Should Your Exit Strategy Be An IPO or A Merger/Acquisition? Analysing The $27.7 Billion Acquisition of Slack.

A Silicon Valley Favourite Is Having A Rough Marriage.

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⏱️ Too lazy to read for 6 minutes? Here’s the TLDR Summary:

• 🚀 There will come a time when you have to decide as an entrepreneur between selling your startup to a private company or to the public.

• 💵 Slack had both options and went with selling to a private company, Salesforce, for $27.7 billion.

• 📊 We’ll dive into:

  • Their pre-acquisition performance.

  • Their post-acquisition performance.

  • Their competitive position during the time of the acquisition.

  • The overall result of the acquisition.

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When I was young, I always thought that selling your company to a big fish like IBM is something only weak people would do — You have to stick with your startup till the end of the road, or else you don‘t have ambition.

Gosh, I was naive.

You‘d think there‘s a difference between the words “startup“ and “business,“; but the truth is they‘re exactly the same.

In the business world, a person owning a restaurant is the same as a person owning a SaaS cloud business like Salesforce. It‘s just numbers.

Sometimes it takes founders years to realize this. It makes sense because whoever you look up to, like Elon Musk (meh), would never sell Tesla, right? Not really.

He would sell Tesla, but none can afford it at this stage. Tesla‘s a cash cow; why would you sell something that makes you billions? He co-founded PayPal a long time ago and exited with $175 million (no strings attached.)

So when a client tells me their exit strategy is to sell to Adobe in 5 years, I like that. Founders who know what they want tend to come closer to achieving this.

But here‘s the dilemma—there‘s a line.

• Some just go for the exit from day one and almost never get there because that‘s their only target.

• Others work hard, focusing on their customer and reach even more.

Let‘s analyze a recent acquisition that turned a startup founder into a billionaire. We‘ll talk numbers, show decks when available, and analyze the timing of the exit.

We‘ll talk about Slack and its $27.7 billion acquisition of Salesforce. This will come in handy the next time you speak to an investor; keep that in mind.

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Slack—Analysing The $27.7 Billion Salesforce Acquisition

They started off as a Silicon Valley gem. Slack was the up-and-coming startup that everyone was proud of. You’d try to use their software, and you’d love it. Then you’d recommend it.

Image from Slack