ACCT09001: Slack and Salesforce Merger Business Rationale Report

This report provides a comprehensive analysis of the merger and acquisition deal between Slack Technologies Inc. and Salesforce.com Inc. It begins with an introduction outlining the significance of the deal, followed by a detailed examination of the business rationale from the perspectives of both companies, emphasizing the strategic advantages each sought. The report then critically identifies and assesses the impact of the merger on both internal stakeholders, including shareholders, management, and employees, and external stakeholders such as government, vendors, lenders, customers, and competitors. Furthermore, the report evaluates the long-term implications of the merger, discussing factors that contribute to the potential success or failure of the combined entity, such as synergies, economies of scale, tax benefits, and competitive pressures. The analysis is supported by references to academic literature and empirical studies to justify the conclusions drawn regarding the deal's overall impact and future prospects.

ADVANCED FINANCIAL
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Critically evaluating the business rational for the deal to both Slack Technologies Inc. and
Salesforce.com Inc.......................................................................................................................3
Critical identification of the impact of Merger on the both internal and external stakeholders. .4
Critical evaluation of the impact of Merger on the long term success or failure of both
companies....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Merger and acquisition is the way through which two companies can merge with each
other or the one company can acquire the other company in order to gain highly competitive
advantages. The report will state the significance of the deal that occur between the Slack
Technologies Inc. and Salesforce.com Inc. The report will also cover the impact of the merger
among the two technology company on the internal as well as the external stakeholders of the
company. The report will also critically evaluate the long term impact of this deal will result into
success or failure along with the reference of the academic literature.
MAIN BODY
Critically evaluating the business rational for the deal to both Slack Technologies Inc. and
Salesforce.com Inc.
The Salesforce.com Inc. acquire the Slack technologies Inc. for $27.7 in cash and stock.
The Salesforce pay the $26.77 in cash and .0776 shares of the company for each shares of the
Slack as a purchase consideration of the merger (O Ceallacháin, 2019). As the Slack provides the
software platform services such as instant access of critical information, helping companies
consolidate workflow and team alignment etc. One of the unique point of the Slack technology
company is that, they provide both desktop and mobile version through which companies are
able to coordinate and collaborate with their teams in order to work. The demand of the Slack
company is increases in the pandemic situation because their communication service is available
anywhere and at any place either it is on home, office or any other. Salesforce company is also a
technology company and provides the services related to technological implementation in the
businesses. This platform is available in order to improve the salesforce of the businesses and
further make improvement in the sales productivity of the company. Salesforce helps the
business in achieving their goals and objectives.
As around 90% of the customers of the Slack tech company also uses the platform
provided by the Salesforce company (O Ceallacháin, 2019). Both the companies in their own
manner helps the businesses in achieving their goals. The Slack owner feels that, after pandemic
there is a chance of slow-down of their business demands. So, both the companies mutually sign
the agreement of merger and acquisition. It is done in order to implement the Slack’s
communication software into the cloud software of the Salesforce company. With the help of
combination of both the company’s data and tools, they both are able to cover the high

competition in the market. As the Microsoft is continuously putting the competitive pressure on
the Slack and become one of the reason behind the merger of the two companies. The Slack is
unable to fight with the Microsoft and need more firepower which is mainly come from this
merger only.
With the merger, the Salesforce is able to make growth in their market share, but because
of the almost same percentage of customer company is not able to enjoy the highly increment in
the customer base. The M&A helps both the companies in improving the performance efficiency
of the staff members, as the weaknesses of the one company is get compensate with the strength
of the other company. The both companies are also able to eliminate its extra cost, as they can
reduce the bargaining power of their similar suppliers (Kwilinski, and et.al., 2020). The
companies also make reduction in their delivery and transportation cost, because of the same
supplier.
Critical identification of the impact of Merger on the both internal and external stakeholders
Before announcing the M&A, both the companies have to considered the impact of the
merger on the internal and external stakeholders of the both companies. It is because the IS
directly influence the operations of the business and ES indirectly influence the business
operations and strategies (Hassan, Ghauri and Mayrhofer, 2018).
Impact on internal stakeholders
The internal stakeholders include shareholders, top management and employees of the
both companies in case of merger and their impact are as follow.
Shareholders: The impact of the M&A on the both company’s shareholders are that, the Slack
company enjoys more benefits than the Salesforce. It is because the Salesforce need to pay extra
than they actually want to pay. The acquired company benefits are calculated by subtracting the
pre-merger value of the Slack from the amount actually paid by Salesforce and is known as
M&A premium. The degree of acquired company benefit is the degree of loss of acquiring
company.
Top Management: The M&A also affect the top management behaviours, it is due to the
difference between cultures of the two organizations. But it is not same in all cases, it is because
the both companies have well-qualified and kind top managers (Hassan, Ghauri and Mayrhofer,

