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Deal Autopsies

Autopsy No. 2 · Microsoft and LinkedIn, 2016

Microsoft's $26.2 billion bet on LinkedIn

In 2016 Microsoft paid $26.2 billion in cash for LinkedIn, half as much again as its share price. We take the deal apart: who got paid, what Microsoft bought, and what the price needed to come true.

By Unknot PartnersResearch current to 20 October 2026123 sources · 74 numbers reported · 77 estimated

01In four numbers

The deal at a glance

Price paid
$26.2bn1,2For every share of the company
Stake bought
100%1,3Of LinkedIn, just after the deal
Implied valuation
$26.2bnPrice ÷ stake. Reported at the time as $26.2bn1
Announced
Jun 20161Announced 13 June 2016. Closed 8 December 20163,5

In June 2016 Microsoft agreed to pay $26.2bn in cash for all of LinkedIn, the professional network, about 49.5% more than its share price.

It was a bet that LinkedIn would be worth more inside Microsoft than on its own. Ten years on, LinkedIn's yearly revenue has grown from $3.4bn to $19.8bn, but Microsoft no longer says how much it earns.

A stake is the share of a company someone owns. Microsoft bought every share: a stake of 100%.

A valuation is what the whole company is worth at the price paid in a deal. When a buyer takes everything, the valuation is simply the price: $26.2bn.

Microsoft paid $196 a share, about 49.5% more than LinkedIn's share price on the last trading day before the deal. That extra is the takeover premium: what a buyer pays for control.

None of it was new money for LinkedIn. Every dollar went to the people who owned its shares.

The price also bought LinkedIn's own cash. It held about $1.8bn more in cash and investments than it owed, so the business itself cost Microsoft about $24.4bn.

The deal was announced on 13 June 2016 and closed on 8 December 2016, after LinkedIn's shareholders and the European Commission approved it.

Show the working: the valuation
  1. Implied valuation= price paid ÷ stake bought= $26.2bn ÷ 100.0% = $26.2bn
  2. Pre-money valuation= post-money valuation − new money= $26.2bn − $0 = $26.2bn
  3. Paid to sellers= price paid − new money= $26.2bn − $0 = $26.2bn

02From start-up to sale

The road to the deal

Reid Hoffman and a small founding team started LinkedIn in late 2002, and the site went live in May 2003.

It grew on funding rounds: sales of new shares to investors, each at a price that puts a value on the whole company.

Sequoia Capital led the first, $4.7m in 2003, at a value of about $17m. The fourth, in 2008, valued LinkedIn at about $1bn. After that it paid its own way.

In May 2011 LinkedIn listed its shares on the New York Stock Exchange at $45 each, a value of $4.3bn. They more than doubled on the first day.

A follow-on offering is a sale of more shares after the listing. In 2013 LinkedIn raised $1.4bn this way, at a price that valued it at $26.2bn: almost exactly what Microsoft would pay three years later.

The chart uses a log scale: each step up the axis is ten times the one below. A jump from $10m to $100m looks as big as one from $1bn to $10bn.

The market kept climbing. At its peak, in February 2015, LinkedIn was worth $33.9bn.

Then, in February 2016, LinkedIn forecast slower growth than investors expected, and its shares fell 43.6% in a day. By June it was worth $17.5bn.

Valuation, log scale

What LinkedIn was worth, round by round and then on the stock market

Each line on the axis is ten times the one below, so early jumps and late jumps of the same size look the same.

  • Value at a funding round or share sale
  • Stock-market value on the day (a price, not a round)
  • Microsoft's price
Only rounds with a public valuation are plotted. Every round, valued or not, is in the timeline below.

  1. March 2003

    Founded, by Reid Hoffman

    Reid Hoffman and a small founding team start work in late 2002. The company is incorporated in March 2003 and the site opens in May; by the end of the year it has about 78,000 members.

    Put in
    Not disclosed

  2. 6 November 2003

    Series A, led by Sequoia Capital

    Sequoia writes the first cheque. Two firms offered terms, after months of rejections.

    Raised
    $4.7m7
    Post-money
    $17mest.

  3. 24 September 2004

    Series B, led by Greylock

    With Sequoia Capital

    Members have grown from about 40,000 to 1.2 million in eleven months. No valuation was published.

    Raised
    $10m6,9
    Post-money
    Not disclosed

  4. 29 December 2006

    Series C, led by Bessemer Venture Partners

    With European Founders Fund

    The shares were issued in December 2006 and the round announced in January 2007.

    Raised
    $13m6,10
    Post-money
    $250mest.

  5. 13 June 2008

    Series D, led by Bain Capital Ventures

    With Sequoia Capital, Greylock, Bessemer Venture Partners, Goldman Sachs, McGraw-Hill and SAP Ventures

    A billion-dollar valuation, months before the financial crisis. It was LinkedIn's last private round: from 2009 the business paid its own way.

    Raised
    $76m6,13,14
    Post-money
    $1bn14,15

  6. 27 July 2010

    A private sale of shares, bought by Tiger Global

    Tiger buys shares from early holders, not from LinkedIn, so no new money arrives. Its filings show it paid about $13 a share before August 2010 and about $23 after.

    Shares bought
    $20m16
    Implied value
    $2.3bn16

  7. 18 May 2011

    Listed on the New York Stock Exchange, underwritten by Morgan Stanley, BofA Merrill Lynch and J.P. Morgan

    With Allen & Co and UBS

    Priced at $45, above the range of $32 to $35 first set in May. Each Class B share kept by the founders and early investors carries ten votes.

    Shares sold
    $353m6
    Value at the IPO price
    $4.3bnest.

  8. 19 May 2011

    The first day's close

    The shares touch $122.70 during the day and close at $94.25, more than double the IPO price.

    Market value
    $8.9bn18,19

  9. 16 November 2011

    Second share sale

    Six months after the IPO, early investors including Bain Capital Ventures, Greylock and Bessemer sell shares to the public.

    Shares sold
    $621m20
    Value at the offer price
    $6.9bnest.

  10. 4 September 2013

    New shares for cash, underwritten by J.P. Morgan and Morgan Stanley

    With Goldman Sachs, BofA Merrill Lynch and Allen & Co

    LinkedIn raises money for itself at $223 a share, a value of about $26.2bn: almost exactly what Microsoft paid three years later.

    Shares sold
    $1.4bn21,22
    Value at the offer price
    $26.2bnest.

  11. 12 November 2014

    Convertible notes, arranged by Goldman Sachs, J.P. Morgan and Morgan Stanley

    LinkedIn borrows $1.32bn. The shares never reached the conversion price, and the notes were still owed when Microsoft bought the company.

    Borrowed
    $1.3bn23

  12. 26 February 2015

    The all-time high

    After strong results the shares close at $270.76, the highest they ever reached.

    Market value
    $33.9bnest.

  13. 5 February 2016

    The guidance shock

    LinkedIn forecasts slower growth for 2016 than analysts expected. The shares fall 43.6% in a day, from $192.28 to $108.38, and reach a low close of $100.98 four days later.

    Market value
    $14.3bnest.

  14. 10 June 2016

    Last close before the offer

    On the Friday before the deal the market values LinkedIn at about $17.5bn. Microsoft's offer is about 49.5% higher.

    Market value
    $17.5bnest.

  15. 13 June 2016

    Microsoft buys LinkedIn

    $196 a share in cash, for every share. A rival bidder, reported to be Salesforce, offered part cash and part its own shares, worth about $200 a share on paper by June; LinkedIn, already in exclusive talks with Microsoft, did not reply.

    Price
    $26.2bn1

03The cap table

Who owned what

A cap table is the list of who owns what share of a company.

LinkedIn had been listed for five years, so thousands of funds and people owned it. The biggest outside holders were fund groups such as Vanguard, with 4.0%.

The exception was Reid Hoffman, the co-founder and chairman, with 10.8% of the shares but about 53% of the votes. LinkedIn had two classes of shares, and each of his Class B shares carried ten votes.

So the deal needed his yes. Microsoft asked him to sign a support agreement, a promise to vote for the deal. He refused, because signing might have turned his shares into ordinary ones with one vote each, and said in public that he would vote with the board.4

To protect itself, Microsoft had LinkedIn agree to pay it $725m if LinkedIn walked away for a better offer or if shareholders voted the deal down.

