Highlights:

  • Own’s falling valuation serves as a stark reminder of the difficulties that many cloud software businesses have had recently and the fact that investors are paying less attention to them than in the past.
  • Salesforce can now provide its customers with a more complete suite of data protection and loss prevention measures due to the acquisition of Own and the integration of its capabilities within Salesforce’s software stack.

Salesforce Inc. to acquire Own Co., a startup earlier called OwnBackup Ltd. for USD 1.9 billion in cash. Own Co. develops tools for backing up data in cloud-supported applications.

If regulators give their clearance, the merger is anticipated to close by the end of January 2025. The sum is a significant reduction from Own’s USD 3.35 billion value, which it declared in August 2021 after closing its largest investment round of USD 240 million.

The transaction is noteworthy because it represents Salesforce’s first significant acquisition since the company declared little over two years ago that it would disband the committee charged with investigating mergers and acquisitions.

Marc Benioff, the CEO and Co-founder of Salesforce, made that move soon after activist investors Starboard Value LLP and ValueAct Capital LLC began to acquire shares in the business and put pressure on it about its sluggishly increasing profitability. They expressed particular concerns about its allegedly consistent propensity to spend billions of dollars buying assets like MuleSoft, Slack, and Tableau Software without realizing a sizable return on those expenditures, at least in the eyes of the investors.

Own’s falling valuation serves as a stark reminder of the difficulties that many cloud software businesses have had recently and the fact that investors are paying less attention to them than in the past. Salesforce Ventures participated in all the startup’s fundraising rounds, which concluded in 2017 and 2018, 2019, 2020, and two in 2021. The company was formerly thought to be a hot property.

The start of the COVID-19 pandemic in early 2020 and the implementation of remote work regulations globally first improved its possibilities. Towards the end of 2021, however, its feasibility started to run out as central banks started hiking interest rates to combat inflation.

Businesses were forced to concentrate more on profitability because of rising borrowing rates, which forced many of them to cut back on technology spending and streamline their processes. That consequently put a lot of pressure on cloud software businesses like Own.

While Own chose to broaden its business, several of its publicly traded competitors—such as Anaplan Inc., Avalara Inc., Coupa Software Inc., Qualtrics Inc., Sumo Logic Inc., and Zendesk Inc.—opted to go private. It changed its direction from being solely focused on Salesforce to include its software in Microsoft Corp.’s Dynamics enterprise offering. Later, it also started supporting ServiceNow Inc.

Own’s flagship Data Platform helps businesses ensure the availability, compliance, and security of their most crucial software-as-a-service data by offering features related to data archiving, seeding, security, and analytics. Businesses can use its analytics tools to inform decision-making and obtain a competitive edge over their competitors.

Salesforce claimed that because of the significance of data for AI projects, more and more of its clients are concerned about the need to reduce the risk of human error, cyberattacks, and system failures. Salesforce can now provide its customers with a more complete suite of data protection tools and loss prevention measures due to the acquisition of Own and the integration of its capabilities within Salesforce’s software stack.

The massive customer relationship management company stated that the purchase of Own will not affect its shareholder return policies and that it will start to improve cash flow in the second year following closing.

Salesforce hasn’t shied away from smaller acquisitions, announcing agreements to acquire businesses like Tenyx Inc. and PredictSpring Inc. in recent weeks, although holding back on larger ones lately.