- General
- December 2, 2020
- 13 minutes read
Winners From Slack’s Acquisition
On Tuesday, the cloud software giant Salesforce announced having reached a formal agreement to acquire the business communications platform Slack…
On Tuesday, the cloud software giant Salesforce announced having reached a formal agreement to acquire the business communications platform Slack for a price of $27.7 billion, marking one of the biggest tech deals in recent years.
The acquisition price represents a premium of over 10% to Slack’s market value of $25 billion as of Tuesday trading close, whereas Slack had risen sharply from lower levels when acquisition rumors by Salesforce began going around last week.
Salesforce is paying $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, summing up to $27.7 billion for all of Slack’s outstanding shares. The purchase price is about 32 times Slack’s projected revenue of $876 million for this year and about 24 times its projected revenue for next year.
From Slack’s acquisition, a group of shareholders, both institutional and individual are in line to reap huge sums. They include;
Stewart Butterfield (CEO)
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| Photo credit: Stuart Isett/Fortune is licensed under Creative Commons |
Butterfield co-founded Slack in 2013, with Slack being an offshoot of a gaming startup that he originally co-founded. He stands to reap $1.9 billion from his Slack stake given its acquisition price by Salesforce. He’s the biggest individual shareholder in Slack.
Before founding Slack, Butterfield notably sold a previous startup, the image sharing site Flickr, to Yahoo for over $22 million.
Cal Henderson
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| Photo credit: TechCrunch, licensed under CC BY 2.0 |
Cal Henderson co-founded Slack along with Stewart Butterfield and has served as the company’s Chief Technology Officer for a long time. He held a stake of 3% as of the time of Slack’s IPO and has sold a sizeable amount of shares over the past year. He’ll pocket over $700 million from Salesforce’s acquisition according to our estimations.
Accel
The venture capital firm Accel has a Slack stake that sums up to a $2.9 billion windfall from Salesforce’s acquisition. It invested about $200 million in Slack over its years as a private company and reaped big when the company debuted on the public markets.
Accel held a stake of about 24% in Slack when it went public last year but has since then sold a sizeable portion of its stake and also distributed shares to its limited partners.
Andreessen Horowitz
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| Marc Andreessen. Photo credit: Joi, licensed under CC BY 2.0 |
The venture capital firm Andreessen Horowitz held a 13.3% stake in Slack as of the time of its IPO. It’s already sold a sizeable amount of its shares and also distributed to its limited partners. Nonetheless, its current Slack stake will see it pocket well over $1 billion from Salesforce’s acquisition.
Social Capital
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| Chamath Palihapitiya. Photo credit: jdlasica, licensed under CC BY 2.0 |
Social Capital is a venture capital firm chaired by Chamath Palihapitiya, an investor who in recent years has made a name for himself as the “Sultan of SPACs”, SPACs referring to special-purpose acquisition companies which are shell corporations designed to take companies public without going through the traditional IPO process.
Social Capital held a 10% stake in Slack as of the time of its IPO and has sold a bit of shares since then. It’s in line to pocket over $2.5 billion from Salesforce’s acquisition of Slack.
2,000+ employees
Slack has over 2,000 employees worldwide, most of whom are in the US. Compensation packages for Slack employees usually have equity included as is the case with many other technology companies, and Salesforce’s acquisition will see many Slack employees reap lucrative monetary rewards from the value of their shares in the company.
Notably, Slack’s acquisition price sums up to over $10 million per employee. However, it’s not the case that most of the company’s employees will see up to that amount given that its shareholding is skewed towards investors and executives at the top.
SoftBank (not really)
Another notable company, the Japanese tech conglomerate SoftBank backed Slack early on with an investment of over $330 million. It however exited its entire Slack stake this September and reaped a $1 billion windfall as a result.
It won’t see a windfall from Salesforce’s acquisition but has nonetheless clinched a profit of $684 million from its $334 million investment in Slack that came from its $100 billion Vision Fund.