Every holder was paid $196 a share in cash, so everyone sold everything. The big venture funds that had backed LinkedIn early were long gone: Sequoia, Greylock, Bessemer and Bain Capital Ventures had all sold, or handed their shares to their own investors, by the end of 2012.

Shareholders, June 2016

Who held the company just before the deal

Each bar is a share of the company. The colour says what the holder did when Microsoft arrived.

  • Sold everything
Shares outstanding at 30 June 2016, from the merger proxy, with no options or share awards. Fund holdings come from each fund group's own 13F filing for the same date. Every holder was paid $196 a share in cash.
Shareholding just before the deal
HolderStakeIn the dealBasis
Reid Hoffman10.8%Sold everythingEstimated
Vanguard4.0%Sold everythingEstimated
Capital World Investors3.4%Sold everythingEstimated
Sands Capital3.1%Sold everythingEstimated
BlackRock3.1%Sold everythingEstimated
Fidelity (FMR)1.8%Sold everythingEstimated
T. Rowe Price1.3%Sold everythingEstimated
Everyone else71.7%Sold everythingEstimated
Other directors and executives0.9%Sold everythingEstimated
Total100.0%
Show the working: does it add up?
  1. Total= every holder's stake added up= 10.8% + 3.99% + 3.44% + 3.12% + 3.11% + 1.76% + 1.27% + 71.7% + 0.87% = 100.0%

04Returns

Who made what

Two numbers tell you how an investment went.

The multiple is money out divided by money in. It ignores how long the money was tied up.

The IRR, or internal rate of return, is the yearly return that makes money in and money out balance once timing is counted. It rewards speed.

Sequoia led the first round. By our estimate it turned about $7.2m into about $1.6bn: 226x in 8.6 years, about 97% a year.

It never saw Microsoft's money. As venture funds often do, it handed its shares to its own investors soon after the listing, in 2012, at about half the price Microsoft later paid. Held to the deal, they would have fetched about $3.3bn.

Handing out shares is called a distribution in kind: the fund's investors get the shares and decide for themselves when to sell. We value them at the market price of the day.

Of the four funds, Bain Capital Ventures came in last, in 2008, and got out first: 5.7x in 3.4 years, about 67% a year.

For buyers on the stock market, timing was everything. $1m of shares bought at the $45 IPO price became $4.4m in the deal, about 30% a year. Bought at the first day's close, it became $2.1m. Bought at the February 2015 peak, it returned 0.72x: a loss, despite Microsoft's premium.

Reid Hoffman sold about a fifth of his shares along the way and took about $3.4bn in all. Against the $649,261 we can see he paid for shares, that is 5,184x, which shows why the multiple means little for founders: they pay in years of work, not cash.

Most investors never published their exact amounts and dates. Where we had to estimate them, the row says est. and the working says how.

Each investor's money in, money out, multiple and IRR. Select a row to see the working.
InvestorMoney inMoney outMultipleIRRHeldIn the deal
est.$7.2m$1.6bn226x97%8.6 yearsSold everything
est.$9.0m$1.3bn148x95%7.9 yearsSold everything
est.$16m$433m26.7x90%5.5 yearsSold everything
est.$50m$283m5.66x67%3.4 yearsSold everything
est.$649,261$3.4bn5,184x112%13.1 yearsSold everything
est.$1.0m$4.4m4.36x30%5.6 yearsSold everything
est.$1.0m$2.1m2.08x14%5.6 yearsSold everything
est.$1.0m$723,8880.72x−17%1.8 yearsSold everything

Select an investor to see the working. Money out includes the value of shares still held, where an investor kept some, priced as stated in its flows.

Yearly return

IRR by investor

The yearly return each investor earned, once timing is counted. Founders are in the table, not the chart. Select a bar to see its working.

  • Sequoia
  • Other investors

Venture capital

Sequoia Capital

Led LinkedIn's first round in 2003 and put money into the next two. It handed every share to its own investors in 2012, four years before Microsoft came, so Microsoft's $196 never reached it. The shares it handed out are valued at the market price of the day, which we estimate.

Money in
$7.2m
Money out
$1.6bn
Multiple
226x
IRR
96.9%
Sequoia Capital's dated cash flows and how each is discounted at the IRR.
DateWhatFlowYearsDiscountToday's value
6 Nov 2003Series A shares (13.26m at $0.32) est.−⁠$4.2m0.001.000−⁠$4.2m
24 Sep 2004Series B shares (3.49m at $0.57) est.−⁠$2.0m0.880.549−⁠$1.1m
13 Jun 2008Series D shares [6]−⁠$1.0m4.610.044−⁠$44,173
29 Feb 2012Shares handed to its investors (1 of 8) est.$148m8.320.004$529,265
1 Mar 2012Shares handed to its investors (2 of 8) est.$148m8.320.004$528,283
2 Mar 2012Shares handed to its investors (3 of 8) est.$146m8.330.004$519,405
6 Mar 2012Shares handed to its investors (4 of 8) est.$149m8.340.004$524,651
8 Mar 2012Shares handed to its investors (5 of 8) est.$149m8.340.004$522,708
14 May 2012Shares handed to its investors (6 of 8) est.$312m8.530.003$969,485
16 May 2012Shares handed to its investors (7 of 8) est.$312m8.530.003$966,067
23 May 2012Shares handed to its investors (8 of 8) est.$269m8.550.003$820,878
Adds up to$0

Years count days from 6 November 2003 divided by 365. Discount = 1 ÷ (1 + IRR) raised to the years. At the IRR, today's values add up to zero.

Show the working
  1. Money in= the sum of every investment= $4.2m + $2.0m + $1.0m = $7.2m
  2. Money out= the sum of everything received= $148m + $148m + $146m + $149m + $149m + $312m + $312m + $269m = $1.6bn
  3. Multiple= money out ÷ money in= $1.6bn ÷ $7.2m = 226x
  4. Time held= days from the first flow to the last ÷ 365= 3,121 ÷ 365 = 8.55
  5. IRR= the yearly rate that makes the discounted flows add up to zero= 96.9%

06Your model

You decide

Here you take Microsoft's seat in 2016 and test the price.

The model builds LinkedIn up from its members. It starts from FY2016, the twelve months to June 2016, to match Microsoft's year: 450 million registered members, people with a LinkedIn account, and $3.4bn of revenue, about $7.63 a member.

Running the site and building the product took 55% of that revenue, sales and marketing 34%, and the head office 15%. Together they came to slightly more than the revenue, so LinkedIn made an operating loss: a margin of −4%. The costs include share-based pay, as the accounts do.

Nine sliders set the future, in three groups: how big LinkedIn gets, what it earns and costs, and how the bet ends. Each comes with why it matters, a sensible range and what really happened. Inputs set "by FY2026" move in a straight line from their FY2016 value to yours, then stay there.

Microsoft's $26.2bn bought LinkedIn's cash too, so the model hands Microsoft the $1.8bn of net cash on day one. After that, Microsoft gets each year's operating profit, less 21% tax.

In the exit year you choose, the model values LinkedIn at a multiple of that year's revenue.

At our base case Microsoft earns 10.3% a year, and gets back $2.47 for every dollar it paid. LinkedIn's first profitable year: FY2018.

To earn its 8% target, Microsoft could have paid up to $31.7bn. At the price it did pay, LinkedIn needed revenue of about $10.7bn by FY2026, growing 12.0% a year. Our base case has $13.6bn.

How big LinkedIn gets

Members, and what each one brings in, set revenue.

8.0%

How fast LinkedIn's registered members grow each year, from 450 million in June 2016.

0.0%25.0%
Why it matters, and what happened
Why it matters.
Members are the network. More of them make LinkedIn more useful to the recruiters and advertisers who pay its bills.
A sensible range.
Members grew 19% in the year to March 2016. LinkedIn's own forecast had revenue growth slowing from about 24% in 2017 to about 15% in 2020. 5% to 15% a year is a plausible band for members: 8% a year for ten years means about 970 million.
What happened.
Registered members passed 1.3 billion by April 2026, about 11% a year. Microsoft does not say how many of them are active.
What it costs to run

LinkedIn's costs as shares of revenue: the site and the product, selling, and the back office. Share-based pay counts as a cost.

