Magic Solutions

Magic Solutions International, Inc., commonly known as Magic Solutions, was a software company headquartered in Paramus, New Jersey, that developed help-desk automation and IT asset-management systems. Founded in 1988 by Igal Lichtman, the company grew out of operational problems at MicroAge, a New Jersey computer retailer and value-added reseller. MicroAge needed a practical way to track equipment, serial numbers, warranties, repairs, and service histories. Lichtman designed a workflow application called ServiceMagic, initially using the C programming language and drawing on the assistance of former colleagues and friends from the Israel Defense Forces. The company’s direction changed when one of MicroAge’s major customers needed a PC-network-based help-desk system to replace a mainframe application. Lichtman adapted the underlying technology into SupportMagic, a Btrieve-based product that helped the customer transition away from Computer Associates’ Netman system. Press coverage of the project generated substantial interest, including more than one hundred inquiries, and encouraged Lichtman to establish Magic Solutions as a dedicated software business. Magic Solutions expanded from a single-programmer operation serving one customer into an independent enterprise-software vendor with more than 300 employees and approximately 6,000 customers. Its products automated internal IT support processes, including incident handling, service workflows, equipment tracking, knowledge access, and inventory discovery. The company emphasized customer-led product development: feedback from users influenced the short development cycles and the features added to its software. Rather than relying heavily on conventional advertising, Magic Solutions used public relations, trade shows, seminars, channel partners, and a direct-sales organization to build market recognition. Its commercial organization was led in part by Mike Pallatta, who developed a large direct-sales and telemarketing operation, and Andrew Rawson, who expanded marketing, public relations, analyst relations, and trade-show activity. This approach allowed the company to close substantial software transactions by telephone and helped establish its reputation in the internal IT help-desk market. The company also built a European distribution channel and pursued distributors in Asia and Latin America. By late 1997, international accounts reportedly generated close to 40 percent of sales. The brand’s technology portfolio broadened through licensing and integration arrangements. Magic Solutions developed a proprietary search technology called Statistical Information Retrieval, or SIR, which was later licensed to Microsoft for use with the CD-based TechNet knowledge base. It also entered arrangements involving Intel’s Wake-on-LAN and inventory-discovery technologies, Ziff Davis support content, and ServiceWare knowledge content. In 1997, the company acquired WINsales, a Seattle-based sales-force-automation business, giving it an entry point into the expanding customer-relationship-management software market. Magic Solutions remained independent and avoided venture capital during most of its growth. As the enterprise-help-desk market consolidated, however, management considered an initial public offering and received interest from Wall Street brokers. Network Associates, which had entered the market through acquisitions including Vycor and PHD Help Desk, ultimately pursued Magic Solutions. Network Associates announced an acquisition plan in March 1998. Contemporary accounts describe the transaction as approximately $110 million in cash overall, while the announcement characterized approximately $90 million as consideration for in-process research and development. After operating under Network Associates, the company’s assets were sold to BMC Software. The asset transaction was announced in December 2003 and formally completed on February 2, 2004, for approximately $47 million in ca…

