Salesforce/M&A
Salesforce recently acquired Slack, is this an example of an LBM or RMB? Explain. How does it meet the criteria for an LBM/RBM? Do you think this was a good move for Salesforce?
Sample Solution
The acquisition of Slack by Salesforce is an example of a large business merger (LBM). This type of transaction occurs when two companies with substantial market shares come together to form one larger entity through the unification of assets or stock interests. It’s usually done in order gain competitive advantages like enhanced economies of scale or greater market share, and it can also provide access to new products/services that weren’t necessarily available before (Hitt et al., 2018).
In terms of the criteria needed for an LBM– this situation certainly meets all the requirements. First, both Salesforce and Slack are well-established organizations which have been in operation since 1999 and 2013 respectively – so they do qualify as “large businesses” according definition set forth by the National Association Corporate Directors (NACD)
Moreover– there was definitely a transfer ownership involved here since Salesforce paid $27.7 billion for majority stake in Slack making it largest purchase made by software giant up until that point (Li & Bensinger, 2020). Furthermore– due size such deals – antitrust regulations must be followed to ensure no single corporation has too much power within industry thus preventing unfair competition from occurring
Overall then –the sale between Salesforce and Slack definitely fits description being classified as LBM because it involves two established entities coming together create something bigger while also falling within legal guidelines set forth government bodies.