$14.00

What LinkedIn earns in a year for each registered member, before anything Microsoft adds, in US dollars.

FY2016: $7.63

$5.00$30.00
Why it matters, and what happened
Why it matters.
Most members pay nothing. The money comes from recruiters, advertisers and subscribers who want to reach them, so this is how well LinkedIn turns its network into revenue.
A sensible range.
About $7.63 a member in FY2016, up from about $3.60 in 2011 as LinkedIn sold more to recruiters. Its own forecast had revenue reaching $7.4bn in 2020, growing about 18% a year, faster than members. $12 to $18 by FY2026 is a plausible band.
What happened.
About $15 a member in FY2026: $19.8bn of revenue over about 1.3 billion members, roughly double FY2016.
0%

Extra revenue from selling LinkedIn through Microsoft's products and sales teams, as a share of LinkedIn's own revenue.

0%30%
Why it matters, and what happened
Why it matters.
This was the deal's big promise: LinkedIn joined to Outlook, Office and Microsoft's sales software should earn more than LinkedIn alone.
A sensible range.
Microsoft named ideas, such as LinkedIn profiles inside Outlook and LinkedIn's sales tool inside its Dynamics software, but put no number on them. 0% assumes it added nothing; 10% to 20% would be a big success.
What happened.
Microsoft reports LinkedIn's revenue as one line, so any revenue it helped add is inside the actual figures, not separate. It never said how much.
40%

The cost of servers, data centres and engineers, as a share of revenue, including share-based pay.

FY2016: 55%

25%60%
Why it matters, and what happened
Why it matters.
The biggest cost. Engineers and servers do not rise with each new member, so this share should fall as revenue grows.
A sensible range.
About 55% of revenue in FY2016, including the depreciation of LinkedIn's data centres. LinkedIn's own forecast had its cash profit margin rising by about 9 points by 2020. 35% to 45% by FY2026 is plausible.
What happened.
In FY2018, the last year Microsoft broke out LinkedIn's costs, cost of revenue and research and development came to about 44% of revenue, before amortising what Microsoft paid for. It has not reported them since.
30%

Sales and marketing, as a share of revenue.

FY2016: 34%

15%40%
Why it matters, and what happened
Why it matters.
Recruiters and big advertisers are won by salespeople. Spend less here and growth may slow.
A sensible range.
About 34% of revenue in FY2016: LinkedIn sold to companies through a large sales force. Microsoft's own sales teams might take on some of that work. 25% to 32% by FY2026 is plausible.
What happened.
About 36% of revenue in FY2018, before amortisation. Not reported since.
8.0%

Finance, legal and the head office, as a share of revenue.

FY2016: 14.6%

3.0%16.0%
Why it matters, and what happened
Why it matters.
Head-office costs are where a merger's savings usually come first.
A sensible range.
About 15% of revenue in FY2016, the cost of running a listed company of about 9,400 people. Microsoft expected to save $150m a year by 2018, mainly by merging two public companies' head offices. 6% to 10% by FY2026 is plausible.
What happened.
About 10% of revenue in FY2018. Not reported since.
How the bet ends

When Microsoft's stake is valued, at what price, and the return it needs.

FY2026

The year you stop counting and value what Microsoft owns.

FY2019FY2031
Why it matters, and what happened
Why it matters.
A later exit gives LinkedIn more years to grow and pay cash, but money that arrives later is worth less today.
A sensible range.
Microsoft did not buy LinkedIn to sell it, so this is a valuation date, not a sale. FY2026, ten years on, is our base case.
What happened.
Microsoft still owns all of LinkedIn. There has been no sale, listing or separate valuation.
4.0x

What LinkedIn is worth in the exit year, as a multiple of that year's revenue.

1.0x12.0x
Why it matters, and what happened
Why it matters.
Most of the answer sits in the exit value, so small changes here move the return a lot.
A sensible range.
Microsoft paid 8.8x LinkedIn's 2015 revenue, and listed peers sold for a median of 7.1x at the time. A business growing more slowly usually sells for less: 3x to 6x is a plausible band.
What happened.
There is no market price for LinkedIn now. At 4x, FY2026's revenue would make it worth about $79bn. Microsoft has never written down the deal's goodwill.
8.0%

The yearly return Microsoft needs to make the bet worth its risk: its hurdle rate.

4.0%15.0%
Why it matters, and what happened
Why it matters.
It sets how much future cash is worth today, and so the most worth paying.
A sensible range.
Outside estimates of Microsoft's cost of capital run from about 7% to 9%. In August 2016 it borrowed for ten years at 2.4% and for thirty at 3.7%; LinkedIn's own banker discounted its forecasts at 10% to 13%.
What happened.
Microsoft has never published a hurdle rate.

Microsoft's IRR

10.3%

Beats its 8% target

On these numbers the price works: Microsoft earns 10.3% a year and could have paid up to $31.7bn.

Money back for every $1

$2.47

Cash that came with LinkedIn, every year's cash and the value in FY2026, against the price

Most worth paying

$31.7bn

To earn 8% a year. It paid $26.2bn

First year in profit

FY2018

FY2016 operating margin: −4%

Value in FY2026

$54.4bn

4x revenue of $13.6bn

Members in FY2026

972m

Needed to earn the target: 761m

Revenue in FY2026

$13.6bn

Up 14.8% a year. Needed: $10.7bn

Operating margin, FY2026

22%

FY2016: −4%

Value per member

$56

In FY2026. The deal valued each at $58

Cash to Microsoft

$8.5bn

Profit after tax, every year to FY2026

Take the model with you

An Excel workbook that opens with your slider values: the deal data, the finished model with live formulas, a blank template, and a sheet that checks the workbook against this page.

The size of the bet

Revenue each year: your LinkedIn, what the price needed, and what happened

All three start from $3.4bn in FY2016. The grey line grows at the rate that earns Microsoft exactly its target; the dots are Microsoft's reported figures, which never move.

  • Your LinkedIn
  • What the price needed
  • What actually happened

Profit or loss

LinkedIn's operating profit each year

After every cost, share-based pay included, before the amortisation of the deal itself. FY2016 is the reported starting point.

  • Loss
  • Profit

Microsoft's cash flows

What Microsoft pays, what it gets each year, and what it owns at the end

The grey bar is the price, less the $1.8bn of net cash that came with LinkedIn. Accent bars are cash coming back; the last one includes the value of the business.

One member, start to finish

What LinkedIn makes from each member

The average member in FY2016, and in FY2026 on your numbers. Most members pay nothing; the money comes from recruiters, advertisers and subscribers, spread here across everyone.

