Microsoft Linked-In Deal: What should the Integration Strategy Be – A Perspective

Traditional business unit performance measures to evaluate post-deal performance have shortcomings (Revenue Growth lacks incentive to use capital effectively. Earnings Growth ignores cost of capital and is subject to arbitrary accounting choices. Return on Equity and Return on Capital Employed can discourage value initiatives that lower this value in short term). Therefore, relatively important but mostly overlooked, given capital structure has changed for both the companies, traditional business unit performance measures such as Revenue Growth, Earnings Growth, Return on Equity, Return on Capital Employed & Net Operating Profit After Tax are not EXACT performance indicators post merger. In order to more accurately predict valuations, Microsoft should rather rely on market capitalization & Share Price Index, which are better reflections of valuations post mergers.

 To obtain cost optimization, there should be swift backend integration of HR, Sales, Products, CRM, IT and Supply Chain. Besides, Microsoft should translate deal price into specific operating performance requirements with assigned responsibility and establish that accountability gets ensured by tracking post acquisition performance through continuous monitoring of valuation points.

Microsoft should create a dedicated new team consisting of HR, Strategy, IT, Finance, Supply Chain, and Admin to look into the integration efforts. There should be a head within Microsoft who should initially be the only communication conduit between the two companies – this is to avoid too many Microsoft leaders talking to Linked-In teams.

Moreover, Microsoft should aggressively promote Linked-In as one stop destination for recruitment/advertisement needs.

Linked-In has been an established brand with top strategy, talents, leaders, proven organizational structure, and processes. The success of the combined entity would depend on how much autonomy does Microsoft bestows on Linked-In. Microsoft shouldn’t appear too aggressive with changing things at Linked-In. Instead Microsoft should allow Linked-In be governed and managed by the way it was done earlier.

Microsoft shouldn’t change Linked-In employee benefits/HR policies. To allay lay-offs fears amongst Linked-In employees, Microsoft should repeatedly talk to Linked-In employees and convey how important Linked-In team is to Microsoft and how the overall strategy of the combined entity would bolster Microsoft – something long amiss in Microsoft portfolio. To gain employees confidence, Microsoft should imbibe Linked-In’s popular policies within Microsoft.