LinkedIn Makes Its First Acquisition, Paving the Way for an IPO?

LinkedIn logo
LinkedIn logo

LinkedIn has snapped up recommendation start-up mSpoke, marking the first acquisition in the white-collar social-networking site's seven-year history as it aims for growth. It could also set LinkedIn on a path toward an IPO.

LinkedIn plans to use mSpoke's recommendation technology to deliver relevant content, advertising and products to its social network users, according to LinkedIn's announcement on Wednesday. The mSpoke deal is the first in what the company expects to be a string of acquisitions that will aid its move to make its information more relevant to users and to increase its presence on mobile devices.

LinkedIn plans to use such acquisitions to expand its business, CEO Jeff Weiner told Bloomberg. Weiner noted that LinkedIn's operations have been cash-flow positive for the past two years, another indicator that prospective investors like to hear besides growth.

No Current Plans to Go Public

Investors and analysts have watching LinkedIn, along with Facebook, waiting to see it launches an IPO. In a Reuters interview earlier this year, Weiner said his company has no current plans for an IPO but is rather focused on building its business and executing its plans.

In that interview, Weiner, who was named CEO last year, said he plans to use small acquisitions as a means to build LinkedIn's business. He said smaller deals would be the focus, given that integration would be easier and not present as great as a distraction.

In addressing the mSpoke acquisition, Weiner in a statement said: "We're actively investing in solutions that help deliver valuable professional insights to LinkedIn members. The addition of mSpoke's talented team of technologists make it an even more compelling opportunity for LinkedIn."

A $2 Billion Valuation?

LinkedIn apparently has a lot more cash to do more deals. Last month, Bloomberg reported that LinkedIn landed a $20 million investment from hedge fund Tiger Global Management, giving the site an estimated $2 billion valuation.

Weiner says he's concentrating on building the business versus gearing up for an IPO. But according to media reports, he apparently doesn't mind taking time out to talk to investment bankers who are interested in the company.