Magnet 360 Bought By India-Based Firm For $50M
Magnet 360, one of Minnesota’s fastest-growing marketing and technology consultancies, has sold to a multinational IT and outsourcing company for $50 million, the company said Monday.
The purchase by the Bangalore, India-based Mindtree could bolster its position amid growing competition in the cloud-based services market.
The acquisition would also boost its “offerings in digitizing the value chain and building sense-and-respond systems,” Mindtree’s CEO, Krishnakumar Natarajan, said in a statement.
Reports indicate St. Louis Park-based Magnet 360 will receive an upfront payment of $37 million. Over the next two years, the company will collect earnouts and additional payments of the remaining $13 million. The acquisition is expected to close on March 31.
Serial entrepreneurs Scott Litman and Dan Mallin, who together founded Magnet 360, had met with roughly 30 companies over the past three years in the process of selling the company. Magnet 360 had collaborated with Mindtree much earlier, yet Litman said serious acquisition talks weren’t initiated until fall of 2015.
“They’ve been great about sending people overseas to meet with us,” said Litman. “When we met these guys at Mindtree, they were like our cousins from the other side of the planet. They have a huge desire as entrepreneurs to drive business and growth.”
Although Magnet 360 happens to be the fourth successful startup Litman and Mallin have raised, neither are looking to take an immediate exit. “We are making sure this transition goes really well,” Litman said. “Our CEO and our COO are in India all week. We expect that most of the travel will be to visit with customers.”
Magnet 360 was originally founded in 2008 after starting as a network of marketing agencies. The business later shifted gears, bringing more capabilities in-house and evolving into a full-service marketing technology consultancy, offering marketing solutions that tie back to the Salesforce.com customer relationship management (CRM) platform. In the process, Magnet 360 acquired two of its partners that specialized in Salesforce, and Salesforce itself became a strategic investor in Magnet 360.
Mindtree said the roughly 100 employee workforce at Magnet 360 would remain employed, an aspect of the agreement that Litman admitted was rather important.
“One of the things we told ourselves the sale has got to be good for the customer, employees and shareholders,” he said. “If it doesn’t meet all three, we said that we aren’t going to do it.”
Following the deal, Magnet 360 CEO Matt Meents said in a statement that this acquisition “will position us among the leading consulting implementation and integration partners for Salesforce programs.”
Magnet 360, which was a private company prior to this acquisition, recorded roughly $25 million in revenue in 2015. Litman said the company had seen a consistent 25 percent increase in revenue each year. Mindtree, which holds offices in 14 countries, reported revenues of $583.8 million for its fiscal year 2015.
The sale of Magnet 360 is not Scott Litman and Dan Mallin's first entrepreneurial achievement. In 2014, Ernst & Young recognized both men as Entrepreneurs of the Year, which came nearly a decade after Litman and Mallin launched MN Cup, the largest statewide contest for startups in the country. Finalists from 2005 (the first year of competition) have raised nearly $200 million, and the contest is scheduled to begin its 12th year this March.