By Natalie Hughes
If you’ve been involved in an organization, whether in an academic, professional, or social setting, then you’re probably familiar with business communication platforms. Salesforce and Slack are two industry giants whose software is installed within the networks of organizations across the United States. Salesforce, an American cloud-based software company, provides customer relationship management services. Slack, another business communication program that has altered the way businesses operate internally, is primarily a channel-based messaging platform. As COVID-19 continues to alter the way workplaces are functioning, demand for tools which enable remote work has risen greatly. Needless to say, systems like Slack and Salesforce have evolved into corporate necessities and are shaping the state of business in the United States.
This past Tuesday, Salesforce announced its intention to buy Slack for $27.7 billion, which will serve as the software vendor’s largest acquisition in its 21 years of operation. Almost twice the size of Salesforce's previous largest acquisition, this deal will turn Salesforce into a forbidding competitor for Microsoft. Additionally, with the added messaging features of Slack, Salesforce will undoubtedly extend its reach and incorporate the communication software into its cloud software programs.
Salesforce CEO Marc Benioff stated that the deal is a “match made in heaven,” adding that Slack’s trajectory reminded him of Salesforce’s during its period of tremendous growth. Slack CEO Stewart Butterfield will continue leading the company as an operating unit of Salesforce. After founding the organization in 2010, Butterfield received (and rejected) offers of acquisition from Google, Microsoft, and Amazon, which valued the company at around $19.5 billion. Now, as the demand for Slack’s services amid pandemic woes has grown and the partnership with Salesforce simply “makes sense,” the deal increases Slack’s value by nearly $8 billion and positions the firm as a threat to larger tech rivals.
The acquisition is set to take place via a purchase in both cash and stock, also ending Slack’s run as a publicly traded company. Shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce stock in exchange for each share of Slack, which is equivalent to a total of about $45.52 with respect to Salesforce’s closing share price on Tuesday. Bank of America is serving as financial advisor to Slack, while Goldman Sachs and Qatalyst Partners are working alongside Salesforce throughout the acquisition. The deal values Slack at over 24 times its estimated revenue for next year, highlighting how effectively the acquisition will extend Salesforce’s value and reach.