Deal Team
Bhavesh Boyapati
• From: Shakopee, Minnesota
• Indiana University, Kelley School of Business | 2026
• Majors: Finance & Accounting
• Minor: Computer Science
Brandon
Stein
• From: Deerfield, Illinois
• Indiana University, Kelley School of Business | 2026
• Major: Finance
• Minor: Computer Science
Presentation Agenda
Executive Summary
Salesforce Situation Overview
• Founded in 1999 by Marc Benioff, San Francisco - based Salesforce is one of the most influential enterprise tech companies in the world
• Sells customer relationship management (CRM) software and applications focused on sales, customer service, marketing automation, e- commerce, analytics, and application development
• Over the last 10 years, the compound annual revenue growth (CAGR) has been 29.04%
BOX Situation Overview
• The company was founded in 2005 by Aaron Levie and Dylan Smith and has grown to become a leading provider of cloud -based collaboration and storage services for businesses of all sizes
• Its service offerings include file sharing and syncing, secure file storage, and document collaboration
• More than 100 ,000 organizations utilize BOX and the firm has a 29 % CAGR over the last three years
Industry Highlights
• Industry revenue is forecast to grow at an annualized rate of 3 .1 % to $ 53 .9 billion over the five years to 2028 , with profit sliding to 16 .6 %
• The cloud - based content management services market is expected to grow at a CAGR of 17 .5 % during the forecast period ( 2023 - 2030 )
• Existing user base has been on the rise and is nearing a point of natural saturation, which will increase competition in the industry
FIR Recommendation Rationale for Salesforce: Acquisition of BOX at $33.09 per Share
• BOX complements Salesforce’s current capabilities and would expand their current technology to involve cloud-based content manag ement services in addition to customer relationship management.
• BOX will enhance overall customer experience for Salesforce users by allowing them to store documents and manage relationships from one entity
• The CRM and Cloud Content Management sectors are becoming more competitive as the number of new customers has been on the declin e, making it critical for companies to have unique traits to stand out from competitors
the synergies that BOX has to offer, the recommendation for the Acquisition of BOX is at an implied equity value of $
Note: Fiscal year ends January 31st
Presentation Agenda
Macroeconomic Outlook
Economic Highlights
• 87.2% chance of Fed hiking rates to 500-525
• Global Headline Inflation set to fall from 8.7% in 2022 to 7.% in 2023 due to lower commodity prices
• Global Growth baseline forecast: Growth set to fall from 3.4% in 2022 to 2.8% in 2023 up to 3.0% in 2024
• PPI declined 0.5% in March 2023: Demand for goods decreased 1.0% , Demand for services decreased 0.3%
• March 2023 CPI: Increased 0.1% from February and 5% YoY; Core CPI: Increased 0.4% from February and 5.6% YoY
• Real GDP increased 2.6% Q4 2022 and is expected to increase 0.6% Q1 2023
• National unemployment rate changed little from February 2023 or March 2022 to stay at 3.5%
• Nonfarm payroll employment increased by 236,000
Cloud Software Industry Overview
• Companies with cloud integration are more likely to take a multifaceted cloud approach
• 60% of current cloud enterprise customers have adopted only 3-6 years ago
• There is a key theme that points to a significant increase in adoption as ~30% of firms are planning to shift in the upcoming years
Cloud Enterprise Users by Industry
Cloud M&A: A Rising Theme
Presentation Agenda
Salesforce Overview
62% of the companies using Salesforce are in the US. (Statista)
They offer a technology platform for their customers to build and run business applications. Salesforce helps companies of every size & industry to connect with their customers through cloud, mobile, social, IoT & artificial intelligence (AI)
Salesforce is the #1 Customer Relationship Management (CRM) Platform
Salesforce is committed to helping businesses form stronger relations with their customers
They utilize Customer 360, an integrated CRM platform to connect companies with their customers. It unites marketing, sales, commerce, service, and IT departments with shared, easy-tounderstand data on one integrated
~80,000 Employees
~150,000 Customers
Top Business Segments
~$12.5B Cash on hand
CRM (Customer Relation Management) software lets companies store customer and prospect contact information, identify sales opportunities, record service issues, and manage marketing campaigns, all in one central location and make information about every customer interaction available to anyone at your company who might need it
BOX Overview
68% of Fortune 500 companies utilize BOX for cloud content management
Box is well-positioned to capitalize on the growing demand for remote work and collaboration tools and digital transformation
Revenue is expected to be in the range of $1.050 billion to $1.060 billion, up 7% yearover-year at the high end of the range, or 10% growth on a constant currency basis.
