Salesforce’s $27.7 billion acquisition of Slack, announced December 1, 2020, was the largest software acquisition ever at the time—a defensive move to compete with Microsoft Teams that would prove controversial as Slack’s growth stalled post-deal.
The Target
Founded in 2013 by Stewart Butterfield (Flickr co-founder), Slack pioneered workplace chat, replacing email with channels, threads, and integrations. The company IPO’d June 2019 via direct listing at $38.50/share ($23B valuation).
By 2020, Slack had:
- 12M daily active users (vs. 75M+ for Microsoft Teams)
- 750K paid customers
- $900M annual revenue (growing 40%+)
But Slack faced existential threat: Microsoft Teams (launched 2017) was bundled free with Office 365, making it difficult for Slack to compete on price.
The Deal
Terms: $27.7B ($26.79/share cash + stock), 50% premium over market price
Announced: December 1, 2020
Closed: July 21, 2021
Salesforce CEO Marc Benioff called Slack “the most strategic acquisition we’ve ever made,” positioning it as the interface for Salesforce’s sprawling CRM ecosystem. The deal would create a “digital HQ” combining Salesforce’s business tools with Slack’s collaboration.
The Rationale
For Salesforce:
- Counter Microsoft’s dominance (Teams + Dynamics CRM)
- Modernize interface (Salesforce’s UI was aging)
- Deepen customer lock-in
- Expand beyond CRM into collaboration
For Slack:
- Survive Microsoft competition (Teams hit 145M daily users in April 2021)
- Leverage Salesforce’s 150K+ enterprise customer base
- Gain resources to compete long-term
The Controversies
Overpaying? Critics argued Salesforce paid 50%+ premium for a company facing brutal competition. Slack’s growth was decelerating as Teams bundling won enterprise deals.
Culture clash: Slack’s casual, emoji-heavy culture vs. Salesforce’s enterprise sales machine.
Antitrust scrutiny: EU and UK regulators investigated but approved with no conditions (Dec 2021).
Activist investors: ValueAct Capital pushed Salesforce to improve margins and M&A discipline; the Slack deal was seen as contrary to that goal.
The Results
Post-acquisition performance was mixed:
- Slack growth slowed: Teams continued dominating (270M daily users by 2023 vs. Slack’s ~20M)
- Salesforce integration: Slow rollout of joint products
- Stock pressure: Salesforce stock fell 50% from 2021 peak; activists (Elliott Management, 2023) pushed for better execution
- Layoffs: Salesforce cut 10% of workforce (Jan 2023), including Slack teams
By 2023, the acquisition was seen as defensive necessity rather than transformative success. Benioff admitted overpaying in hindsight, though Slack remained strategically valuable for Salesforce’s ecosystem.
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