Build an M&A Model - Salesforce Acquires Slack

Overview In this exercise, you will step into the shoes of Salesforce’s corporate development team as they evaluate acquiring Slack in late 2020, a high-growth collaboration platform. The goal: integrate Slack into Salesforce’s ecosystem to create long-term strategic value. You will work with publicly available financials and explore how different deal structures—cash vs. stock, debt financing, and asset write-ups—impact pro forma financials and EPS. Some numbers have been simplified for learning purposes, but the exercise reflects the real mechanics analysts use in M&A. Beyond building the model, your challenge is to analyze whether the deal makes sense: Is it accretive or dilutive in the first year? How does the mix of cash and stock affect timing until the deal becomes beneficial? Which assumptions or synergies drive the transaction to become a “good deal” in the future? Learning Goals Understand real-world transaction assumptions: Go beyond calculating diluted shares to defining deal structure, with a focus on transaction financing. Master transaction mechanics: Complete the Sources & Uses sections and perform asset write-ups and purchase price allocation. Build pro forma financials: Incorporate new debt, interest expense, and incremental D&A to evaluate the impact on pro forma EPS. Analyze accretion/dilution: Assess whether the transaction is accretive or dilutive, and use sensitivity analysis to understand how changes in deal assumptions affect EPS. By completing this exercise, you’ll see how transaction mechanics—from Sources & Uses to purchase price allocation and accretion/dilution—come together in a fully integrated M&A model. Key Concepts Accretion: The increase in the acquirer’s EPS following a transaction. Dilution: The decrease in the acquirer’s EPS following a transaction. Sensitivity Analysis: Evaluates how changes in key assumptions (e.g., offer price or stock consideration) impact accretion/dilution. Pro Forma EPS: EPS adjusted for transaction effects such as financing, D&A, and synergies. Sources of Funds: Where acquisition financing comes from (cash, debt, or stock). Uses of Funds: How acquisition capital is deployed, including purchase price, fees, and debt repayment. Asset Write-Ups: Adjustments to the target’s assets to fair value, affecting post-transaction depreciation and amortization.

Practice Build an M&A Model - Salesforce Acquires Slack with interactive Excel modeling exercises in our M&A Modeling module.

This hands-on modeling exercise helps you master Build an M&A Model - Salesforce Acquires Slack through real-world Excel practice and financial modeling techniques.