Ranked #2 Best Place to Work in 2023 by Glassdoor
BOX is known for their highprofile security, this is why the Department of Defense is one of their customers
~25,000 Employees
~100,000 Customers
Ongoing research to incorporate AI to summarize documents, quickly find data in documents, and automate creation content with Box Notes
74% of companies have implemented a permanent hybrid working style, increasing demand for cloud-content management
Salesforce’s
Priorities
Improve Margins and Return Capital to Shareholders
• In August 2022, Board of Directors authorized a program to repurchase up to $10.0 billion of common stock; During FY23, approximately 28 million shares of common stock repurchased for $4.0 billion; February 2023: additional $10 Billion in repurchases authorized
• The ”Plan”- Restructuring plan to increase operating margins: a reduction of workforce and real estate exits and office space reductions; $828mm incurred in FY23, expect to incur $600mm-$1.1B in near term
Acquire and make other transactions- Develop market share, new technologies, and intellectual properties
• Evaluate new investment opportunities to advance holistic Customer360 Platform and scalability; Past transactions include:
1. Slack- $27.7B in July 2021
2. Tableau- $15.7B in June 2019
MuleSoft- $6.5B in March 2020
BOX Financial Overview and Catalysts
q Box posted a positive net income for the first time in fiscal year 2023
q Free cash flows increased 40% from FY2022 due to increasing operating margins
q High performance and YoY increases can be attributed to high retention (108% in 2023)
q Cost of Revenues increasing slower that revenue growth- due to bundling of products
Anticipated Catalysts and Updates for 2023
q Stronger net retention rates will be seen in the upcoming years due to add ons of products to existing customers- Increases the overall Average Contract Value per customer- as well as improved marketing and selling strategy
q Cost of revenues increasing at ~1% YoY, leading to increasing operating margins
q Box Deployments- Increasing rate with customers along with renewals and expansions of contracts
q New Products being developed or newly launched including Box Sign, Insights, and enhancements to existing features
q Zero Trust Controls- More customizable security policies based on enterprise needs applied to products
q Development of Partnership with Microsoft to make sharing files easier and save it to Box content cloud
q Box Consulting Portfolio- New offering designed to help organizations make structural optimizations in areas like security, business processes, and user
Presentation Agenda
Strategic Rationale
• Strong fit with Salesforce’s goal to allow users to easily access data within their companies :
• Box is a cloud management content company that complements Salesforce’s existing customer relationship management offerings
• Cybersecurity is one of Salesforce’s main concerns -Box supports storing data securely with encryption while still supporting file sharing
• Integrating Box’s technology into the Salesforce platform could benefit every customer and further enhance Salesforce’s reputation beyond being purely a CRM provider
- Many customers already use Box for backend storage on Salesforce
- Would allow Salesforce to better manage their customer relationships by allowing companies to manage their content on their platform
• The CRM industry has experienced less customers entering, making the industry more competitive .
