Salesforce’s latest significant move marks its return to major acquisitions, with the purchase of Own Company, a SaaS data protection and management provider, for a substantial $1.9 billion in cash. This acquisition comes following a hiatus from major deals since Salesforce acquired Slack for an astounding $27 billion in 2021. Notably, the purchase price for Own Company is substantially lower than its valuation of $3.35 billion in a 2021 venture capital funding round.
Strategic Interest in Continuous Data Protection
Salesforce’s interest in Own Company’s technology, particularly its Continuous Data Protection (CDP) system, has been evident since at least August, when the two companies teamed up to enhance data backup for Salesforce’s SaaS customers. Own Company’s CDP technology, which leverages Salesforce Change Data Capture events, continuously monitors and logs changes in production data, ensuring a thorough historical record.
Founded in 2012, Own Company initially zeroed in on backing up Salesforce customer data but later branched out into other SaaS applications. These expansions covered platforms such as Sage Business Cloud Financials, Veeva, nCino, Microsoft Dynamics 365 CRM, Power Platform, and ServiceNow. However, the bulk of its revenue continues to come from Salesforce customers.
Enhancing Data Security
Steve Fisher, President of Salesforce, underscored the growing importance of data security and acknowledged that Own Company’s experience and products would significantly bolster Salesforce’s data protection and management capabilities. This acquisition aligns with Salesforce’s broader strategy of enhancing its service offerings to better meet client needs in data security and management, areas that are of increasing concern in the tech industry.
Investor Pressures and Strategic Shifts
The acquisition also follows actions by Elliott Management, an activist investor, which recently acquired a significant stake in Salesforce and voiced dissatisfaction with the company’s growth, profit margins, and the return on its numerous acquisitions. This critique came on the heels of Salesforce’s history of high-value mergers, including the purchase of Tableau for $15.7 billion and MuleSoft for $6.5 billion.
In response to these financial pressures, Salesforce announced a 7,000-job cut in January 2021 to reign in operating costs. Yet, later that year, the company went on a hiring spree, adding 3,300 new employees, signaling a renewed focus on growth and profitability. These swings in employment highlight Salesforce’s ongoing adjustments in its strategy to maintain a balance between growth and financial prudence.
Broader Industry Implications
Salesforce has made a significant move by acquiring Own Company, a provider specializing in SaaS data protection and management, for a notable $1.9 billion in cash. This strategic purchase signals Salesforce’s return to making major acquisitions, a practice it had paused since its monumental $27 billion acquisition of Slack back in 2021. The deal is drawing attention not only because of the industry’s consolidation but also due to the notable difference between the acquisition cost and Own Company’s earlier valuation. During a venture capital funding round in 2021, Own Company was valued at a hefty $3.35 billion. Therefore, the purchase price is considerably lower, raising questions and speculations about market dynamics and the actual value perceived by Salesforce. This move could be a tactical effort by Salesforce to strengthen its portfolio in data protection and management, an increasingly critical area. By bringing Own Company into its fold, Salesforce aims to enhance its offerings and maintain its competitive edge in the rapidly evolving tech industry.