2018). This case of the M&A will result into the establishment of a new effective management.
With this, managers of Slack and Salesforce are able to solve the issues related to the
implementation of policies and strategies in less time and in less cost.
Employees: The employees of the company are highly get affected in case if companies do not
involve them or considered them before announcing the M&A deal. As the employees are the
most important group of the organization, put their efforts and time in achieving the daily targets
and further the goals of the company. Not considering them into the decision of M&A will result
the failure of M&A. It is because it will increase the anxiety level, demotivation and the job
insecurity among the employees and the competitors may take this advantage and offer them the
high pay if they join their company (Hassan, Ghauri and Mayrhofer, 2018).
Impact on external stakeholders
The M&A put huge impact on the external stakeholder such as government, vendors,
lenders, advisors, customers and competitors (Chirico and et.al., 2020).
 Government: Government regulators are the one which look out that all companies are
processing as per the rules and regulations set by them or not. The impact is that, before
announcing the deal Slack and Salesforce need to file an approval form to the
government which might take long time. In case if any of the company have any clashes
with the state or central law of UK, the government will generate non-approval notice to
the company’s.
 Vendors: As M&A provides the opportunity to the acquiring and acquired company
related the consolidation of vendors and increases their bargaining power. So it become
necessary for the vendor to know, whether they are continuing as a supplier of the
companies after merger or not (Bommaraju and et.al., 2018). But Slack and Salesforce
also face one of the challenge related to maintaining their normal operations after the
merger of the companies (Chirico and et.al., 2020).
 Lenders: The lenders of the acquired firm are much interested in knowing when M&A is
taken place. It is because they are interested in using their funds for the purpose of
merger. Along with that the lenders of the Slack are also interested in knowing
projection of the merged. It is because they are interested to know when their debts will
get them paid off.

 Advisors: The M&A put huge impact on the advisory firms, as their business demand in
the market is directly linked with the acquired and acquiring firms. It will speed the
merger processes and also visualize that the managers always fulfil the shareholders
trust. But it also put negative impact in case if more than one advisors are hired by the
companies. It is will lead to increment in the cost and time of the merger deal.
 Customers: Generally acquiring and acquired company ignore their customers during
the merger processing but it also put the impact on the customers as well. Because of this
impact the company may lose their market share (Jap, Gould and Liu, 2017). The Slack
and Salesforce by considering their customer perception, vanishes the wrong intention of
their competitors and maintain a strong communication with their customers.
 Competitors: In order to take the competitive advantage in the markets, competitors will
not miss any chance of creating the doubts among the employees and customers of the
acquiring and acquired company (Chirico and et.al., 2020). The competitors always try
to put competitive pressure on the company which was really happened in the case of
Slack by the Microsoft. So Slack and Salesforce need to clear all the doubts and convert
the negative impact into positive impact.
Critical evaluation of the impact of Merger on the long term success or failure of both companies
The merger of the Slack Technologies Inc. and the Salesforce.com Inc. provides both the
companies a great long term success. It is because the companies are taking the advantage of
synergies and economies of scale. As per the Lawless (2021), opinion, synergies are take place
when two similar companies are combining with each other. The both companies are technology
company provides software services to the different businesses. With this the both company can
also able to consolidate or eliminate their branch, offices, manufacturing facilities etc. The
merger helps the companies in successfully expanding the businesses in the near future and
provide them long term benefits. The company have long term success in the term of tax return
as well. It is because the both companies are paying corporate tax individually, but now both are
paying single corporate tax rate. For example; the corporate tax rate in UK is 19% and before
merger Slack and Salesforce pay their own 19% i.e. 38% for both, but post-merger they need to
pay only 19%. As the Ammirato and et.al. (2019), state the acquired company need not to pay
any tax because of the assumption of the liquidation of acquired company in M&A.

