Salesforce to Buy Cloud Backup Specialist Own Co. for $1.9 Billion in Cash

Salesforce Inc. today said it will spend $1.9 billion in cash to buy a startup called Own Co., formerly known as OwnBackup Ltd., which sells cloud-based application data backup tools.

The deal is expected to close by the end of January 2025, assuming it receives regulatory approval. The amount represents a large discount from the $3.35 billion valuation Own announced in August 2021, when it closed its last and largest funding round of $240 million.

The deal is notable because it represents Salesforce’s first major acquisition since it announced it was eliminating its mergers and acquisitions board a little over two years ago.

The move comes after Salesforce co-founder and CEO Marc Benioff shortly after activist investors Starboard Value LLP and ValueAct Capital LLC bought stakes in the company and began to pressure it over its slow-growing profitability. In particular, they raised concerns about its seemingly regular trend of spending billions of dollars on assets like Tableau Software, Slack, and MuleSoft without seeing a meaningful return on those investments — at least according to investors.

Own’s declining value underscores the struggles many cloud software companies have faced in recent years, with investors seeing less interest than before. The startup was once seen as a hot deal and has completed a series of increasingly large funding rounds in 2017, 2018, 2019, 2020 and two in 2021, with Salesforce Ventures participating in each round.

Its prospects initially improved with the outbreak of the COVID-19 pandemic in early 2020 and the introduction of remote work policies around the world. But its fortunes began to deteriorate in late 2021 as central banks began to raise interest rates to head off inflation.

Rising interest rates have forced businesses to focus more on profitability, which has meant many have had to cut technology spending and consolidate their business operations. As a result, this has put significant pressure on cloud software startups like Own.

Many of Own’s publicly traded competitors, including Anaplan Inc., Avalara Inc., Coupa Software Inc., Qualtrics Inc., Sumo Logic Inc. and Zendesk Inc., have gone private, while Own itself has sought to diversify its business. Once focused solely on Salesforce, the company changed direction to move its software to Microsoft Corp.’s Dynamics enterprise offering and later added support for ServiceNow Inc.

Own’s flagship data platform provides data archiving, seeding, security, and analytics capabilities and helps companies ensure the availability, compliance, and security of critical software-as-a-service data. Its analytics tools also help companies make decisions to gain a competitive advantage over their rivals.

Salesforce said the importance of data to AI initiatives means its customers are increasingly concerned about mitigating the risks of system failures, cyberattacks and human error. By buying Own and integrating its capabilities into its own software stack, Salesforce will be able to offer customers a more comprehensive set of data protection and loss prevention tools.

The customer relationship management giant said the acquisition of Own will have no impact on its shareholder return policy, adding that the deal will be accretive to cash flow starting in the second year after its closing.

While Salesforce has held off on major acquisitions of late, it has also been making smaller acquisitions, announcing deals to buy startups like PredictSpring Inc. and Tenyx Inc. in the past few weeks.

Image: Salesforce