Member Article

The $26bn acquisition of LinkedIn by Microsoft certainly caught the eye this week.A business that is little more than 14 years old and wasn’t generating operating profits (under GAAP) selling for almost ten times revenue – that’s some deal.

Yet it doesn’t take a great deal of investigation into some of the non-financial statistics to see why such an eye watering price might be justifiable:

• LinkedIn has 430 million members and is growing fast.The vast majority of these are professionals for whom the site has become far more than a shop window for CVs.That demographic profile is simply outstanding and worth $60 a user to Microsoft.
• The site had 45 billion page views in the first quarter of 2016.This is a site that provokes and maintains user interest – in contrast to other social media providers.
• LinkedIn has a quality of content that is markedly different to Facebook or Twitter.For professionals its content has (in the main) intelligence, relevance and authority.Inevitably this has been somewhat diluted as the user base has grown but that core professional user base remains.

Furthermore like any good acquirer Microsoft (not that it has a great track record in buying up until now!) can point to a number of tangible and real synergies.The most obvious of which is getting its products to market and ‘empowering every person and organisation on the planet.’What better way to do that than with the world’s largest and most valuable professional network.

Time will tell whether this is an acquisition where value is created.What is clear is that the on-line world continues to create value and opportunities at every turn…