Magnet 360, a 160-employee technology-based strategy-and-marketing firm aligned with huge Salesforce.com, has agreed to sell itself to Mindtree, the India-based IT consulting firm, for up to $50 million.
Mindtree's CEO said in a conference call Monday that the terms include a cash payment of $37 million and up to another $13 million tied to St. Louis Park-based Magnet 360's performance.
"We are now seeing clients starting to invest heavily in digital-transformation programs beyond just building the customer experience layer," said Mindtree CEO Krishnakumar Natarajan in a prepared statement. "This acquisition will strengthen our offerings in digitizing the value chain. … Combined with Mindtree's established Salesforce practice, this acquisition positions the company for leadership in addressing the fast-growing cloud-based services market."
Magnet 360 was formed in 2008 by co-founders Scott Litman and Dan Mallin, veteran technology-marketing entrepreneurs, and majority partner Skip Gage, the longtime marketing executive and founder of Gage Marketing. Gage became chairman of Magnet's board.
They and subsequent investors Salesforce and StarTec Investments, and several individuals, infused nearly $5 million by 2013 to roll out what became a fast-growing firm with more than $25 million in revenue, excluding several non-Salesforce subsidiaries that Magnet sold after Salesforce invested in 2013. Magnet said its revenue has been growing at a 20 percent-plus annual clip in recent years, and the company has expanded to offices in New York, Los Angeles and Chicago.
The maximum sale price of nearly $50 million over the next two years represents about 10 times the investment by founding and subsequent private investors between 2008 and 2013.
"We did all right," said Litman, who added that he and Mallin will remain consultants to Magnet and its major clients.
He said that Magnet will operate as a wholly owned subsidiary of Mindtree, which has a U.S. headquarters in New Jersey, and that all employees will keep their jobs, as the combination is designed to drive client-and-revenue growth.
Magnet CEO Matt Meents, who came to the company as part of a 2012 merger, will continue to lead it.
Meents said he was excited about tapping into Mindtree's "strategic relationships" with huge companies around the globe.
"We are very excited about becoming a key part of Mindtree's growth,'' Meents said.
Litman and Mallin, who earlier built and sold another technology-based marketing firm, are the founders of the Minnesota Cup annual entrepreneurial competition.