Today Salesforce announced the acquisition of Slack for $27.7 billion. The deal was leaked last week, but now Salesforce has officially confirmed it, along with the deal price. The sale is for cash and Salesforce stock. The is the biggest acquisition to date by Salesforce and a huge win for Slack employees and investors. A few quick thoughts on this deal:
- Hot market – There’s been lots of M&A activity in tech over the last few months. I’ve noticed it at a local level with private tech companies at various stages. This deal is at an enterprise level and involves two publicly traded companies.
- Majority cash – Notably, Slack is getting a considerable percentage of the purchase price in cash. It will receive stock too, but more cash.
- Growth strategy – Salesforce has acquired a number of companies over the years, including Tableau for over $15 billion last year and Mulesoft for over $6 billion in 2019. Growth through acquisition is a serious part of its strategy.
- Integration – I’m curious about how Salesforce will digest and integrate such a big deal. It clearly has experience integrating companies it acquires.
- Valuation – Slack didn’t benefit from the pandemic as much as some other publicly traded tech companies that facilitated working from home, such as Zoom. From a valuation perspective, Slack may have seemed less expensive in the current landscape.
- Public – Slack went public in the summer of 2019 and had a valuation of $24 billion after the first day of trading on the stock market. Today’s deal price is 15% higher. Slack was a public company for about a year and a half before this deal was announced.
I’m very familiar with both companies. I used Salesforce heavily in the past and currently use Slack every day to communicate. This is a huge deal, and it will be interesting to see if other big tech players announce acquisitions of their own.