LinkedIn, which specializes in helping users make business connections, has landed a huge deal for itself. The networking website has agreed to be acquired by Microsoft for $26.2 billion, or $196 per share, in a deal that is expected to close sometime this year. It’s Microsoft’s biggest acquisition and one of the largest ever in the tech sector.
The two companies see great potential synergies between Microsoft’s Office software products and LinkedIn’s network of 433 million users. For example, your Microsoft desktop could use LinkedIn to provide you with names of experts when it recognizes that you are working on a specific type of project. LinkedIn, in turn, could use data from your Office software to customize your LinkedIn newsfeed with articles of specific interest to you.
Microsoft and LinkedIn say the merger will help them “digitally map” the world’s workforce and economy until every job, employee, job description and training opportunity can be found online. Pretty ambitious.
Microsoft is issuing debt to finance the deal, which might seem odd given the company has roughly over $100 billion in cash reserves stacked up overseas. Unfortunately, if Microsoft “repatriated” those profits it would have to pay about $30 billion in US taxes. The company is not interested in doing that.
This is Microsoft’s third notable acquisition. Its 2011 purchase of Skype is widely considered a major success, while the company’s bid to get into cell phones by purchasing Nokia’s phone operation was a flop.
Several people have asked me whether (and how) LinkedIn makes money. It does. The company had $2.9 billion in revenue in 2015. That money came from premium memberships, promoted job postings and good ol’ fashioned advertising.
LinkedIn has been promised that it will be allowed to keep its “distinct brand, culture and independence.” I sure hope so. I’m a big fan of LinkedIn. In fact, I believe it can play an important role in your personal financial strategy. Remember, your job is your biggest asset. It generates nearly all the revenue to not only fund your life but also build for retirement. We need to safeguard and maximize that asset. Networking with peers via LinkedIn can make you better (thus more valuable) at your current job, and help you move to a new position that pays more.
If you’re not yet on LinkedIn, people (prospective employers, colleagues) are wondering why not. Sign up today and take a few minutes to make your profile pop. Here are some great tips to get you started.