GoKart Labs, a 50-person Minneapolis-based digital design and consulting firm, has been acquired by a Chicago company that already has a presence in the Twin Cities.
The buyer, West Monroe Partners, is an employee-owned full-service technology consulting firm with 1,500 professionals in nine offices, including 60 in Minneapolis about a block from the GoKart space in the Warehouse District.
“We are really excited to not only bring the two businesses together, but creating this new office together will be phenomenal,” said GoKart’s co-founder Don Smithmier. “We’ve got the opportunity to create a really world-class product studio surrounded by management and technology consulting expertise that will be a powerful combination.”
The deal was completed Oct. 4; terms were not disclosed. Tom Ewers, managing director and lead of West Monroe’s Minneapolis office, said his firm will have about $350 million in 2019 revenue. GoKart will have about $14 million in revenue this year, Smithmier said.
GoKart was started in 2009 by Smithmier, a former Capella Education executive, and A.J. Meyer, who saw a need to help companies build their digital and online services.
GoKart has served as a business incubator of sort and developed such companies as the social learning platform Sophia Learning; online news site Bring Me the News; and the online health literacy education platform the Big Know. It has also worked on the digital transformation of big organizations including the digital transformation of Allina Health’s patient-centered online tools.
The companies are now looking for a space big enough for both operations in the Warehouse or North Loop neighborhoods.
The two firms are coming together during a time when companies of all sizes are looking to invest heavily in digital offerings.
International Data Corp., a provider of market intelligence for the technology industry said in a report earlier this year that enterprises around the world would spend $1.2 trillion in digital transformation spending in 2019, an 18% increase over 2018.
Smithmier will become a senior director at West Monroe in the Minneapolis office and work closely with Ewers. Meyer will become an innovation fellow, a role for experienced technologists at West Monroe. Virtually all the technical and consulting staff of GoKart will join West Monroe and be eligible for West Monroe’s employee stock ownership plan. A select number of GoKart’s finance and back-office positions will be consolidated.
West Monroe said GoKart is its largest acquisition to date. Ewers said the firm has looked at 300 possible businesses in the past two years and met with 60 before making a final offer for GoKart. West Monroe has generally looked for modest acquisitions that fill either geographic or capability purposes.
Both sides realize that clients are looking for partners that can solve for business, user and technology needs as well as have strategic expertise and the ability to scale projects on an enterprisewide basis.
“We were coming at this from two different sides and serendipitously met in the middle,” Ewers said. “One of the things we identified [in GoKart] was digital product and service.”
“It was interesting in that we were both kind of looking for each other,” Smithmier said of the deal process. “There was a lot of need for strategic expertise, which West Monroe has in spades. We saw that as very complimentary.”