- This acquisition would expand Salesforce capabilities , increasing customer subscriptions
- Would allow Salesforce to better manage their customer relationships by allowing companies to manage their content on their platform
Strategic Recommendation – Hard Synergies
Description
• With their combined resources, the overall amount spent on research and development for their products will decrease
- Box spent $243,529 M for Research and Development for fiscal year 2023
- Salesforce spent $ 5,055 M for Research and Development for fiscal year 2023
• Both companies already have operations in place for sales and marketing, with their combined resources, the overall amount spent on this segment will be reduced
- Box spent $331,400 M for Sales and Marketing for fiscal year 2023
- Salesforce spent $13,526 M for Sales and Marketing for fiscal year 2023
• Box has data and access to information from its client’s which can be used to improve Salesforce’s operations and development
• Many customers already use BOX for backend storage with Salesforce , combining these complementary technologies with many similarities will result in cost savings
• Through this acquisition, Salesforce will be able to optimize their staff workforce and save revenue that would otherwise be contributed towards salaries
• Salesforce has its own Content Management division which can be consolidated with BOX’s Infrastructure upon acquisition
• Salesforce and Box are both in the same subsector of the industry so this acquisition will reduce competition in an already saturated market
Strategic Recommendation – Soft Synergies
Description
• With Salesforce acquiring BOX, they will be able to increase their new customer subscriptions that utilized BOX and did not utilize Salesforce, which will increase their market share
• This increased market share will give both companies higher negotiating power, which will drive bottom -line growth in the long -term
• Both companies value cybersecurity as a priority
• Salesforce will be able to greatly enhance its cybersecurity as BOX is known for its secure storage which is why the Department of Defense is one of their customers
• Box Keysafe has been enhanced to include unique self -protected encryption keys that increase storage security to one of the most trustworthy in the sector
• As one company, Salesforce with be able to give companies end -to -end accessibility for their customers
• This means that businesses would be able to use Salesforce for customer relationship management as well as for file sharing and collaboration
• Leads to higher operation margin which is a key focus for Salesforce with the “Plan”
• The most notable patents that would be obtained from this acquisition are those related to e -signatures
- Two are relating to the handling and acquiring of electronic signature
- The third is related to the security and governance in electronic signature systems
- Box is in the process of finalizing a partnership with Microsoft to simplify e-signatures while maintaining the integrity of security
• Box and Salesforce have many similar customers and in same cases, the same customers, allowing opportunities for cross -selling and up -selling which can increase revenue and decrease cost of sales
Presentation Agenda
Discounted Cash Flow Valuation
Sources: SEC Filings, Bloomberg, Cap IQ
Box Inc. Sensitivity Analysis/
Football Field Analysis
Football Field Analysis
Presentation Agenda
Strategic Alternatives
Company Snapshot Highlights
• Founded: May 2007
• HQ: Delaware, US
• Sector: Cloud Software
Company Description:
Weaknesses
Strengths Key Synergies
Mkt Cap: $7.6B
P/BV: N/A
EV/EBITDA: 20.89x
DBX provides solutions to securely store, synchronize and share business files through centralizing work in the cloud
• Founded: Dec 2008
• HQ: Delaware, US
• Sector: Work Management
Company Description:
• CAGR of 15% since 2018
• Key Acquisitions have included HelloSign, DocSend, and CloudOn to develop information management and cybersecurity infrastructure
• Professional and Personal user base
• R&D Expenses Increased by 50% FY23
• Negative Cash Flows
• Growing Headcount
• Security Breaches have been of concern in the past
• Free Version is very limited and not ideal for corporate use
• Government Regulation
• Saturated Market
• Customer Retention and margin pressures mounting
• Simple and Easy design
• Easy integration into SalesForce operations
• File sharing and communication among teams
• User-friendly UI/UX Design
• Strong hard synergies
• Strong soft synergies
Mkt Cap: $3.7B
P/BV: 10.94x
EV/EBITDA: N/A
ASAN is a platform designed organize, track, and manage work
• Increased Demand for Remote work spaces and work management tools
• Model restrictive to smaller companies
• High profile clients including Dropbox, Airbnb, NASA
• Allows collaboration across services
• Strong soft synergies
• Few hard synergies
Mkt Cap: $3.9B
P/BV: 29.18x
EV/EBITDA: N/A
• Founded: Apr 1983
• HQ: Massachusetts, US
• Sector: Data Processing
Company Description: PEGA develops client onboarding and lifecycle, and customer engagement software
• Founded: Aug 2008
• HQ: Ames, IA
• Sector: Software
• Government initiatives such as green drive may lead to government adoption of solutions
• Consistently growing “ACV”(Annual Contract Value)- 15% since 2021
• High Attrition Rate among its employees
• Limited R&D investment
• Model limits integrating small and niche firms
• Strong distribution network and client base
• Consistent quality and output through automating various processes
• Good hard synergies
• Good soft synergies
Mkt Cap: $2.79B
P/BV: 1.1x
Company Description: WK offers financial solutions such as auditing, ERM, Risk Compliance, and Reporting
• 4 acquisitions since 2021 to develop integration and financial reporting capabilities
• Increasing Average Annual Contract Values from 2021
• Expected Loss of Operations FY23- ~$110MM
• Product marketing and Integration is underdeveloped
• Profitability ratio and Net margins are below industry average
• Strong Client Portfolios
• Strong free cash flows- able to expand into new projects
• Strong Client Retention
• Few hard synergies
• Strong soft synergies
Source: Mergent Online, SEC Filings
Strategic Alternatives
Cloud Services Industry Relative Valuation
Sources: SEC Fillings & Cap IQ