Cut Salesforce Some Slack

Salesforce recently announced its acquisition of Slack for $27.7 billion. After a 40% decrease in Slack’s valuation after its 2019 IPO at $23 billion, the acquisition will hopefully bolster Slack’s user adoption and will add a key component to Salesforce’s business-to-business portfolio. Salesforce is no stranger to acquisitions, having acquired over 60 companies; CEO Marc Benioff, specifically, has been on an acquisition streak in attempts to transform their digital services and described the deal as “a match made in heaven”. BofA Securities advised Salesforce during the deal, while Qatalyst Partners and Goldman Sachs advised Slack.

The deal is the 8th largest acquisition in tech industry history and represents a significant change to the landscape. As compared to its competitors, specifically Microsoft, Salesforce may be able to provide added gains by integrating Slack’s customer communication with Salesforce’s existing logging, tracking, and forecasting.

Salesforce has a history of failed customer messaging systems, such as Chatter and Quip, and while Slack adoption rates are high for internal uses, it has yet to crack the consumer messaging market. Paired with Salesforce’s existing client relation management services, ‘Slack Connect’, which facilitates better communications between businesses and their customers, could strengthen Salesforce’s position and increase Slack’s user base.

It seems that investors are also excited about the deal, illustrated by the 1.83% spike in Salesforce’s stock and the .64% spike in Slack’s stock price after the deal was announced. In a digital world dominated by ‘work from home’ and industries shocked by the pandemic, the acquisition signals a continued dedication to digitized communication efforts and Salesforce’s strategic initiative focused on B2B.