Microsoft’s LinkedIn Acquisition Good For SMBs

Microsoft acquired LinkedIn this month, when it could have been an excellent fit for another social network. For Facebook, it would have provided them with legitimacy and greater credibility with small-to-midsize businesses [SMBs]. With LinkedIn, Zuckerberg et al could have solved a missing piece of their social media puzzle — namely to add a business component to their platform.

By Microsoft pulling the trigger first, it essentially married the two biggest names in curriculum vitae. Now, professionals will not only be able to create their resumes on Microsoft Word, they will also be able to seamlessly update their professional credentials on LinkedIn at the same time.

But that’s just one of the advantages. With this acquisition, SMB operators and their employees are uniquely positioned in the catbird seat, as the melding of these two formidable companies evolve and offer more and more features and services for its users.

The Deal

Microsoft announced on June 13 this acquisition deal valued at $26.2 billion, which breaks down to $196 per share. As the firm’s largest purchase in its long history, Microsoft is primed to ramp up LinkedIn’s software offerings. And it couldn’t have come at a better time, as LinkedIn has been experiencing challenges in the financial markets – with their stock plummeting 40-percent earlier this year.

The valuation for this new Microsoft-LinkedIn network comes in at approximately 91 times earnings before interest, taxes, depreciation and amortization, according to Bloomberg, the highest multiple of any takeover valued at more than $5 billion this year.

This acquisition is also the largest enacted under the tenure of Microsoft CEO Satya Nadella. It is his latest effort to pump new blood into the software company’s current platform offerings.

“It’s really the coming together of the professional cloud and the professional network,” Mr. Nadella said in an interview after the announcement.

Practical Applications for SMBs

The partnership will be split between office tools, such as Microsoft’s Office programs used by a vast number of small-to-midsize businesses and a professional network that allows these workers to connect, communicate and collaborate with each other.

Connecting Office directly to LinkedIn is monumental. For starters, sales professionals using Microsoft’s Dynamics software for managing customer relationships could enhance their knowledge of clients based on the background data they have uploaded to their LinkedIn profiles.

With LinkedIn’s proprietary Lynda.com [a channel of training videos that LinkedIn bought for $1.5 billion last year], Microsoft will be able to interface this data direct to its own software products, such as Excel spreadsheets, Word documents and PowerPoint presentations, in addition to their email management software, Outlook and Pulse, its news aggregator.

Office 365 and Dynamics

In a letter to Microsoft employees on Monday, Nadella outlined the vision for the LinkedIn acquisition.

“Along with the new growth in our Office 365 commercial and Dynamics businesses this deal is key to our bold ambition to reinvent productivity and business processes. Think about it: How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world,” he said.

“It requires a vibrant network that brings together a professional’s information in LinkedIn’s public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete,” added Nadella.

To Compete with Salesforce

For SMBs who have been shopping around for a streamlined customer relationship management [CRM] product, they might want to take a look at what the new Microsoft-LinkedIn partnership will bring to the table. From all appearances, it makes sense they will go head to head with the likes of Salesforce.com in the enterprises services space. In fact, to that point, Salesforce’s stock fell on the day the announcement of this acquisition became public.

“Think about connecting with a professional network and having the entirety of your professional life be enhanced and empowered, where you are acquiring new skills in your current job and finding a greater bigger next job,” said Microsoft CEO Satya Nadella.

In a announcement to employees, LinkedIn CEO Jeff Weiner said: “Essentially, we’re both trying to do the same thing but coming at it from two different places: For LinkedIn, it’s the professional network, and for Microsoft, the professional cloud.”

“I think this creates a real professional cloud competitor to Salesforce at scale,” said Undertone co-founder Eric Franchi.

The theory appears valid, when you consider that Microsoft reportedly attempted to purchase Salesforce last year for $55 billion but couldn’t consummate the deal.

Synergistically Speaking 

While Microsoft is undoubtedly one of the most ubiquitous operating systems in the world, it has failed at previous attempts to create a competitive social networking platform. Unlike consumer-focused social ecosystems, which have built their empires off of advertising, most small firms perceive LinkedIn as a business tool for sales, marketing and recruitment. While other companies may block Facebook from being viewed by its employees, few, if any block LinkedIn.

All of the capabilities and advantages noted today are just the tip of the iceberg for these two companies. As a result of their combined efforts, they will be able to pull from one immense synergistic set of Big Data to feed SMBs with intelligence, tools and communication holistically — something I’m sure Facebook would have loved to have added to their arsenal to get a jump start on becoming a business social network.

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Ron is part of the marketing team at Telzio, covering everything from tips and tech for growing businesses to customer success stories for the Telzio blog. Previously a Director of Advertising and Public Relations at Marriott International, Ron has published several books including the award-winning graphic novel Facebucks.