We believe Spiff exemplifies this new era, Deutsche Bank on CRM’s new M&A strategy

Salesforce (NYSE:) reached a definitive agreement to acquire Spiff, a provider of a new class of incentive compensation management (ICM) software that combines an intuitive low-code UI, the familiarity of a spreadsheet, and a powerful processing engine to drive commissions automation at scale.

The deal is expected to close in the first quarter of fiscal 2025, subject to customary closing conditions, and is not expected to affect the financial guidance Salesforce issued on Nov 29.

Founded just over five years ago, Spiff last raised $50 million in funding in May 2023, valuing the company at $260M post-money.

Deutsche Bank analysts view this acquisition as aligning with Salesforce’s refined M&A strategy, characterized by disciplined deal sizing, strategic fit, multiple paid, and non-dilutive terms.

Given Salesforce’s size, this acquisition, according to Deutsche Bank, though modest, is a strategic addition to its Sales Performance Management (SPM) solutions.

“Even at an assumed ~$300mn valuation and ~10x multiple, ~$30mn in ARR is clearly not about acquiring revenue (~10bp contribution to Salesforce Subscription revs). Analysts remain on the lookout for other tuck-in to mid-sized acquisitions in light of often seeing multiple transactions in the same fiscal quarter. Importantly, messaging from management suggests a new era of far more disciplined M&A; something that is known to be a concern of longer duration investors. Analysts believe Spiff exemplifies this new era,” commented Deutsche Bank, reiterating its Buy rating and $300 price target on the stock.