When Companies Collide: Maximizing Acquisitions
What happens when a $94 billion company acquires a $26 billion company¹? We don’t know the punch line to that question yet, but we do know that Microsoft has made news recently for acquiring LinkedIn for $26.2 billion. To date, that is Microsoft’s biggest purchase, dwarfing the $8.5 billion they paid for Skype. We know that Microsoft doesn’t have a perfect track record with acquisitions, writing down $7.6 billion in 2015 on Nokia, which virtually wiped out the entire value of that transaction². Microsoft isn’t the only company that has struggled to create value out of acquisitions. In fact, more than 80% of company mergers fail, and corporate culture differences is often at the root of these failures³. Microsoft says it will allow LinkedIn to function autonomously, but it is hard to know the degree to which this will be true and at what level of the LinkedIn organization employees will feel the changes. Any change creates uncertainty, and people don’t like uncertainty. Although we don’t yet know the outcome of this partnership, we do know that the leaders in both organizations have their work cut out for them to make this successful. Given how risky mergers and acquisitions [...]