These days Salesforce’s M&A strategy is getting as much attention as its product and innovation thinking.
The recent Dreamforce conference was overshadowed by speculation that the firm was set to make a bid for Twitter, rumors that led to CEO Marc Benioff taking time out to address an impromptu financial analysts meeting to soothe nerves.
The speculation around Twitter ended over the weekend when Salesforce briefed the Financial Times that it wasn’t interested in taking any interest further forward. Benioff said that in this instance there wasn’t the right mix:
It’s not the right fit for us for many different reasons...You’re going to look at price, you’re going to look at culture, you’re going to look at everything.
That fits entirely with the message to analysts at Dreamforce when Benioff told them:
We look at a lot of things. And we pass on almost everything. In fact, the number of things that we acquire is very limited and very few...We look at just everything, but we are extremely disciplined about what we do and how we buy.
At that same session, the Salesforce CEO also made clear his irritation at the Twitter rumors resulting in him having to discuss his M&A plans in public at all:
I have no interest in going through my whole M&A pipeline and having [analysts] vote on it. It’s not appropriate. We should be able to run confidential processes with companies and look at those companies and make our own decisions.
That being so, he’s not going to be over the moon that a hacked email to Salesforce board director General Colin Powell has made its way into the public domain, containing a 60-slide presentation of potential acquisition targets, including one or two surprising names on the list.
Names on the list
The slide deck was for internal use only and dates back to May and made its way onto the internet courtesy of 'hacktivist' web site DC Leaks. It was buried away among thousands of other emails to and from Powell, but picked up by the Wall Street Journal yesterday.
On the list of prospective takeover targets are a couple that were already known about - Demandware, which Salesforce ended up buying as the basis of its Commerce Cloud offering, and LinkedIn, where it lost out to former BFF Microsoft, which didn’t make Benioff particularly happy and has resulted in anti-trust objections being lodged with regulators in the US and Europe:
We wanted [LinkedIn] but we didn’t get it. I don’t know why we didn’t get it. We weren’t included in the process. They were kind of talking to us and they weren’t really talking to us. We don’t know what really happened.
Others on the list are the sort of companies that could logically be presumed to be of interest to Salesforce, such as ServiceNow - given Salesforce’s increased focus on service management - and Box - Salesforce is a long-time investor in the firm. Other firms that caught Salesforce's eye included Pegasystems, Qlik, HubSpot, Veeva Systems, Zendesk and Tableau.
More surprising perhaps was the inclusion of close ally Workday, as well as NetSuite, currently the subject of a takeover bid by Oracle. Benioff has said in the past that Salesforce has no interest in the back office ERP space, but the inclusion of these two names would seem to suggest that this is open to review.
Certainly in recent years, the firm has been ready to expand into market sectors that have previously been the domain of third parties in the Salesforce eco-system, such as field service management and CPQ. There’s no reason to assume that ERP should be any different if the right moment and opportunity arose.
The most ambitious name on the list was Adobe, which has a market cap of nearly $54 billion, larger than Salesforce’s own. Adobe also makes it onto a list of potential ‘interlopers’ who could be rivals in any future takeovers, alongside Amazon, Facebook, Hewlett Packard Enterprise, Microsoft and Oracle among others.
Oh and of course, the one name not on the takeover possibility list? That would be Twitter.
It’s important to remember that this is is a ‘just browsing, not buying’ shopping list rather than a 'to do' list. The official Salesforce party line is:
The presentation is a broad survey of publicly traded companies in May 2016, and the appearance of company names on the list doesn't imply Salesforce ever intended to acquire them.
That said, there are some clear points of interest here, such as the inclusion of heavily data-centric firms as well as potential extensions to service management and marketing functionality. But it’s Workday and NetSuite that catch my eye. Is a direct incursion into the back office still off the cards?