In any high-growth industry, Mergers and Acquisitions (M&A) is bound to be one of the fundamental pillars of many larger companies’ growth strategies. The Salesforce ecosystem is no exception, and over the past decade, there have been hundreds of large transactions across the globe, mainly focussing on consultancies (SIs) and app companies (ISVs).
The Salesforce landscape is a very different place in 2024 than it was in 2014. Back in 2014, Salesforce’s yearly revenue was around $4B, but this pales in comparison to the nearly $35B in revenue they produced in the 2023/2024 year. This just goes to show the huge compounding growth that can result in a constant 20-25% growth rate over ten years.
Salesforce capitalized on the growing need for enterprise digital transformation, as well as many smaller SMB-sized businesses that wanted to compete and grow their businesses with the latest Sales/Service/Marketing CRM technology.
Whilst we have been publishing many of our thoughts surrounding the saturation of the Salesforce job market and the increasing difficulty of landing a job, back in 2014, Salesforce was an extremely niche skill. It was so niche, in fact, that growing a business was challenging due to a lack of qualified applicants out in the market. The year 2014 was also when Trailhead was launched to democratize Salesforce education for the masses (some might say it worked a bit too well!).
For larger consultancies that wished to take advantage of the huge digital transformation opportunity in front of them, acquiring smaller boutique consultancies was an easy way to build a skilled niche workforce and buy a book of business at the same time.
Who Acquires Who?
So, who exactly are the businesses interested in acquiring Salesforce ecosystem businesses? Let’s take a look…
Global Solution Integrators
Global solution integrators (GSIs) are the ‘top dogs’ when it comes to Salesforce implementations. They are the usual suspects, such as Accenture, Deloitte, IBM, PwC, and WiPro who work on massive, global projects.
Between 2014 and 2020, these companies went on a buying spree to bulk up their Salesforce expertise. Some of the more notable deals included Accenture’s acquisition of Cloud Sherpas, a consultancy with over 1,000 employees; IBM’s acquisition of Bluewolf for an estimated $200M; Wipro’s acquisition of 4C for €68M; and Appirio’s acquisition for $500M.
Private Equity
Private equity (PE) money occupies a large portion of the money deployed in the Salesforce ecosystem. Typically, private equity firms will acquire a company where they see particular potential or strategic value and look to sell the company at a profit in future years.
Some of the most notable deals include Conga’s $70M investment from Insights Ventures and Thoma Bravo acquiring Apttus in 2018 (which was later merged with Conga in a $715M deal). PE deals seem to be a constant in the Salesforce ecosystem, with more recent deals, including Main Capital Partners acquiring Cloud Coach in June 2023 and Scaleworks acquiring marketing attribution ISV, Full Circle Insights, the following month.
Independent Software Vendors
Independent software vendors (ISVs) are also big proponents of the Salesforce M&A market. When an AppExchange company receives venture capital or private equity backing, making a strategic acquisition of another ISV can help create a more comprehensive product offering.
When Conga, a document generation solution, received their $70M investment, they acquired six companies, including Action Grid, Novatus, and Contract Wrangler. Formstack also went on a similar buying spree, as did Validity.
Salesforce
Last but not least, we have Salesforce themselves. Acquisitions are a vital part of Salesforce’s growth strategy, in fact, many of their biggest products have been acquired, as opposed to organically created. This includes Marketing Cloud, Slack, MuleSoft, and Commerce Cloud.
Whilst some of these flagship acquisitions get much of the media attention, Salesforce make many smaller acquisitions, which, according to Crunchbase, total 74 over the years.
These acquisitions include consulting businesses, some of the most notable being Acumen Solutions and Traction On Demand; ISVs, including Troops, Steelbrick, and their latest acquisition, Spiff, as well as off-platform solutions such as Airkit.ai.
Salesforce Ventures also provides a series injection of growth and innovation, with over 700 investments within and beyond the Salesforce ecosystem. Many companies that Salesforce ended up acquiring had some sort of investment from the Ventures arm.
Summary
The Salesforce ecosystem is one of the most vibrant and exciting tech industries in the world, with IDC estimating that they will create a net gain of 11.6M jobs and $2.02T in business revenues between 2022 and 2028.
Whilst Salesforce and other large enterprises’ growth has slowed in the face of rising interest rates and cautious buyers, the ecosystem continues to innovate and has no shortage of M&A deals.
If you are a founder who is interested in selling your business or you just want to chat about the current state of M&A or the ecosystem at large, feel free to reach out to me directly at ben@salesforceben.com
The post The Salesforce M&A Market – Who Acquires Who? appeared first on Salesforce Ben.