Salesforce's Bold Move: Acquiring Own for $1.9 Billion – What This Means for the Cloud Market

Salesforce's Acquisition of Own Co.

Salesforce has announced its plan to acquire Own Co. for a staggering $1.9 billion in cash. This startup specializes in data backup tools for cloud-based applications. The deal is expected to close in the first quarter of 2025, pending regulatory approval.

Background on Own Co.

Previously known as OwnBackup, the startup was valued at $3.35 billion during a 2021 funding round, which saw participation from Salesforce Ventures. This acquisition marks a notable return to significant deals for Salesforce, especially after a period of cautious spending following feedback from activist investors regarding profitability.

Changing Landscape for Software Companies

The decline in Own's valuation reflects the broader trend affecting software companies. Following a surge in cloud software adoption during the pandemic, interest from investors has waned. Central banks' efforts to combat inflation have prompted a shift in focus towards profitability, impacting single-product companies and startups.

Expansion Plans

While Own has primarily focused on Salesforce clients, the startup aimed to diversify by partnering with Microsoft Dynamics and ServiceNow. Salesforce's recent acquisitions also include smaller firms like PredictSpring and Tenyx, indicating a strategic push to bolster its offerings.

Financial Implications

Salesforce assures that the acquisition of Own will not hinder its shareholder return initiatives, with expectations that it will enhance free cash flow starting in the second year post-acquisition. CEO Marc Benioff emphasized a commitment to ensuring that future acquisitions are beneficial and align with the company's strategic goals.

Looking Ahead

As Salesforce navigates the acquisition landscape, it remains focused on balancing organic and inorganic growth while maintaining its commitment to profitability and customer satisfaction.