Revenue, costs and cash per member, FY2016 and FY2026
Per member, a yearFY2016FY2026
Revenue per member$7.63$14.00
Running the site and building the product−⁠$4.20−⁠$5.60
Sales and marketing−⁠$2.59−⁠$4.20
General and admin−⁠$1.11−⁠$1.12
Operating profit per member−⁠$0.28$3.08
Tax$0.00−⁠$0.65
Cash per member−⁠$0.28$2.43
Show the working: Microsoft's IRR
  1. Members in FY2026= start members × (1 + member growth) ^ years= 450m × (1 + 8.00%) ^ 10 = 972m
  2. Revenue in FY2026= members × revenue per member × (1 + revenue the buyer adds)= 972m × $14.00 × (1 + 0.0%) = $13.6bn
  3. Operating profit in FY2026= revenue − product and site − sales and marketing − general and admin= $13.6bn − $5.4bn − $4.1bn − $1.1bn = $3bn
  4. Cash to the buyer, all years= each year's operating profit less tax on it, added up= $8.5bn
  5. Value of the business= revenue in the exit year × exit multiple= $13.6bn × 4.00x = $54.4bn
  6. Money back for every $1= (cash that came with it + yearly cash + value at the end) ÷ price= ($1.8bn + $8.5bn + $54.4bn) ÷ $26.2bn = 2.47x
  7. The buyer's IRR= the yearly rate that balances the price against the cash and the value at the end= 10.3%
  8. Most worth paying= cash that came with it + yearly cash and the value at the end, each ÷ (1 + target) ^ year= $1.8bn + $4.6bn + $54.4bn ÷ (1 + 8.00%) ^ 10 = $31.7bn
Show the working: what the price needed
  1. Price less what the cash covers, in today's terms= price − cash that came with it − yearly cash ÷ (1 + target) ^ year= $26.2bn − $1.8bn − $4.6bn = $19.7bn
  2. Value needed in FY2026= that × (1 + target) ^ years= $19.7bn × (1 + 8.00%) ^ 10 = $42.6bn
  3. Revenue needed= value needed ÷ exit multiple= $42.6bn ÷ 4.00x = $10.7bn
  4. Members needed= revenue needed ÷ revenue per member, with what the buyer adds= $10.7bn ÷ $14.00 = 761m
  5. Revenue growth needed= (revenue needed ÷ start revenue) ^ (1 ÷ years) − 1= ($10.7bn ÷ $3.4bn) ^ (1 ÷ 10) − 1 = 12.0%
Show the year-by-year table
The model year by year, in US dollars
YearMembersPer memberRevenueSite and productSalesAdminProfitMarginCashMicrosoft cash flow
FY2016 (deal)450m$7.63$3.4bn−⁠$1.9bn−⁠$1.2bn−⁠$501m−⁠$124m−4%−⁠$24.4bn
FY2017486m$8.27$4bn−⁠$2.2bn−⁠$1.4bn−⁠$559m−⁠$43m−1%−⁠$43m−⁠$43m
FY2018525m$8.91$4.7bn−⁠$2.4bn−⁠$1.6bn−⁠$620m$70m2%$56m$56m
FY2019567m$9.54$5.4bn−⁠$2.7bn−⁠$1.8bn−⁠$682m$220m4%$174m$174m
FY2020612m$10.18$6.2bn−⁠$3.1bn−⁠$2bn−⁠$744m$413m7%$326m$326m
FY2021661m$10.82$7.2bn−⁠$3.4bn−⁠$2.3bn−⁠$807m$657m9%$519m$519m
FY2022714m$11.45$8.2bn−⁠$3.8bn−⁠$2.6bn−⁠$869m$961m12%$759m$759m
FY2023771m$12.09$9.3bn−⁠$4.2bn−⁠$2.9bn−⁠$930m$1.3bn14%$1.1bn$1.1bn
FY2024833m$12.73$10.6bn−⁠$4.6bn−⁠$3.3bn−⁠$987m$1.8bn17%$1.4bn$1.4bn
FY2025900m$13.36$12bn−⁠$5bn−⁠$3.7bn−⁠$1bn$2.3bn19%$1.8bn$1.8bn
FY2026972m$14.00$13.6bn−⁠$5.4bn−⁠$4.1bn−⁠$1.1bn$3bn22%$2.4bn$56.8bn

FY2016 is the starting point. Its cash flow is the $26.2bn price less the $1.8bn of net cash that came with LinkedIn. Tax is 21% of any operating profit. Money is in US dollars.

07The aftermath

What happened next

Microsoft closed the deal on 8 December 2016, after promising European regulators that rival networks could keep working with Office.

LinkedIn kept its brand, its independence and its chief executive, and kept growing. Revenue passed $10bn in FY2021 and reached $19.8bn in FY2026, Microsoft's year to June 2026: about 19.2% a year since the deal. Registered members passed 1.3 billion.

Amortisation spreads the cost of things a buyer paid for, such as customer relationships and technology, over several years. It is a charge in the accounts, not cash going out.

Microsoft stopped reporting LinkedIn's profit after FY2018. That year its accounts showed LinkedIn losing $987m, after $1.5bn of amortisation. Before amortisation, LinkedIn made about $518m, a margin of 9.8%.

Goodwill is the part of a purchase price left over after valuing everything the buyer can name, such as cash, buildings, customers and technology. Microsoft booked $16.8bn of it for LinkedIn and has never written any of it down.

Joining LinkedIn to Office took longer. In 2025 Microsoft put LinkedIn's chief executive in charge of Office too, saying it brought the deal's original idea closer. In October 2026 he left, and Office moved to another part of Microsoft.

  1. 8 August 2016

    Microsoft borrows $19.75bn74,75

    Seven bond issues, lasting 3 to 40 years, at 1.1% to 3.95% interest. Microsoft had $113bn of cash and investments, but $109bn of it was held abroad.

  2. 19 August 2016

    Shareholders approve4,108

    Votes worth 84.5% of all the voting power say yes. Hoffman's shares alone carried about 53%.

  3. 6 December 2016

    Europe clears it, with conditions109

    For five years in Europe, PC makers may leave LinkedIn off Windows, and rival professional networks keep their links into Office.

  4. 8 December 2016

    The deal closes1,3

    LinkedIn becomes part of Microsoft but keeps its brand and its chief executive, Jeff Weiner, who reports to Satya Nadella.

  5. 24 April 2017

    500 million members110

    LinkedIn says it has 500 million members in more than 200 countries.

  6. 3 August 2018

    The last profit figure78

    In its first full year inside Microsoft, LinkedIn's revenue is $5.3bn. After $1.5bn of amortisation of what Microsoft paid for, it makes an operating loss of $987m. Microsoft has not reported LinkedIn's profit since.

  7. 1 June 2020

    A new chief executive111,112

    Ryan Roslansky, head of product, takes over from Jeff Weiner, who becomes executive chairman.

  8. 29 July 2021

    A $10bn year79

    Revenue passes $10bn for the first time, at $10.3bn in FY2021, up 27%.

  9. 14 October 2021

    Out of China113,114

    Microsoft closes LinkedIn's social network in China, citing a harder operating environment and heavier compliance demands, and replaces it with a jobs-only app.

  10. 1 November 2023

    A billion members115

    LinkedIn passes one billion members and adds AI tools for job seekers who pay for Premium.

  11. 24 October 2024

    A €310m privacy fine80,116

    Ireland's data regulator fines LinkedIn €310m over how it used members' data for targeted advertising. LinkedIn has appealed.

  12. June 2025

    LinkedIn's boss takes on Office117

    Roslansky also takes charge of Office and Microsoft 365 Copilot. Nadella says it brings Microsoft closer to the deal's original idea: connecting LinkedIn's map of the working world with Microsoft's.

  13. 22 April 2026

    Another new chief executive81

    Daniel Shapero, the chief operating officer, becomes LinkedIn's chief executive. Members now number more than 1.3 billion.

  14. 29 July 2026

    $19.8bn of revenue80,118

    LinkedIn's revenue reaches $19.8bn in FY2026, up 11%, with every line of business growing.

  15. 1 October 2026

    Office moves on119

    Microsoft says Roslansky is leaving, staying on as an adviser until the end of 2026. Office and Teams move to another part of the company, and LinkedIn's chief executive now reports straight to Nadella.

Cheap or expensive?

On the evidence so far, Microsoft paid a full price and has very likely earned it back.

Full, because it paid 33.6x a year's adjusted EBITDA when listed peers sold for a median of 21.6x, and 49.5% more than LinkedIn's own share price.

Earned, because LinkedIn grew faster than the price needed. Our base case says it needed revenue growth of about 12.0% a year; it managed 19.2%, to $19.8bn in FY2026.

Very likely, not certainly, because revenue is not profit. Microsoft stopped reporting LinkedIn's profit after FY2018, when the margin before amortisation was about 9.8%. With margins that thin and a lower exit multiple, the deal would fall short: try it in You decide.

Microsoft's accounts point the same way. It has never written down the goodwill from the deal, which it would have to do if the business tested as worth less than it paid, though LinkedIn may be tested together with other Microsoft businesses.

The strategic bet is less clear. LinkedIn still runs as a separate company, it pulled out of China, and Microsoft's latest attempt to put LinkedIn and Office under one leader lasted little more than a year.

Our verdict: expensive by the yardsticks of 2016, justified by the revenue of 2026, and unproven on profit.

08For the seminar room

Discussion

Five questions to argue about. Try your own answer before you open the guides.

