Who is willing to afford Salesforce for $ 50 billion?

by bold-lichterman

It could be the biggest deal ever in the software industry. Salesforce would have entered into discussions with his financial advisers after being approached by a potential buyer, the agency reported on Wednesday evening Bloomberg.

As a direct result of the announcement, the stock price literally jumped 11.6% yesterday on the New York Stock Exchange to $ 74.65, pushing Salesforce’s market cap to over $ 43.8 billion. (around 39.5 billion euros).

A start-up that has become a heavyweight in 15 years

Founded in San Francisco in 1999 by Parker Harris and Marc Benioff, Salesforce publishes software cloud for professionals. These cover a wide range of areas: sales management, customer service, marketing strategy (personalization of customer journeys, etc.), community management in order to promote collaboration, etc. With Analytics Cloud, Salesforce also offers data analysis solutions, and with Salesforce1 Platform, a platform for the development of business applications.

Last April, the American group launched a new offer for human resources departments, in order to promote engagement and communication between a company’s employees. In terms of the economic model, the strength of Salesforce lies in particular in the recurrence of its revenues. No more old CD-ROMs bought once and for all, its solutions are mostly marketed as services (Saas, software as a service) in the form of monthly subscriptions for each user. A winning bet since the trend has only been confirmed over time: in 2013, 41% of turnover achieved by the CRM sector alone (custumer relationship management, customer relationship management, editor’s note) were in Saas, according to Gartner.

Over $ 5 billion in sales

As a result, more than 15 years after its creation, Salesforce generated $ 5.37 billion in revenue in 2014. And with the digital transformation of businesses and the strong demand for services cloud, its growth remained strong, at 32%. When publishing its financial results, the company announced that it hoped to cross the $ 10 billion in turnover over time.

In the meantime, Salesforce has also grown thanks to several strategic acquisitions, at the cost of millions of dollars. In recent years, for example, the company put $ 2.5 billion on the table in June 2013 to afford ExactTarget, a US specialist in data-driven marketing services. Last summer, the firm paid 390 million dollars to buy RelateIQ, a player in CRM solutions for small and medium-sized businesses. And at a time when Internet users are becoming more and more mobile-first, Salesforce launched in September a $ 100 million venture capital fund to invest in start-ups specializing in mobile offers or connected objects.

A leader who shakes up the big guys

Consequently, the American giants were also forced to advance their pawns. Yes Bloomberg did not identify the name of the interested buyer, the rumors have already started. Already, with a capitalization of more than 40 billion dollars, it must be said that a lot of names are already set aside. Only the biggest ones remain. Rumors about Microsoft, which is heading for the cloud since the arrival of Satya Nadella, Cisco and IBM have been going well. Others also speak of the German group SAP which wishes migrate his business model more to the cloud, or even Oracle. The latter, valued at more than 194 billion dollars, also wishes to evolve towards completely dematerialized solutions. The firm recently announced, through co-CEO Mark Hurd, that 95% of its offering will be in the cloud within a few months, compared to only 65% ​​today. Oracle would not have approached Salesforce, however, says Buzzfeed. But if other players were to jostle in front of Salesforce’s door, Oracle could be forced not to sit idly by.

Whatever the name of the buyer, all have developed solutions cloud aimed at companies, but most of them still remain far behind Salesforce, which had been able to anticipate in several segments the turn of Saas and cloud. Thus, in the CRM software market alone, Salesforce emerged as the industry leader in 2013, according to a Gartner study, with a global market share of 16.1% (in terms of turnover), ahead of the German SAP (12.8%) and the American Oracle (10.2%), with Microsoft and IBM coming a long way behind. And the leader was also the most dynamic: its growth from 2012 to 2013 had exceeded 30% in this niche. The acquisition of Salesforce would therefore allow these players to push the cloud against competition.