The most difficult challenge the Slack and Salesforce face while processing the merger of
the companies is that their competitors such as Microsoft tries to manipulate the employees of
the company. This is by offering them higher package jobs and create competitive pressure on
the Slack for the same as their demand of the business are high in the pandemic. But both the
companies grab this as an opportunity by involving the employees into the merger process and
deal and offer them promotion and high pay. As both the companies have kind and
knowledgeable top managers to form new policies and practices for new merged company, this
will reduce any further ego and future clashes occur if any. As per Feldman and Hernandez
(2020), perspective this all factor indicates that both the company’s members are smart enough
in converting the challenges into opportunity and achieve long term success. The one for factor
which define the Slack and Salesforce long term success is their motive behind the M&A. The
companies motive is to increase their client businesses sales productivity even during this work
from home environment by implementing communication software of Slack into the cloud
software of Salesforce.
As per Koo (2020), opinion, the M&A advisory will guide the company to whether the
merger will lead long term success or failure to acquiring and acquired company. In this case,
Slack and Salesforce hire the M&A advisory for the whole processes of merger deal. The
advisory determines the value of the Slack business, analyse the marketing of both business,
assess the due diligence if any, resolve the transaction issues and many more. The companies
considered the impact of the merger on its internal and external stakeholders before announcing
the mergers is also one of the long term success criteria of the business. As per Lawless (2021),
views the increase in the growth rate, competitions domination and reduction is tax are all the
long term success factor of any merger business.
CONCLUSION
The report concludes that before dealing and announcing the merger and acquisition, it is
important for the acquiring and acquired company to hire a M&A advisory to reduce the time
and cost. The report also concludes the importance of knowing the impact of M&A on both the
Slack and Salesforce technology company. The report also states that how considering the
impact of the merger on internal and external stakeholders lead to achieving the long term

success of the company. The report further concludes that how the merger helps both the
companies in achieving the goals and objectives of their customer businesses. The report also
describes the competitive pressure of the Microsoft on the Slack lead to merger with Salesforce.

REFERENCES
Books and journals
Kwilinski, A. and et.al., 2020. Main effects of mergers and acquisitions in international
enterprise activities.
Hassan, I., Ghauri, P. N. and Mayrhofer, U., 2018. Merger and acquisition motives and outcome
assessment. Thunderbird International Business Review, 60(4), pp.709-718.
Chirico, F. and et.al., 2020. To merge, sell, or liquidate? Socioemotional wealth, family control,
and the choice of business exit. Journal of Management, 46(8), pp.1342-1379.
Bommaraju, R. and et.al., 2018. The impact of mergers and acquisitions on the sales
force. Journal of Marketing Research, 55(2), pp.254-264.
Jap, S., Gould, A. N. and Liu, A. H., 2017. Managing mergers: Why people first can improve
brand and IT consolidations. Business Horizons, 60(1), pp.123-134.
Koo, J. S., 2020. How Do Advisors Influence Mergers and Acquisitions?: An Analysis of
Acquisitions in Japan. The Journal of Asian Finance, Economics, and Business, 7(7), pp.123-
129.
Feldman, E. R. and Hernandez, E., 2020. Synergy in Mergers and Acquisitions: Typology,
Lifecycles, and Value. Academy of Management Review, (ja).
Ammirato, S. and et.al., 2019. The use of social media for knowledge acquisition and
dissemination in B2B companies: an empirical study of Finnish technology
industries. Knowledge Management Research & Practice, 17(1), pp.52-69.
O Ceallacháin, G., 2019. Timed Delay Data Management in Salesforce.
Lawless, W. F., 2021. Exploring the Interdependence Theory of Complementarity with Case
Studies. Autonomous Human–Machine Teams (A-HMTs). Informatics 2021, 8, 14.
Online
The Objectives & Importance of Advanced Financial Management In An Organization. 2021
[Online]. Available through:< https://talentedge.com/blog/objectives-importance-advanced-
financial-management-organization/>
Mergers and acquisitions (M&A). 2021 [Online]. Available through:<
https://debitoor.com/dictionary/mergers-and-acquisitions>
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