  1. 1

    Did Microsoft overpay?

  2. 2

    Why did one man's vote matter so much?

  3. 3

    Who made the most: the first investors, the founder or the stock market?

  4. 4

    Why pay all cash, and why borrow it?

  5. 5

    What would have to be true for Microsoft to lose money?

The guides are a starting point, not the last word. Most of these questions have more than one good answer.

09Sources and methods

Sources

Every source we used, in order of first use on this page, then every number we had to estimate and how we did it.

We paraphrase our sources and link to the originals.

Every source

  1. 1LinkedIn and Microsoft via SEC EDGAR, 13 June 2016. Microsoft to acquire LinkedIn (Form 8-K, Exhibit 99.1)filing
  2. 2Microsoft via SEC EDGAR, 13 June 2016. Microsoft and LinkedIn investor presentation (Form 8-K, Exhibit 99.1)filing
  3. 3Microsoft via SEC EDGAR, 8 December 2016. Form 8-K: completion of the acquisition of LinkedInfiling
  4. 4LinkedIn via SEC EDGAR, 22 July 2016. Definitive merger proxy statement (DEFM14A)filing
  5. 5LinkedIn via SEC EDGAR, 8 December 2016. Form 8-K: completion of the mergerfiling
  6. 6LinkedIn via SEC EDGAR, 19 May 2011. Prospectus for the initial public offering (Form 424B4)filing
  7. 7LinkedIn, 12 November 2003. Sequoia Capital 'links in' with $4.7 million investmentpress release
  8. 8Fortune, 26 May 2011. How LinkedIn first raised money (and endured rejection), by Lee Howernews
  9. 9LinkedIn, 13 October 2004. LinkedIn secures $10 million in Series B funding led by Greylockpress release
  10. 10LinkedIn, 29 January 2007. LinkedIn raises $12.8 million from Bessemer Venture Partners and European Founders Fundpress release
  11. 11Bessemer Venture Partners, 11 December 2006. LinkedIn investment memoanalysis
  12. 12TechCrunch, 28 January 2007. LinkedIn raises nearly $13 million morenews
  13. 13LinkedIn, 18 June 2008. LinkedIn secures $53M of funding led by Bain Capital Venturespress release
  14. 14LinkedIn, 23 October 2008. LinkedIn raises $22.7 million from Goldman Sachs, The McGraw-Hill Companies, SAP Ventures and Bessemer Venture Partnerspress release
  15. 15TechCrunch, 17 June 2008. LinkedIn closes its round; got that billion dollar valuationnews
  16. 16The Next Web, 27 July 2010. LinkedIn reportedly valued at $2.26 billionnews
  17. 17Tiger Global via SEC EDGAR, 3 June 2011. Schedule 13D on LinkedInfiling
  18. 18VentureBeat, 19 May 2011. LinkedIn's day in the sun: share price doubles, worth nearly $9B in IPOnews
  19. 19The Daily Beast, 19 May 2011. LinkedIn IPO surges (Bloomberg)news
  20. 20LinkedIn via SEC EDGAR, 17 November 2011. Prospectus for the follow-on offering (Form 424B4)filing
  21. 21LinkedIn via SEC EDGAR, 4 September 2013. Prospectus supplement for the share offering (Form 424B5)filing
  22. 22LinkedIn via SEC EDGAR, 29 October 2013. Form 10-Q for the quarter to 30 September 2013filing
  23. 23LinkedIn via SEC EDGAR, 12 November 2014. Form 8-K: 0.50% convertible senior notes due 2019filing
  24. 24LinkedIn via SEC EDGAR, 29 April 2016. Form 10-Q for the quarter to 31 March 2016filing
  25. 25Yahoo Finance via the Internet Archive, 31 March 2015. LNKD historical prices (archived copy of 31 March 2015)data
  26. 26LinkedIn via SEC EDGAR, 12 February 2016. Form 10-K for 2015filing
  27. 27LinkedIn via SEC EDGAR, 12 February 2015. Form 10-K for 2014 (cover page)filing
  28. 28Yahoo News, 4 February 2016. LinkedIn forecasts weak first-quarter profit, shares plunge (Reuters)news
  29. 29Yahoo News, 5 February 2016. LinkedIn shares dive on weak forecast (AFP)news
  30. 30Yahoo Finance via the Internet Archive, 6 April 2016. LNKD historical prices (archived copy of 6 April 2016)data
  31. 31LinkedIn via SEC EDGAR, 4 February 2016. LinkedIn announces fourth quarter and full year 2015 results (Form 8-K, Exhibit 99.1)filing
  32. 32ABC13 Houston, 13 June 2016. Microsoft set to buy networking site LinkedIn for $26.2 billion (AP)news
  33. 33Microsoft via SEC EDGAR, 13 June 2016. Form 8-K: merger agreement with LinkedInfiling
  34. 34Fortune, 16 June 2016. Salesforce considered buying LinkedInnews
  35. 35Vanguard Group via SEC EDGAR, 10 August 2016. Form 13F-HR for 30 June 2016filing
  36. 36Capital World Investors via SEC EDGAR, 15 August 2016. Form 13F-HR for 30 June 2016filing
  37. 37Sands Capital Management via SEC EDGAR, 12 August 2016. Form 13F-HR for 30 June 2016filing
  38. 38BlackRock Institutional Trust Company via SEC EDGAR, 10 August 2016. Form 13F-HR for 30 June 2016filing
  39. 39BlackRock Fund Advisors via SEC EDGAR, 10 August 2016. Form 13F-HR for 30 June 2016filing
  40. 40BlackRock Advisors via SEC EDGAR, 10 August 2016. Form 13F-HR for 30 June 2016filing
  41. 41BlackRock Inc. via SEC EDGAR, 10 August 2016. Form 13F-HR for 30 June 2016filing
  42. 42FMR (Fidelity) via SEC EDGAR, 11 August 2016. Form 13F-HR for 30 June 2016filing
  43. 43T. Rowe Price Associates via SEC EDGAR, 15 August 2016. Form 13F-HR for 30 June 2016filing
  44. 44Sequoia Capital via SEC EDGAR, 26 May 2011. Form 4: the Sequoia Capital funds' shares at the IPOfiling
  45. 45Sequoia Capital via SEC EDGAR, 2 March 2012. Form 4: shares handed to the Sequoia funds' partners, 29 February and 1 March 2012filing
  46. 46Sequoia Capital via SEC EDGAR, 6 March 2012. Form 4: shares handed to the Sequoia funds' partners, 2 March 2012filing
  47. 47Sequoia Capital via SEC EDGAR, 8 March 2012. Form 4: shares handed to the Sequoia funds' partners, 6 March 2012filing
  48. 48Sequoia Capital via SEC EDGAR, 12 March 2012. Form 4: shares handed to the Sequoia funds' partners, 8 March 2012filing
  49. 49Sequoia Capital via SEC EDGAR, 16 May 2012. Form 4: shares handed to the Sequoia funds' partners, 14 May 2012filing
  50. 50Sequoia Capital via SEC EDGAR, 18 May 2012. Form 4: shares handed to the Sequoia funds' partners, 16 May 2012filing
  51. 51Sequoia Capital via SEC EDGAR, 24 May 2012. Form 4 (Michael Moritz): the Sequoia funds' last shares handed out, 23 May 2012filing
  52. 52Sequoia Capital via SEC EDGAR, 12 February 2013. Schedule 13G/A: no shares left at the end of 2012filing
  53. 53Greylock via SEC EDGAR, 26 May 2011. Form 4: the Greylock funds' shares at the IPOfiling
  54. 54Greylock via SEC EDGAR, 23 November 2011. Form 4 (David Sze): the Greylock funds' sale in the November 2011 offeringfiling
  55. 55Greylock via SEC EDGAR, 1 March 2012. Form 4 (David Sze): shares handed to the Greylock funds' partners, 28 February 2012filing
  56. 56Greylock via SEC EDGAR, 15 March 2012. Form 4 (David Sze): shares handed to the Greylock funds' partners, 13 March 2012filing
  57. 57Greylock via SEC EDGAR, 24 May 2012. Form 4 (David Sze): shares handed to the Greylock funds' partners, 22 May 2012filing
  58. 58Greylock via SEC EDGAR, 9 August 2012. Form 4 (David Sze): shares handed to the Greylock funds' partners, 7 August 2012filing
