Microsoft's blockbuster $26 billion acquisition of LinkedIn on Monday may have come out of left field, but it was a courtship many years in the making.
From LinkedIn's earliest days after launching 14 years ago, Microsoft was considered the only possible "logical buyer," according to one LinkedIn insider.
The problem was Microsoft — like most of its peers — didn't see the logic in buying LinkedIn.
"People never fully understood the value LinkedIn was creating until after they went public," says Mark Kvamme, an early LinkedIn investor and former member of its board of directors. "No one ever truly understood the value of what Reid [Hoffman, founder] and Jeff [Weiner, CEO] were building."
It's not unusual for larger companies to kick the tires about acquiring a startup of LinkedIn's prominence. What is unusual is how few tech companies actually made serious bids before LinkedIn ultimately went public.
Microsoft considered acquiring LinkedIn around 2008 for $1.5 billion, according to multiple sources close to LinkedIn at the time, but Microsoft is said to have been "lukewarm" on the deal.
One source said LinkedIn would likely have agreed to a bid in the $1 billion-$1.5 billion range at that time.
While Microsoft may not have bid actively for LinkedIn in 2005-2006, Yahoo is said to have weighed a deal then (for substantially less than $250 million), according to a source close to Yahoo at that time.
Multiple meetings were held on the matter internally, but no serious bid was put forward to LinkedIn, according to multiple sources close to both companies.
The only other large technology company said to have taken a serious interest in LinkedIn in the years before its IPO was Salesforce, which vied for a large stake during an investment round in 2008, according to multiple LinkedIn insiders.
LinkedIn's team decided against taking funding from a company looking to acquire it. In 2010, Salesforce launched its own social workplace application called Chatter.
LinkedIn went public in 2011 and had a nearly $9 billion market cap at the end of its first day of trading. By 2015, LinkedIn was valued at more than $30 billion — but then investors began to lose their patience for tech companies not named Facebook.
Microsoft and LinkedIn began talking about partnering again in January, eventually leading to the $26 billion deal announced five months later.
It's less than what LinkedIn was worth last year, but far more expensive than it would have been if Microsoft realized LinkedIn's potential back in 2008.