MindTree – A Toddler Growing up with a Cloud Strategy

Earlier this month, MindTree Limited (BSE:532819), an India-based international IT outsourcer, entered into a definitive agreement to acquire Magnet 360, LLC, a Salesforce Platinum Consulting Partner. MindTree paid $50 million in cash, including a cash payment of $37 million at close and an earn-out payment of $13 million over two years. Our estimate is that the deal represents approximately 1.7x revenue, which is generally in the range we are seeing most established Salesforce consulting firms trade depending on their growth and margin profile.

We wanted to highlight this deal not because of its Salesforce nature but instead because it seems to signal rejuvenation by MindTree to more aggressively grow inorganically. This deal represents MindTree’s fourth acquisition since January 2015 after taking an M&A hiatus for nearly 6 years (although they have tried to pursue M&A during the period but seemed to always come up short). MindTreee has been vocal recently about its aggressive growth strategy to expand and increase market share, especially within cloud services consulting solutions. In July of this year, the company acquired Bluefin Solutions, a UK-based SAP consulting firm, for more than $60 million.

While at approximately $600 million of revenue MindTree continues to be a fraction of the size of the larger Indian outsourcers, it will be interesting to see how its cloud consulting practice will continue to evolve from here.