  59. 59Greylock via SEC EDGAR, 10 August 2012. Form 4 (David Sze): shares handed to the Greylock funds' partners, 9 August 2012filing
  60. 60Greylock via SEC EDGAR, 16 August 2012. Form 4 (David Sze): shares handed to the Greylock funds' partners, 14 August 2012filing
  61. 61Greylock via SEC EDGAR, 17 August 2012. Form 4 (David Sze): the Greylock funds' last shares handed out, 16 August 2012filing
  62. 62Bessemer Venture Partners via SEC EDGAR, 23 November 2011. Form 4: Bessemer's sale in the November 2011 offeringfiling
  63. 63Bessemer Venture Partners via SEC EDGAR, 14 February 2012. Schedule 13G: 3,328,253 shares at the end of 2011filing
  64. 64Bessemer Venture Partners via SEC EDGAR, 12 February 2013. Schedule 13G/A: no shares left at the end of 2012filing
  65. 65Fortune, 16 November 2011. Why is Bain bailing on LinkedIn?news
  66. 66Reid Hoffman via SEC EDGAR, 18 May 2011. Form 3: Reid Hoffman's shares at the IPOfiling
  67. 67Reid Hoffman via SEC EDGAR, 26 May 2011. Form 4: Reid Hoffman's sale in the IPOfiling
  68. 68SEC EDGAR, 9 December 2016. Ownership filings by Reid Hoffman, including every Form 4 on LinkedInfiling
  69. 69Reid Hoffman via SEC EDGAR, 23 August 2012. Form 4: one of Reid Hoffman's 2012 sales under his preset selling planfiling
  70. 70Reid Hoffman via SEC EDGAR, 9 December 2016. Form 4: Reid Hoffman's gift of August 2016 and his shares cashed out at closingfiling
  71. 71Reid Hoffman via SEC EDGAR, 11 February 2016. Schedule 13G/A: 14,489,899 shares at the end of 2015filing
  72. 72LinkedIn via SEC EDGAR, 4 August 2016. Form 10-Q for the quarter to 30 June 2016filing
  73. 73LinkedIn via SEC EDGAR, 14 June 2016. Transcript of the Microsoft and LinkedIn investor call (soliciting material)filing
  74. 74Microsoft via SEC EDGAR, 28 July 2016. Form 10-K for the year to 30 June 2016filing
  75. 75Microsoft via SEC EDGAR, 5 August 2016. Form 8-K: issue of $19.75 billion of notesfiling
  76. 76LinkedIn via SEC EDGAR, 1 July 2016. Preliminary merger proxy statement (PREM14A), filing-fee tablefiling
  77. 77Microsoft via SEC EDGAR, 2 August 2017. Form 10-K for the year to 30 June 2017 (Note 9, business combinations)filing
  78. 78Microsoft via SEC EDGAR, 3 August 2018. Form 10-K for the year to 30 June 2018filing
  79. 79Microsoft via SEC EDGAR, 29 July 2021. Form 10-K for the year to 30 June 2021filing
  80. 80Microsoft via SEC EDGAR, 29 July 2026. Form 10-K for the year to 30 June 2026filing
  81. 81MediaPost, 22 April 2026. Microsoft names Daniel Shapero LinkedIn CEOnews
  82. 82Yahoo Finance, 10 June 2016. META (formerly FB) historical pricesdata
  83. 83Facebook via SEC EDGAR, 28 April 2016. Form 10-Q for the quarter to 31 March 2016 (cover page)filing
  84. 84Facebook via SEC EDGAR, 28 January 2016. Form 10-K for 2015filing
  85. 85SiliconANGLE, 14 June 2016. After LinkedIn, will Twitter be the next takeover target?news
  86. 86Twitter via SEC EDGAR, 3 May 2016. Form 10-Q for the quarter to 31 March 2016 (cover page)filing
  87. 87Twitter via SEC EDGAR, 29 February 2016. Form 10-K for 2015filing
  88. 88Yahoo Finance, 10 June 2016. GOOGL historical pricesdata
  89. 89Alphabet via SEC EDGAR, 3 May 2016. Form 10-Q for the quarter to 31 March 2016 (cover page)filing
  90. 90Alphabet via SEC EDGAR, 11 February 2016. Form 10-K for 2015filing
  91. 91Yahoo Finance, 10 June 2016. CRM historical pricesdata
  92. 92Salesforce via SEC EDGAR, 20 May 2016. Form 10-Q for the quarter to 30 April 2016 (cover page)filing
  93. 93Salesforce via SEC EDGAR, 7 March 2016. Form 10-K for the year to 31 January 2016filing
  94. 94Yahoo Finance, 10 June 2016. 6098.T historical pricesdata
  95. 95Recruit Holdings, 13 May 2016. Consolidated financial results for the year ended March 31, 2016filing
  96. 96US Federal Reserve via FRED, 10 June 2016. Japanese yen to one US dollar, noon buying rate (DEXJPUS)data
  97. 97Der Aktionär, 13 June 2016. Breaking news: Microsoft kauft Xing-Konkurrenten LinkedIn, 50 Prozent Aufschlagnews
  98. 98Der Aktionär, 14 June 2016. Und jetzt Xing vor Übernahme? Aktie profitiert von LinkedIn-Hammernews
  99. 99XING AG, 31 March 2016. Geschäftsbericht 2015 (annual report for 2015)filing
  100. 100US Federal Reserve via FRED, 10 June 2016. US dollars to one euro, noon buying rate (DEXUSEU)data
  101. 101LinkedIn via SEC EDGAR, 28 April 2016. LinkedIn announces first quarter 2016 results (Form 8-K, Exhibit 99.1)filing
  102. 102Microsoft via SEC EDGAR, 1 August 2019. Form 10-K for the year to 30 June 2019filing
  103. 103Microsoft via SEC EDGAR, 30 July 2020. Form 10-K for the year to 30 June 2020filing
  104. 104Microsoft via SEC EDGAR, 30 July 2024. Form 10-K for the year to 30 June 2024filing
  105. 105Microsoft via SEC EDGAR, 28 July 2022. Form 10-K for the year to 30 June 2022filing
  106. 106Microsoft via SEC EDGAR, 27 July 2023. Form 10-K for the year to 30 June 2023filing
  107. 107Microsoft via SEC EDGAR, 30 July 2025. Form 10-K for the year to 30 June 2025filing
  108. 108LinkedIn via SEC EDGAR, 22 August 2016. Form 8-K: results of the special meeting of stockholdersfiling
  109. 109European Commission, 6 December 2016. Mergers: Commission approves acquisition of LinkedIn by Microsoft, subject to conditions (IP/16/4284)press release
  110. 110Fortune, 24 April 2017. LinkedIn now has 500 million membersnews
  111. 111CNBC, 5 February 2020. Jeff Weiner to step down as LinkedIn CEO and become executive chairmannews
  112. 112Bloomberg, 5 February 2020. LinkedIn CEO Jeff Weiner steps down after 11 yearsnews
  113. 113CNBC, 14 October 2021. Microsoft is abandoning LinkedIn in Chinanews
  114. 114CBS News, 14 October 2021. Microsoft says it is shutting down LinkedIn in Chinanews
  115. 115Gulf News, 1 November 2023. LinkedIn hits 1 billion members, adds AI features for job seekers (Reuters)news
  116. 116Irish Data Protection Commission, 24 October 2024. Irish Data Protection Commission fines LinkedIn Ireland €310 millionpress release
  117. 117Redmond Channel Partner, 9 June 2025. LinkedIn CEO to lead Microsoft productivitynews
  118. 118LinkedIn, 29 July 2026. Q4 earnings and business highlightspress release
  119. 119Channel Insider, 5 October 2026. Microsoft Office and Teams chief Ryan Roslansky leaves amid Copilot reshufflenews
  120. 120Aswath Damodaran, Musings on Markets, 23 February 2016. Lazarus rising or Icarus falling? The GoPro and LinkedIn question!analysis
  121. 121Fortune, 13 June 2016. Here's proof Microsoft just paid way too much to connect with LinkedInanalysis
  122. 122LinkedIn via SEC EDGAR, 14 June 2016. All-employee email from Satya Nadella (soliciting material)filing
  123. 123TechCrunch, 1 July 2016. Five companies considered buying LinkedInnews

Every estimated number, and how we got it

Where no public source gives a number, we estimate it from ones that do and say how. Everything else on the page is Reported, with its source.

