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Private Equity Acquires Government MSP for $2.4 Billion, 11.6X EBITDA

American Securities LLC and Lindsay Goldberg, two private equity firms, are acquiring AECOM’s management services business — which includes government-focused IT services and cybersecurity capabilities. The price tag is $2.405 billion — or a lofty valuation of 11.6 times expected adjusted EBITDA for fiscal 2019.

Aecom back in June 2019 announced plans to spin off the Management Services business. At the time, Aecom said the business unit ranked as a top 20 government services provider, according to Bloomberg, with expertise across intelligence, cybersecurity, IT, nuclear remediation and O&M (operations and maintenance).

In that June 2019 statement, Aecom said the Management Services business had about 25,000 employees — 10,000 of whom have security clearance. In fiscal 2018, the Management Services business generated $3.7 billion in revenue and $200 million of operating income.

Private Equity Acquires Aecom’s Management Services: Executive Perspectives

John Vollmer, president, AECOM’s Management Services group

Fast forward to present day and the this week’s private equity deal. On the leadership front, John C. Vollmer, president of AECOM’s Management Services group, and the existing management team will continue to lead the business.

Referring to the business unit sale, Vollmer said:

“This transaction is a testament to our proven execution ability in complex, mission-critical situations globally, and the hard work and commitment of our talented employees. American Securities and Lindsay Goldberg have impressive track records of building lasting value for their portfolio companies, particularly in the government services sector. I am confident that this world-class investor group has the resources and expertise that will enable us to accelerate our innovation and future growth.”

The deal is expected to close in the first half of fiscal 2020.

Government IT Service Providers: Mergers and Acquisitions Deal List

Merger and acquisition (M&A) activity involving government IT service providers has been steady, with numerous first-time buyers jumping into the market. Recent deals ChannelE2E has tracked are listed here.

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