Magic Solutions originated inside MicroAge, a computer retailer and value-added reseller based in Mahwah, New Jersey. MicroAge sold and serviced computer equipment, but its service department lacked a suitable PC-based system for tracking serial numbers, warranty rights, repairs, and service histories. In response, company president and co-owner Igal Lichtman designed a service-management workflow and worked with former colleagues and friends from the Israel Defense Forces to build an application in the C programming language. This first system was called ServiceMagic. A major MicroAge customer later needed a help-desk system that could run on a PC network. The customer was replacing a mainframe environment and required an alternative to Computer Associates’ Netman. Lichtman modified ServiceMagic and developed SupportMagic, a Btrieve-based help-desk application. The customer’s successful implementation attracted attention after a magazine article described the project. More than one hundred inquiries followed, demonstrating demand beyond MicroAge’s own operations and leading to the creation of Magic Solutions in 1988. The company began with one programmer supporting one customer. Lichtman devoted himself to the new business and recruited additional technical and commercial staff, including programmer Vadim Mostov. Mike Pallatta joined the sales organization and eventually became vice president of Sales, while Andrew Rawson became vice president of Marketing. Pallatta built a relatively lean telemarketing and direct-sales model, and he and Rawson developed telephone-based sales tools capable of closing deals without in-person meetings. Lichtman retained close control over product development and directed the company according to customer feedback rather than a purely internally generated product roadmap. Magic Solutions expanded its sales force, created a European distribution channel, and used trade shows, press relations, seminars, and industry presentations as its main promotional mechanisms. The company became recognized as a significant provider of internal IT help-desk software. Its trade-show presence was unusually elaborate, featuring a space-shuttle replica containing an interactive support center and an animatronic rabbit mascot. The company reportedly spent more than $250,000 on some individual trade-show displays. Marketing under Rawson grew to more than 35 employees, while Pallatta’s direct-sales organization reached approximately 60 people. The product and technology portfolio broadened during the mid-1990s. Magic Solutions developed Statistical Information Retrieval, known as SIR, a proprietary search engine designed around its search method. The technology was later licensed to Microsoft for the CD-based TechNet knowledge base. Magic Solutions also arranged technology relationships involving Intel’s Wake-on-LAN and inventory-discovery tools, Ziff Davis support content, and ServiceWare’s Knowledge-Paks. These arrangements helped the company extend SupportMagic into a broader support platform incorporating discovery, knowledge, and workflow capabilities. International operations became increasingly important. The company acquired SupportMagic Benelux in 1996, taking control of a major distribution operation, and released a Kanji version of SupportMagic for Japan through Transcosmos. It opened or established operations in Chicago, San Jose, Toronto, London, Frankfurt, Munich, Amsterdam, and Brussels, while Barbara Johnson supported broader European, Asian, and Latin American distribution. By late 1997, international accounts accounted for nearly two-fifths of sales according to the available historical account. Magic Solutions continued to operate without venture-capital backing and preserved its original management structure for much of its independent period. By the mid-1990s, however, the help-desk market was becoming more competitive and consolidated. Large software companies could bundle help-desk products with security, systems-management, or other enterprise offerings. Management considered both an IPO and outside investment. Network Associates had entered the sector through the acquisition of Vycor and PHD Help Desk and later opened discussions with Magic Solutions. Network Associates announced the planned acquisition on March 25, 1998. The deal was described in the announcement as approximately $90 million for in-process research and development, while broader historical descriptions report a cash transaction of approximately $110 million. Magic Solutions subsequently operated as part of Network Associates, which later became associated with the McAfee name. Network Associates sold the Magic Solutions assets to BMC Software in a transaction announced on December 15, 2003 and completed on February 2, 2004, for approximately $47 million in cash. The standalone Magic Solutions brand is now defunct, although its history represents an important example of an independent 1990s IT service-management software vendor that scaled through customer-led development, direct sales, channel expansion, and strategic technology partnerships.

1. 2004Assets transferred to BMC Software

   BMC Software completed its acquisition of the Magic Solutions assets from Network Associates on February 2, following the announcement of the transaction in December 2003.

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2. 1998Acquired by Network Associates

   Network Associates announced and completed the acquisition of Magic Solutions in a transaction reported at approximately $110 million in cash in broader historical accounts.

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3. 1997WINsales acquired

   Magic Solutions bought WINsales, extending its portfolio into sales-force automation and customer-relationship-management software.

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4. 1996SupportMagic internationalization and Benelux acquisition

   The company acquired SupportMagic Benelux and released a Kanji edition of SupportMagic for distribution in Japan.

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5. 1995Recognition in fast-growth company rankings

   Magic Solutions appeared in the Inc. 500 and received a Deloitte & Touche FAST 50 recognition during its rapid expansion period.

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6. 1988Magic Solutions founded

   Igal Lichtman established Magic Solutions after the success and wider interest generated by the SupportMagic help-desk application developed for a MicroAge customer.

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A customer-driven enterprise software provider focused on automating internal IT help desks, service operations, asset tracking, and related support workflows.

• ServiceMagicService management software1988

  ServiceMagic was the original service-management application created for MicroAge. It addressed the practical administrative needs of a computer service operation by organizing equipment identifiers, warranty entitlements, repair records, and service histories. Its workflow-oriented design supplied the technical foundation from which Magic Solutions later developed its commercial help-desk products.

• SupportMagicHelp-desk automation

  SupportMagic was Magic Solutions’ principal help-desk product. Built initially for a large MicroAge customer moving from a mainframe-based system to a PC network, it supported internal IT service workflows and helped organizations manage support requests and service operations. The product’s successful early deployment and subsequent press coverage generated the demand that led to Magic Solutions’ formation.