NumberValueMethod
Series A (6 November 2003): post-money valuation$17mLee Hower, who ran the fundraise, put the value before the money at $10m to $15m. Adding the $4.7m raised gives $14.7m to $19.7m; we use the middle.
Series C (29 December 2006): post-money valuation$250mBessemer's investment memo proposed $12.5m at $237.5m before the money, about $250m after it. TechCrunch reported the same figure as a rumour.
Listed on the New York Stock Exchange (18 May 2011): value at the IPO price$4.3bn$45.00 a share (the IPO price) × 94,498,627 shares (after the offering, prospectus).
Second share sale (16 November 2011): value at the offer price$6.9bn$71.00 a share (the offer price) × 97,555,614 shares (after the offering, prospectus).
New shares for cash (4 September 2013): value at the offer price$26.2bn$223.00 a share (the offer price) × 117,284,726 shares (after the offering, prospectus supplement).
The all-time high (26 February 2015): market value$33.9bn$270.76 a share (the highest close, Yahoo Finance; LinkedIn's 10-K gives the same 2015 high) × 125,118,124 shares (on the 2014 10-K cover).
The guidance shock (5 February 2016): market value$14.3bn$108.38 a share (AFP) × 132,074,709 shares (on the 2015 10-K cover).
Last close before the offer (10 June 2016): market value$17.5bn$131.08 a share (AP) × 133,544,222 shares (on the 10-Q cover, April 2016).
Reid Hoffman: stake before the deal11%14,489,899 shares (his Class B shares, merger proxy) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
Vanguard: stake before the deal4.0%5,380,235 shares (its 13F filing) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
Capital World Investors: stake before the deal3.4%4,638,237 shares (its 13F filing) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
Sands Capital: stake before the deal3.1%4,202,770 shares (its 13F filing) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
BlackRock: stake before the deal3.1%4,187,715 shares (the 13F filings of four BlackRock companies) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
Fidelity (FMR): stake before the deal1.8%2,364,438 shares (its 13F filing) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
T. Rowe Price: stake before the deal1.3%1,705,766 shares (its 13F filing) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
Other directors and executives: stake before the deal0.9%1,176,172 shares (merger proxy, shares held outright) ÷ 134,723,145 shares outstanding at 30 June 2016 (merger proxy).
Everyone else: stake before the deal72%The balance: 96,577,913 shares held by other funds, employees and the public.
Sequoia Capital: Series A shares (13.26m at $0.32) (6 November 2003)$4.2m13,262,928 Series A shares (the funds' Form 4 at the IPO) × $0.32. Dated at the first Series A close; some may have been bought in September 2004.
Sequoia Capital: Series B shares (3.49m at $0.57) (24 September 2004)$2.0m3,490,197 Series B shares (the funds' Form 4 at the IPO) × $0.57, on the Series B issue date.
Sequoia Capital: Shares handed to its investors (1 of 8) (29 February 2012)$148m1,684,000 shares handed to the fund's own investors (Form 4), valued at $88.12, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (2 of 8) (1 March 2012)$148m1,684,000 shares handed to the fund's own investors (Form 4), valued at $88.12, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (3 of 8) (2 March 2012)$146m1,684,000 shares handed to the fund's own investors (Form 4), valued at $86.80, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (4 of 8) (6 March 2012)$149m1,684,000 shares handed to the fund's own investors (Form 4), valued at $88.33, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (5 of 8) (8 March 2012)$149m1,684,000 shares handed to the fund's own investors (Form 4), valued at $88.33, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (6 of 8) (14 May 2012)$312m2,806,718 shares handed to the fund's own investors (Form 4), valued at $111.31, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (7 of 8) (16 May 2012)$312m2,806,718 shares handed to the fund's own investors (Form 4), valued at $111.33, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Sequoia Capital: Shares handed to its investors (8 of 8) (23 May 2012)$269m2,806,873 shares handed to the fund's own investors (Form 4), valued at $95.83, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Series B shares (13.96m at $0.57) (24 September 2004)$8.0m13,960,794 Series B shares (the funds' Form 4 at the IPO) × $0.57, on the Series B issue date.
Greylock Partners: Shares sold in the November 2011 offering (1.40m) (22 November 2011)$97m1,404,798 shares (prospectus and Form 4) × $68.94, the $71 offer price less the banks' fee.
Greylock Partners: Shares handed to its investors (1 of 7) (28 February 2012)$247m2,800,000 shares handed to the fund's own investors (Form 4), valued at $88.12, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Shares handed to its investors (2 of 7) (13 March 2012)$255m2,800,000 shares handed to the fund's own investors (Form 4), valued at $90.97, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Shares handed to its investors (3 of 7) (22 May 2012)$192m2,000,000 shares handed to the fund's own investors (Form 4), valued at $95.83, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Shares handed to its investors (4 of 7) (7 August 2012)$136m1,250,000 shares handed to the fund's own investors (Form 4), valued at $108.69, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Shares handed to its investors (5 of 7) (9 August 2012)$136m1,250,000 shares handed to the fund's own investors (Form 4), valued at $108.69, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Shares handed to its investors (6 of 7) (14 August 2012)$129m1,250,000 shares handed to the fund's own investors (Form 4), valued at $103.19, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Greylock Partners: Shares handed to its investors (7 of 7) (16 August 2012)$133m1,293,180 shares handed to the fund's own investors (Form 4), valued at $103.19, the average price of LinkedIn insiders' share sales reported within three days. No closing price was available from a source we could use.
Bessemer Venture Partners: Series C shares (4.26m at $2.94) (29 December 2006)$13mAll of Bessemer's 4,578,253 shares at the IPO except its 322,741 Series D shares are taken to be Series C, at $2.94, on the Series C issue date.
Bessemer Venture Partners: Shares sold in the November 2011 offering (1.25m) (22 November 2011)$86m1,250,000 shares (prospectus and Form 4) × $68.94, the $71 offer price less the banks' fee.
Bessemer Venture Partners: The rest, sold or handed out during 2012 (3.33m) (2 July 2012)$347mBessemer held 3,328,253 shares at the end of 2011 and none at the end of 2012 (its 13G filings), but did not have to report when or how it let them go. We value them at $104.33, the average price of LinkedIn insiders' sales in 2012, in the middle of the year. The 2012 range, $85 to $125 a share, puts this flow between $282m and $416m.
Bain Capital Ventures: Series D shares (4.36m at $11.47) (13 June 2008)$50m4,359,198 shares (IPO prospectus), all of them Series D, × $11.47, on the first Series D close.
Bain Capital Ventures: Shares sold in the IPO (653,880) (24 May 2011)$27m653,880 shares (IPO prospectus) × $41.85, the $45 IPO price less the banks' fee.
Bain Capital Ventures: The rest, sold in the November 2011 offering (3.71m) (22 November 2011)$255m3,705,318 shares (follow-on prospectus) × $68.94, the $71 offer price less the banks' fee.
Reid Hoffman: Series A shares (2.03m at $0.32) (6 November 2003)$649,2612,028,942 Series A shares (his Form 3) × $0.32, dated at the first Series A close. What he paid for his 17,037,090 founder shares is not public, so they count as nothing.
Reid Hoffman: Shares sold in the IPO (115,335) (24 May 2011)$4.8m115,335 shares (Form 4) × $41.85, the $45 IPO price less the banks' fee.
Reid Hoffman: Shares sold under his preset plan in 2012 (874,668) (18 July 2012)$90mThe 11 sales on his Forms 4 in 2012, 874,668 shares in all, each at its reported average price, before commissions. Dated at their value-weighted middle.
Reid Hoffman: Shares sold under his preset plan in 2013 (2,000,000) (16 July 2013)$387mThe 24 sales on his Forms 4 in 2013, 2,000,000 shares in all, each at its reported average price, before commissions. Dated at their value-weighted middle.
Reid Hoffman: Shares sold under his preset plan in 2014 (1,166,676) (21 April 2014)$220mThe 18 sales on his Forms 4 in 2014, 1,166,676 shares in all, each at its reported average price, before commissions. Dated at their value-weighted middle.
Reid Hoffman: 13.59m shares at $196 in the deal (8 December 2016)$2.7bn13,589,899 shares cashed out at closing (his Form 4) × $196. He had given away 900,000 shares in August 2016, after the deal was signed, so this is less than the $2.84bn the merger proxy implied.
A buyer at the IPO price: The same shares at $196 (8 December 2016)$4.4m$1m ÷ $45 = 22,222 shares, × $196 at closing.
A buyer at the first day's close: The same shares at $196 (8 December 2016)$2.1m$1m ÷ $94.25 = 10,610 shares, × $196 at closing.
A buyer at the 2015 peak: The same shares at $196 (8 December 2016)$723,888$1m ÷ $270.76 = 3,693 shares, × $196 at closing.
Revenue growth, LinkedIn, 201535%$2,990.9m of revenue in 2015 ÷ $2,218.8m in 2014, less one.
Share of revenue from hiring and learning products (Talent Solutions), LinkedIn, 201563%$1,877.2m of Talent Solutions revenue ÷ $2,990.9m of total revenue.
Operating profit before amortisation, LinkedIn, in Microsoft's accounts, FY2018$518mThe $987m operating loss plus the $888m and $617m of amortisation Microsoft reported in LinkedIn's costs.
Operating margin before amortisation, LinkedIn, in Microsoft's accounts, FY20189.8%$518m of operating profit before amortisation ÷ $5,259m of revenue.
Revenue growth a year, LinkedIn, FY2016 to FY202619%From $3,434.9m in the twelve months to June 2016 to $19,817m in FY2026, ten years later: (19,817 ÷ 3434.9) ^ (1 ÷ 10) − 1.
Registered member growth a year, LinkedIn, June 2016 to April 202611%From 450.0m members at 30 June 2016 to 1.3bn in April 2026, 9.8 years later.
What Sequoia's shares would have fetched in the deal, Sequoia Capital, December 2016$3.3bn16,840,309 shares (Form 4 at the IPO) × $196.
What Greylock's shares would have fetched in the deal, Greylock, December 2016$2.8bn14,047,978 shares (Form 4 at the IPO) × $196.
Facebook: market value$334bn$116.62 a share at the close on 10 June 2016 (Yahoo Finance) × 2,860.3m Class A and B shares (10-Q cover).
Facebook: EBITDA, 2015$11.1bnOperating income of $6,225m plus $1,945m of depreciation and amortisation and $2,960m of share-based pay (10-K), to match LinkedIn's adjusted EBITDA.
Twitter: market value$9.8bnAbout $14.03 a share: the 13 June close of $14.55, which SiliconANGLE reported as up 3.7%, worked back a day. × 701.9m shares (10-Q cover).
Alphabet: market value$499bnAbout $733.19 a Class A share and $719.41 a Class C share at the close on 10 June 2016 (Yahoo Finance's prices, multiplied back by 20 for the 2022 split) × 686.6m shares (10-Q cover); unlisted Class B valued like Class A.
Alphabet: EBITDA, 2015$29.6bnOperating income of $19,360m plus $5,063m of depreciation and amortisation and $5,203m of share-based pay (10-K).
Salesforce: market value$55.4bn$81.83 a share at the close on 10 June 2016 (Yahoo Finance) × 677.5m shares (10-Q).
Salesforce: EBITDA, Year to January 2016$1.2bnOperating income of $114.9m plus $525.8m of depreciation and amortisation and $593.6m of share-based pay (10-K).
Recruit Holdings: market value$20.1bnAbout ¥3,815 a share at the close on 10 June 2016 (Yahoo Finance's price, multiplied back by 3 for a later split) × 564.7m shares (results), at ¥107.06 to the dollar.
Recruit Holdings: revenue, Year to March 2016$14.8bn¥1,588.6bn as reported, at ¥107.06 to the dollar.
Recruit Holdings: EBITDA, Year to March 2016$1.9bn¥202.3bn, Recruit's own EBITDA, at ¥107.06 to the dollar. Recruit owns the job site Indeed, but most of its revenue is Japanese staffing and media.
XING: market value$1.1bnAbout €167 a share at the close on 10 June 2016: Der Aktionär reported €182, up 9%, on 13 June. × 5.62m shares (annual report), at $1.1281 to the euro. The close could be a few euros either way.
XING: revenue, 2015$139m€122.9m as reported, at $1.1281 to the euro.
XING: EBITDA, 2015$41m€36.6m as reported, at $1.1281 to the euro.
Model start: revenue, FY2016$3.4bnThe twelve months to June 2016, matching Microsoft's year: 2015's $2,990.9m, plus the first half of 2016 ($1,793.4m), less the first half of 2015 ($1,349.4m).
Model start: running the site and building the product, as a share of revenue, FY201655%Cost of revenue, product development, and depreciation and amortisation, $1,891.1m in the twelve months to June 2016, ÷ revenue. Share-based pay is included, as in the accounts.
Model start: sales and marketing, as a share of revenue, FY201634%Sales and marketing, $1,167.5m in the twelve months to June 2016, ÷ revenue.
Model start: general and administrative, as a share of revenue, FY201615%General and administrative, $500.6m in the twelve months to June 2016, ÷ revenue.
Model: cash and investments that came with the company, less its debt$1.8bnCash and marketable securities of $3,159.6m at 31 March 2016, the last balance sheet before the deal, less the $1,322.5m face value of the convertible notes.

