Acquisition Heavy.

As of June 10th, Microsoft has about $108 billion in cash, cash equivalents, and short + long term securities. They’ve historically been one of the most aggressive tech companies in terms of acquisition strategy, having acquired Skype, Yammer, Nokia, Mojang, etc. in the past, all to the tune of billion dollar price tags. LinkedIn will be their biggest acquisition to date, but Microsoft has the cash and resources available to make big bets like this.


For the $26.2 billion valuation, this equals approximately 8.1x trailing twelve month revenue of LinkedIn (3.2B revenue) and serves as a pretty large premium vs. the public comps on marketplaces (hovering around 5.1x TTM revenue). However, since November 2015, LinkedIn stock has been sliding south, losing around 60% in market cap around the lowest point in February 2016. These last six months was a window of opportunity for any of the tech titans to purchase a social network with almost half a billion users worldwide. Reminiscent of WhatsApp in many ways.

Perhaps in the next 3 to 5 (to 10?) years, we’ll start seeing the real value of these acquisitions like LinkedIn and WhatsApp pay off for their acquirers, similarly like YouTube and Instagram have already demonstrated for Google and Facebook.