By Calvin Biesecker
Booz Allen Hamilton (BAH) on Friday said it plans to separate its United States government and global commercial consulting businesses and will sell a majority stake in the government business to the private equity firm The Carlyle Group for $2.5 billion.
For Carlyle the deal adds to its portfolio of aerospace and defense holdings. The company has been more focused on acquiring firms in the commercial aerospace industry the last several years, most recently with Sequa Corp. and Firth Rixon Ltd. last December.
Carlyle’s deal for BAH’s government business is expected to close in the second half of this year pending shareholder and regulatory approvals. BAH is owned by its partners, which consist of its various executive officers.
BAH’s government business, which is based in Northern Virginia and has over 18,000 employees, did over $2.7 billion in sales in its latest fiscal year ended March 31. The government business, which serves the Defense Department, Department of Homeland Security, and other federal clients, makes up about two-thirds of the overall company.
Overall BAH has been growing at double-digit rates the past 15 years, a company spokeswoman told Defense Daily. In its latest fiscal year, the growth rate was 14 percent for the government business and the overall company, she said.
The government business has been growing at double-digit rates the past few years and is expected to continue growing, a Carlyle spokesman told Defense Daily. BAH has “an amazing brand and a great reputation,” he said.
BAH’s government business officers, who collectively will have a minority stake in the company, will retain their managerial roles. Ralph Shrader, chairman and CEO of BAH, will lead the government business following its acquisition by Carlyle.
BAH has been exploring its strategic alternatives for the past two years. It was becoming increasingly difficult to manage both the government business, which is highly regulated, and the commercial business under the same “umbrella,” the company spokeswoman said.
The commercial business will continue as a stand-alone company owned and operated by its current officers and focused on global management consulting.
BAH’s financial adviser for the deal is Credit Suisse.