Terms used

  • Adjusted EBITDA: EBITDA that also leaves out share-based pay and some one-off items, as the company chooses to define it.
  • Amortisation: spreading the cost of something a buyer paid for, such as customer relationships or technology, over several years. A charge in the accounts, not cash going out.
  • Cap table: the list of who owns what share of a company.
  • Class B shares: LinkedIn's shares for its founders and early investors, with ten votes each. The public's Class A shares had one.
  • Convertible notes: loans that the lender can swap for shares at a set price.
  • Distribution in kind: a fund handing shares to its own investors instead of selling them.
  • EBITDA: earnings before interest, tax, depreciation and amortisation; a rough measure of operating cash profit.
  • Exit multiple: the value of a business at the end of a holding period, as a multiple of its yearly revenue.
  • Fiscal year (FY): a company's accounting year. Microsoft's runs from July to June, so FY2016 is July 2015 to June 2016.
  • Follow-on offering: a sale of more shares after a company has listed.
  • Funding round: a sale of new shares to investors at an agreed price.
  • Goodwill: the part of a purchase price left over after valuing everything the buyer can name, such as cash, buildings, customers and technology.
  • IPO (initial public offering): a company's first sale of shares on a stock exchange, also called a listing.
  • IRR (internal rate of return): the yearly return that makes money in and money out balance once timing is counted.
  • Log scale: an axis on which each step is ten times the one before.
  • Market value: a listed company's share price times its number of shares.
  • Multiple: money out divided by money in.
  • Net cash: cash and investments, less debt.
  • New money: cash paid into a company for new shares, rather than to existing shareholders.
  • Operating margin: operating profit as a share of revenue.
  • Operating profit (or loss): revenue less the costs of running the business, before interest and tax.
  • Registered member: anyone with a LinkedIn account, whether or not they use it.
  • Revenue per member: a year's revenue divided by the number of registered members.
  • Share-based pay: shares or options a company gives its staff instead of cash. The accounts count it as a cost.
  • Stake: the share of a company someone owns.
  • Support agreement: a big shareholder's signed promise to vote for a deal.
  • Takeover premium: how much more a buyer pays than the market price before the offer.
  • Target return: the yearly return an investor needs for a bet to be worth its risk; also called a hurdle rate.
  • Valuation: what a whole company is worth at the price paid in a deal.