Real Reason Why Microsoft Acquired LinkedIn for $26.2 Billion

Microsoft has purchased LinkedIn for $196 per share in all cash deal worth a whopping $26.2 Billion. The deal was in the offing since February but has been finalized now.

It is an agreement which will enable Microsoft to position itself in a better way in a burgeoning enterprise cloud software market. The purchase also includes the educational site, which was acquired by LinkedIn in April last year.

It is not difficult to understand the reasons for the Redmond-based company to go for this deal. Since its inception in December 2002, the site has shown substantial growth and today have 433 million members worldwide.

The site is visited by 105 million people every month. It seven million active job listings and therefore recruitment factors also must have one of the reasons for the arrangement.

LinkedIn has carved a distinct niche for itself among millions of small trade owners and entrepreneurs who use its services for professional networking, development of trade and commerce and employee recruitments.

LinkedIn will maintain its distinct identity, and Jeff Weiner will stay on as CEO, reporting to Microsoft CEO, Satya Nadella.

More than half the revenue which LinkedIn makes is from recruitment. It has a vast base of members exceeding 433 million and no company which recruits talent globally will ignore this. In fact, the site can be named as the biggest resume resource in the world.

Other sources of income for the site include advertising and member subscriptions. However, these are not very reliable and individual subscription costs in between US$30 to US$120 per month and contribute 11 percent to its coffers.

The US$26 billion agreement is not just for the existing business of the site. It is an opportunity to sell total systems to customers at one place. Customer relationship management software can be run on both on the desktop and mobile devices, something which no other company is offering. Besides cloud services, Microsoft will be offering its communication platform having sales lead generation and recruitment functions.


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