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Wild Salesforce Speculation

By Denis Pombriant
May 8, 2015 2:10 PM PT

The blogosphere lit up last week after it was disclosed on Bloomberg that Salesforce was working with unnamed bankers on a possible merger. Naturally, everyone automatically thought that Salesforce was in play, and my colleagues and I went into overdrive speculating about who the suitor might be, what the striking price would be, and whether it was a good idea to do the deal. The first two questions dominated the discussion.

Wild Salesforce Speculation

Of course, as a public company, Salesforce in theory could be bought -- though I am not aware if there are enough shares circulating to make it possible for anyone to acquire the company, or even a majority interest, outright.

As for the last question, I never thought a Salesforce acquisition deal would be a good idea for the company, and I said so. The largest potential buyers didn't impress me as a group that could keep the entrepreneurial fires burning.

Generally, I think it would be bad for you and me if this innovation engine were suddenly swallowed up by a larger, risk-averse entity. At any rate, CRM stock went for a joy ride, and a lot of people got quoted in the press before everything subsided like you knew it would.

Sage Salesforce Speculation

In the meantime, I got an email from Sage, the maker of a variety of accounting products for small businesses around the world. Sage sells through a distribution channel and has been quite successful signing high-volume distributors all over the world. The company had three CRM products too, but recently sold off SalesLogix and ACT! (the contact manager). It still has SageCRM, a cloud offering that I typically don't see outside of the Sage channel.

The email invited me a to a fireside chat on May 13 between Marc Benioff, CEO of Salesforce, and Stephen Kelly, his counterpart at Sage.

Over the winter, the two companies jointly announced that Sage would begin moving some of its accounting products to the Salesforce1 Platform. The marketplace took very little interest in the announcement. In fact, I didn't even hear about it until Vice Chairman Keith Block mentioned it at a Salesforce event in Boston last month. Even then, it didn't get much attention.

Sage and Salesforce could be interesting news. Salesforce doesn't need another accounting/ERP package -- it already has Financial Force, IntAcct, Kenandy, and Zuora, which handles subscription finance. There are others, too. The point is that Sage would be just another accounting package.

However, Sage brings other assets. Salesforce always could use another partner with the reach of Sage and its distribution channel. It sells through a global distribution network -- and it has never been great at CRM.

Therefore it was curious to me that no one put the pieces together that Sage and Salesforce might be getting ready to do a deal. I wouldn't think Salesforce would buy Sage, but I feel that taking a minority position in the company via a preferred stock purchase might help the relationship along. Sage would get some cash (I assume) to continue its coding effort, and Salesforce would acquire access to a big SMB network.

Something's Coming

Of course, this is all highly speculative. I don't think it's a great idea for any company to buy Salesforce or for Salesforce to buy Sage, but perhaps I don't know what I'm talking about.

Still, there are many signs that something between Sage and Salesforce is going to happen. Just the fact that the two CEOs want to be seen together at what will amount to a press conference, tells me that whatever they have to discuss will not be small. I'd look for some announcement before the chat to focus our attention.

In a few days, we'll know for sure. Meanwhile, the blogosphere will continue its speculations, and Salesforce could see its stock appreciate more, for little reason.


Denis Pombriant is a well-known CRM industry researcher, writer and speaker. His new book, Solve for the Customer, is now available on Amazon. He can be reached at denis.pombriant@beagleresearch.com. You can also connect with him on Google+.


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