Mergers and Acquisitions in the ICT market: The case of Microsoft and LinkedIn Corp.

Abstract

The emergence of new devices and the need to acquire new technologies and know-how have led companies to change their business strategies. For this reason, Merger and Acquisitions have been considerd one of the most important strategies to gain competitive advantage, to grow and, of course, to increase company’s value. The aim of this Master thesis is to underline and understand the key factors that explains why a complex and significant tool as M&A have received plenty of attention by companies, media and acedemic circles. In particular, given the importance of ICTindustry and its contribution on notional and international economies, we focus on M&A activity in the ICT market. The goal is to draw not only the peculiarities that set a part and characterize M&A operations in this sector, but also to derive the value drivers. Empirically, we focus on the the acquisition of LinkedIn Corporation by Microsoft Corporation in 2016, trying to conclude if the price paid by Microsoft was coherent with the real value of the target.

In the first part, the thesis provides a brief history of mergers and acquisitions and discuss the strategic logic, finalcial reasoning and organizational factors behind this complex transactions. The following chapters, focus on the valuation approaches to determine the value of a target firm, given the sector’s orginin , the size and the structure of companies. In the second part, we will focus on M&A transactions in the ICT sector, emphasizing the key drivers of M&A in this dynamic market, and finally, we will analyze the Microsoft-LinkedIn case.