Thursday, June 16, 2016

Trying to understand Microsoft's acquisition of LinkedIn



The news about Microsoft's acquisition of LinkedIn was a big surprise. And I am sure, not only for me.
So the only question to be asked: "Why?"

Actually there three possible reasons for any M&A act:

  1. VALUE-CREATION:
    Acquired assets combined with own competences create a new business or save costs
  2. VALUE-LEVERAGE:
    Private equity acquisition buy low - sell high
  3. VALUE-INCREASE:
    Acquiring risky assets with high potential


It's a challenging puzzle for an outsider like me.

The first option seems to be unrealistic to believe. The intend behind the acquisition of Nokia’s mobile phone assets was a generating added value by combining the hardware with own software and services. It didn't happen.

The effort to convince investors of the great product synergies for both companies combined with the new strategy for Microsoft forged by Nadella does not fit int he second option neither.

The third option would be something innovative and new for a Microsoft. To buy company, provide it with capital and management and let it exist relatively independently? I think, it would be a pleasing result for LinkedIn.

We will see what the future brings!