Microsoft-LinkedIn: A Good Story, Well-told

Jun 2016

From a Wall Street perspective, Microsoft’s announcement that it will be acquiring LinkedIn was a surprise. From a financial communications perspective, it was refreshing, for a few reasons.

Announced on a Monday morning without the de riguer Sunday night media leak, the deal caught investors and media alike off guard (though apparently not a handful of prescient options traders on the prior Friday).  While the leak strategy can help less significant deals gain visibility and allow controversial deals a window to articulate their rationale ahead of the media frenzy, for deals like Microsoft-LinkedIn, the parties correctly judged that it wasn’t needed.  By leveling the playing field, the resulting coverage was arguably more robust, and the media have already set the dramatic stage:  intimating that LinkedIn saw the deal as its best path to greater scale; and retracing Microsoft’s failed attempts to diversify in the post-PC era.

The announcement also showcased the growing importance of employee engagement in the public eye.  Gone are the days where the employee strategy consisted only of a behind-the-scenes town hall meeting where execs dodged the obvious questions about job security.  Social media has empowered workers, especially in the technology sector.  Jeff Weiner played his hand very well by crafting a thoughtful and heartfelt letter to employees that he posted on LinkedIn for all to see.  While retaining valuable talent in the face of a surprise sale to a tech behemoth is the obvious subtext of the letter, it also aligns the transaction with the all-important mission and vision of the company.  It also allows the rest of us in the general public to see a little of the culture and passion that underpin a successful enterprise, and that’s a good thing for all of us LinkedIn users as they move forward.

Finally, the messaging behind the announcement illustrated the vital importance of having a clear, simply-stated strategic rationale.  The “why” behind any acquisition is the M&A equivalent of the maxim about first impressions, and in today’s quick-judgment media landscape you have even less time to make your case.  Bringing together the leader in professional cloud services with the leading professional network helps even the more ponderous thinkers quickly grasp why this deal came together– my young colleagues immediately grasped the potential benefits of combining LinkedIn’s most useful features with our Office 365 suite.

It also speaks volumes about Microsoft’s history and its future – it’s no coincidence that Satya Nadella put Nokia behind the company in the weeks leading up to the big LinkedIn announcement.  He has now clearly charted the company’s course in the cloud and it will be fun to watch whether Microsoft can beat the odds and become a tech titan that successfully transitions to a new era.

Time will tell if the deal is a winner.  The strategic rationale is there and judging from analyst reactions the price seems fair all around, LinkedIn’s 47% pre-announcement year-to-date stock decline notwithstanding.  But successful deals turn on culture, vision, egos and ultimately, performance.  Thanks to a well-strategized announcement and insightful follow-on media coverage, we’ve got all we need to watch this one unfold.

Originally Published on LinkedIn