoft Corporation has recordedwrite-downs that exceeded $9.4 billion paid for the Nokia Corporationhandset unit in (2014 Mims, 2016). Prior deals, including those ofSkype Technologies and Yammer Inc., which were aimed at bolsteringthe firm’s social and digital credentials failed to achieve eitherof these.

Inconclusion, the acquisition of LinkedIn by Microsoft Corporation ofis one of the most expensive and successful transactions since itinvolves two giant companies and has resulted in massive benefits fortwo companies. Although skeptics have questioned the price, it ishoped to be a more promising takeover, gauged on the massive effortsof research carried out prior, and the amount of experience MicrosoftCorp. has had in past transactions.

References

Bruner,R.F. (2016). Appliedmergers and acquisitions, University Edition.New Jersey N.J: Wiley &amp Brothers.

Greene,J. (2016). Microsoftto Acquire LinkedIn for $26.2 billion.Retrieve on 7thOctober 2016 fromhttp://www.wsj.com/articles/microsoft-to-acquire-linkedin-in-deal-valued-at-26-2-billion-1465821523

Mims,C. (2016). Why Microsoft bought LinkedIn. TheWallstreet Journal.Retrieved fromhttp://www.wsj.com/articles/microsoft-gains-link-to-a-network-1465922927

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