For Salesforce, it’s Eat or Be Eaten

Marc Benioff has built Salesforce into a major force in cloud software in recent years, in large part through acquisitions. But in losing LinkedIn to Microsoft, the limits of Mr. Benioff’s ability to compete with bigger firms for deals showed. And that raises the prospect that Salesforce could end up itself being bought, perhaps by Microsoft or Oracle.

The company’s once red-hot sales growth has slowed to 27% annually in fiscal 2016 from 37% in 2013. The acquisition of LinkedIn would have transformed the company, boosting annual revenue in one shot by 45% to $10 billion and putting Salesforce into new areas like corporate recruiting. But now that’s off the table, Salesforce’s chances of pulling off a big, transformative merger are over. There’s simply not much else to buy that has more than $1 billion in revenue and is related to anything Salesforce is pursuing.