Salesforce Discusses Its M&A Framework Following the Informatica Fallout

"We're going to be quick to walk away from things that we are not totally confident in," claimed CEO Marc Benioff

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CRMLatest News

Published: May 31, 2024

Rhys Fisher

Salesforce has shared insight into its acquisition strategy by discussing its mergers and acquisitions (M&A) framework.

The CRM provider cited this framework as a critical reason that no company has been “more successful with M&A than Salesforce.”

During an earnings call, Marc Benioff, Chairman and CEO of Salesforce, said: “Products that we acquired, many of them at the multi-hundred-million-dollar revenue level, are now at the multi-billion-dollar revenue level.

Some of the largest, most important software companies in the market today are actually companies that we acquired at much smaller levels.

While Benioff confirmed that Salesforce will continue to invest in “inorganic innovations,” he was quick to point out that any deals will be struck in accordance with the company’s M&A framework.

When it comes to large-scale acquisitions, the CRM leader outlined the need for the company it snaps up to have a best-in-class asset, a clear timeline to value accretion, and a strong balance sheet.

In doing so, the CEO pointed to the recent acquisition of Spiff, the compensation management (ICM) software solutions provider, as an example of the type of deal that the organization is focusing on.

Meanwhile, Benioff emphasized that Salesforce is “not going to shy away from M&A for any one particular reason if it’s within our framework.”

Yet, the CEO confirmed that even those potential acquisitions and mergers that sit within the framework will be treated with “extreme” caution. He noted:

We’re also going to be quick to walk away from things that we are not totally confident in or that we don’t have the trust with whatever company that we’re looking at.

The Salesforce-Informatica Fallout

The timing of these statements is particularly interesting, given the reports on the company’s proposed acquisition of Informatica, which dominated the CX news space earlier in the year.

Despite Bloomberg reporting that – at one point – the companies were only days away from finalizing an agreement, the deal eventually fell through, with an unidentified source claiming that they were unable to agree on terms due to price.

And while Informatica is not named directly during the earnings call, one could infer that Salesforce’s lack of “total confidence” in the deal likely led to its collapse.

That confidence may have taken a hit after both companies experienced drops in share prices after the news broke, and while Salesforce recovered slightly from its initial seven percent drop, Informatica’s stock has continued to decline. Now, it’s at its lowest level since mid-January.

The potential takeover also faced criticism from the wider CX sector, notably from Gaurav Dhillon, Co-Founder of Informatica and current CEO of SnapLogic.

Dhillon called the acquisition a “real step backward” for Salesforce and predicted a “rocky road ahead” for Informatica’s users due to significant overlaps in integration products.

Yet, several prominent CX analysts begged to differ when the topic was recently re-examined during a CX Today Big CX News discussion.



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