The acquisition frenzy continues and now the acquistion of LinkedIn by Microsoft has the blessing of the EU. The purchase price is $26.2 billion, which prices the LinkedIn social media business at 8.1x trailing 12 month revenues and 6.7x next 12 month revenues.
In particular, this is a strategic move as LinkedIn’s data set gives Microsoft an opportunity to both continue to grow the existing business by selling it through its channels, differentiate its CRM product, Dynamics, and offer a sales productivity tool in Sales Navigator. Also, LinkedIn operates a monopoly on resume and employment data and, the business unit can be operated very profitably. Last, the great management team at LinkedIn will complement Microsoft’s.
This acquisition will have three implications for startups. First, the transaction informs future M&A multiples. Second, the acquisition has the potential to upend the CRM market. Microsoft Dynamics + LinkedIn creates a leading CRM product with some form of intelligent data entry; and that raises the question: Will being a CRM system of record without intelligence be enough to succeed? Third, this likely removes LinkedIn from the buyer segment of the M&A market as the company works through its sale.
THE European Union has approved Microsoft’s mega buyout of the professional networking site LinkedIn, provided the US tech giant meets commitments to allow fair competition. The European Commission, the EU executive, said it approved the merger after Microsoft offered promises, including leaving personal computer manufacturers and distributors free not to install LinkedIn on Windows operating systems. “The European Commission has approved under the EU Merger Regulation the proposed acquisition of LinkedIn by Microsoft,” the commission said.