I-Cubed, a fast-growing Raleigh technology and consulting firm focused on the manufacturing sector, has been acquired for up to $24 million by a publicly traded Indian company.
A byproduct of the acquisition by tech consulting firm KPIT is the creation of a new 40-employee Raleigh company, ICI Digital, a Web-content management company.
KPIT agreed to pay $14 million for I-Cubed’s primary business, plus an additional $10 million that is contingent on achieving performance milestones. The business it acquired employs about 90 workers, most of whom work at the company’s offices at N.C. State University’s Centennial Campus.
Thompson said he is “highly confident” that the business will achieve all the milestones.
“In fact,” he added, “I’m going to stick around awhile to make sure it occurs.”
The company’s employees have their own motivation: They will share in the upfront money and milestone payments from KPIT.
I-Cubed, which was founded in 1984, has been an employee-owned business since 2006. Current employees owned more than 80 percent of the business and former employees owned the remainder.
Keeps I-Cubed name for now
KPIT was only interested in the larger of I-Cubed’s two major businesses – hence the spinoff, said Donald Thompson, I-Cubed’s CEO.
The ICI Digital operation that is being spun off “was outside KPIT’s sweet spot,” Thompson said. ICI Digital provides consulting and technology services for managing the digital infrastructure of “high-end websites” for customers such as TimeWarner Cable and Cary-based SAS.
During a transition period of 6-to-12 months, the I-Cubed business acquired by KPIT will maintain the I-Cubed name. Eventually, however, “we will be blended into the global KPIT brand,” Thompson said.
The I-Cubed business also is absorbing about 20 KPIT employees at the outset. In addition, Thompson anticipates the business will hire another 20-to-30 employees over the next six months, and roughly a third of those new hires will be based in Raleigh.
KPIT has more than 9,200 employees worldwide and generated $444 million in revenue in its latest fiscal year, up more than 20 percent from the previous year.
I-Cubed provides software and consulting services that help manufacturers accelerate the product-development process and reduce costs. Its customers include Caterpillar, John Deere, Pratt & Whitney and Raytheon.
Thompson said I-Cubed’s annual revenue has risen at least 30 percent in each of the last six years and that the company wasn’t seeking a buyer when it was approached by KPIT about eight months ago.
But by joining the much larger KPIT, he said, the business can compete for bigger pieces of business and “we can now serve our customers globally. One of our customers is Volvo. We serve Volvo in the U.S., but now we can can service them on a global basis.”
Thompson will continue to lead I-Cubed as vice president and head of KPIT’s product lifecycle management practice in North America.
Thompson also will initially be the CEO of the spinoff, ICI Digital, during a transitional period. ICI’s day-to-day operations will be run by Greg Boone, senior vice president and general manager.