Earlier this month, Microsoft announced it would acquire LinkedIn for $26.2 Billion, valuing the company at 91 times earnings. LinkedIn performance has been lackluster since it’s public debut dropping $11 Billion from its market value in February following lower than expected 2016 revenue forecasts. Despite poor performance, many in the Venture Capital and Technology space argue this acquisition is a good deal for Microsoft. The potential upside is huge given LinkedIn’s domination of the professional social networking space boasting 430m registered users and 100m visitors to its site each month.
The deal signals the growing wave of tech acquisitions and a decrease in IPOs caused by a race for market share between the tech titans (Google, Microsoft, Apple, Facebook and Amazon) and a data grab by these companies. This is good news for startups and investors, providing another route to liquidation in a tough IPO market.