• SupportMagic PlatformIntegrated IT support platform

  The SupportMagic Platform broadened the company’s original help-desk offering through integrations and licensed content. Its surrounding technology ecosystem included inventory discovery, Wake-on-LAN capabilities, external support information, and knowledge content. The platform reflected Magic Solutions’ strategy of combining workflow automation with the information and infrastructure needed by internal IT support teams.

• Statistical Information Retrieval (SIR)Enterprise search technology

  SIR was a proprietary search technology developed by Magic Solutions programmer Efim Gendler. Its name referred to the statistical approach used to retrieve information. The technology was subsequently licensed to Microsoft for use with the CD-based TechNet knowledge base, extending the commercial reach of a technology developed within the help-desk software business.

• WINsalesSales-force automation

  WINsales was a sales-force-automation software business acquired by Magic Solutions in 1997. The acquisition added customer-relationship-management functionality to the company’s established IT support portfolio and provided a foothold in a neighboring enterprise software category.

• Trade-show space shuttle display

  United States · Europe

  Magic Solutions used a large space-shuttle replica containing an interactive support center as the centerpiece of its trade-show marketing. An animatronic rabbit mascot was incorporated into the display, creating a distinctive visual identity for an otherwise technical enterprise-software company.

  Outcome. The trade-show program became the company’s signature promotional activity and supported its reputation as a visible help-desk software thought leader.

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• International sales seminars

  United States · Canada · European Union

  The company organized an international seminar series for support professionals and channel participants, using education and demonstrations to promote its help-desk products across established and developing markets.

  Outcome. The seminars supported channel development and international expansion without relying primarily on conventional paid advertising.

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• 2004Transfer assets to BMC SoftwareM&A

  After Network Associates owned the business, the Magic Solutions assets were transferred as part of a later portfolio transaction.

  What changed. BMC Software acquired the Magic Solutions assets from Network Associates for approximately $47 million in cash.

  Aftermath. The standalone Magic Solutions brand became defunct following the transfer of its assets.

  Asset acquisition consideration. Approximately US$47 million in cash (Transaction completed February 2, 2004)

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• 1998Sell the company to Network AssociatesM&A

  The help-desk market was consolidating, and Network Associates was seeking to strengthen its position after entering the category through earlier acquisitions.

  What changed. Magic Solutions accepted acquisition by Network Associates. The announcement described approximately $90 million for in-process research and development, while broader accounts describe approximately $110 million in cash for the transaction.

  Aftermath. Magic Solutions ceased to operate as an independent software vendor and later became part of the asset portfolio sold to BMC Software.

  Acquisition consideration. Approximately US$90 million attributed in the announcement to in-process research and development; approximately US$110 million in cash in broader historical descriptions (1998)

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• 1997Acquire WINsalesM&A

  Magic Solutions faced a consolidating enterprise software market and sought growth opportunities adjacent to its core help-desk business.

  What changed. It acquired WINsales, a Seattle-based sales-force-automation software company.

  Aftermath. The transaction gave Magic Solutions an entry into customer-relationship-management software before the company itself was acquired by Network Associates.

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• 1996Pursue international distribution and localizationStrategy

  As the help-desk software business expanded beyond North America, Magic Solutions needed broader distribution and localized products.

  What changed. The company acquired SupportMagic Benelux, built offices and channels across Europe, and released a Kanji version of SupportMagic for Japan.

  Aftermath. International accounts became a substantial part of the business, representing nearly 40 percent of sales by late 1997 according to the historical account.

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• 2003Magic Solutions assets sold to BMC Software

  Network Associates agreed to sell Magic Solutions’ assets to BMC Software for approximately $47 million in cash; the acquisition was completed in February 2004.

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• 1998Magic Solutions announces acquisition by Network Associates

  Network Associates announced a transaction to acquire Magic Solutions, bringing the independent help-desk software vendor into a larger security and systems-management company.

  M&A
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• 1997Magic Solutions acquires WINsales

  The company purchased Seattle-based WINsales, a sales-force-automation software company, to establish a presence in the growing customer-relationship-management market.

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• 1996Kanji version of SupportMagic released for Japan

  Magic Solutions introduced a Kanji-language version of SupportMagic and arranged Japanese distribution through Transcosmos.

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1. Magic Solutions