- GeneralM&A
- July 22, 2021
- 5 minutes read
Deal: Salesforce Completes $28B Slack Purchase
After entering a definitive agreement last December, CRM software giant Salesforce has completed its acquisition of Slack, the popular workplace…
After entering a definitive agreement last December, CRM software giant Salesforce has completed its acquisition of Slack, the popular workplace communications tool, for which it paid $27.7bn in a mix of cash and stock.
- Officially, Slack has been taken off the public markets and is now a privately-held division of Salesforce, which coughed up $15.6bn in cash and $12.1bn of common stock to buy the company. Slack is Salesforce’s biggest acquisition on record.
- To show the seriousness of Salesforce’s Slack purchase, the company paid a multiple of 31x Slack’s revenue ($903mn) in its most recent fiscal year despite the company being unprofitable on a net basis. More so, Salesforce took a $10bn loan facility to finance the cash portion of the purchase, implying it really wanted the deal.
- Salesforce has historically expanded with acquisitions and is no stranger to big ones. Before Slack, it paid $16bn to buy Tableau Software in 2019, then its biggest acquisition on record that just got beat by Slack. Such big acquisitions are the work of Marc Benioff, Salesforce’s founder and longtime dealmaking CEO.
- With the addition of Slack, it seems Salesforce is hoping to be the software of standard for enterprises to function, with a suite encompassing collaboration, communications, resource management, and its likes. Salesforce is already the biggest CRM tool for enterprises in its right and Slack is one of the biggest enterprise communications tools.
- But unlike in CRM, Slack faces many rivals encroaching on its space, with Microsoft’s Teams software as its arch-rival. In that regard, Slack is in a tougher spot trying to gain ground above others.
- In fact, Slack struggled on the public markets since its IPO in 2019 wherein it began trading at just above $38 a share but got acquired in 2021 at an effective sales price of $45.50, a 20% appreciation in a period where the Nasdaq was up 80%. More so, Slack’s share price was hovering around $25 when Salesforce swooped in with an acquisition offer.
- Still, Slack’s roughly $28bn price tag marks one of the biggest takeover deals of the software industry in this decade. It’s a price point that delivered big money to the company’s early investors and founding team, including CEO Stewart Butterfield whose haul was around $2bn.
- “Salesforce and Slack are uniquely positioned to lead this historic shift to a digital-first world. I could not be more excited for what’s to come.” Butterfield said in a statement.
