When Microsoft and LinkedIn announced the acquisition on Monday, the Web literally exploded. Most publishers went with the articles that were either neutral or questioning of the deal. Bloggers and regular users were much less forgiving. Many voiced concerns that the price Microsoft had agreed to pay was unreasonably high, that Microsoft had had very little success integrating acquired businesses into the wider offering of their products before, or that combining LinkedIn social graph with Microsoft productivity tools would mean that the users would enjoy even less privacy. While most of these concerns could turn out true, I personally have a more positive outlook of this acquisition.
Most M&A deals in tech can be broadly attributed to one of two distinct categories: product acquisitions and business acquisitions. In case of product acquisition, the acquirer is typically going after the product/technology, and the team behind it, with the ultimate goal of either strengthening some of its already existing products, or integrating this new product in their broad ecosystem, thus offering their customers additional services. In case of business acquisition, the objectives can be less obvious. As such deals typically happen at the later stages, the business of the company being acquired may already be successful on its own. This means that while the acquirer may still go after that company hoping to use it to strengthen its own business lines, it is also possible that the main goal is to use the vast resources of the parent company to help the company being acquired grow its own business further.
Most articles covering the acquisition of LinkedIn were primarily focused on the ways LinkedIn’s extensive userbase and social graph might be used to augment certain Microsoft products. While Microsoft indeed draws very significant revenues from a number of products that might benefit from the deeper integration with LinkedIn, many wondered (e.g. Peter Bright from Ars Technica http://arstechnica.com/information-technology/2016/06/nope-i-still-cant-make-sense-of-microsoft-buying-linkedin/) if it would make more sense for Microsoft to try and enter some form of extensive partnership with LinkedIn instead of going forward with...Read More