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Salesforce’s acquisition talks with Slack are shaking up the corporate software landscape, raising exciting possibilities that test the strategy of market leader Microsoft. In 2016, Microsoft considered an $8 billion acquisition of Slack, but Bill Gates advised the company to focus on internal development, first by trying to improve Skype, and later by developing Teams. Previously, Microsoft tried unsuccessfully to acquire Salesforce for $55 billion in what would have been the largest acquisition in its history. Later, in 2016, Salesforce tried to acquire LinkedIn, but was pipped at the post by Microsoft, generating a complaint from the former for possible monopolistic behavior that was quickly dismissed.
In July, Slack also reported Microsoft for monopolistic behavior, arguing that Microsoft could be forcing companies to install Teams as part of its Office package.
Now, Salesforce is looking to buy Slack, whose share price has soared as a result of its widespread use during the pandemic: to around $30 last Wednesday, and now close to $41, sending its valuation to $23.2 billion, but that is likely to settle at around $17 billion.
For Salesforce, the acquisition of Slack, which is very popular with startups, would help it develop the corporate communication market: Salesforce’s Cloud software is popular with larger and consolidated companies, so exploring the segment of smaller companies with development potential could be extremely interesting. Salesforce’s enterprise software covers almost every area, it is basically seen as a support for outward-looking operations (CRM, customers, suppliers, etc.), while Slack is more of an internal communications company with inward-looking operations, which would make for a good strategic fit.
On the other hand, Slack’s founder, Stewart Butterfield, was unhappy about the sale to Yahoo! in 2005 of his previous company, Flickr, after which was allowed to die on the vine and ended up being sold off 13 years later.
The pandemic has changed corporate communication permanently: the new normal is now videoconferencing, as is the case of Zoom, as well as apps for messaging and coordination. Microsoft sees this as fundamental for its growth, making Slack an attractive proposition thanks to its capacities as an advanced messaging application, as well as a flexible API that allows integration with practically any other type of application (project management, ticketing systems, messaging, shared documents, etc.), enabling the development of highly advanced corporate communication systems. In short, an open platform philosophy very similar to that used by Marc Benioff in Salesforce, which could undoubtedly generate very interesting synergies.
The conversations between Salesforce and Microsoft seem to be quite advanced, and a decision is expected in the next few days.
UPDATE (01/12): deal closed, and Salesforce will acquire Slack for $27.7 billion.
