NEW YORK, Nov. 30, 2020 /PRNewswire/ -- PA
Consulting (PA), the consultancy
that's Bringing Ingenuity to Life, today announced
that global technical and professional services
leader, Jacobs (NYSE: J) has signed an agreement to
invest in PA for a 65% shareholding in the company. The
transaction, which values PA at £1.825 billion and
is expected to close by the end of calendar Q1 2021
subject to regulatory approvals and shareholder
consent, sees current shareholder The Carlyle Group exit
its stake in PA.
PA has grown strongly during the five-year Carlyle investment
period through a combination of organic and M&A-led growth
(seven acquisitions) which has driven global expansion. This has
resulted in EBITDA more than doubling over the period of Carlyle's
investment and compound annual revenue growth of 12% since
2016.
From its inception in 1943, PA has worked with a wide range of
clients – from start-ups with a promising idea to change the world
to some of the most important global companies and organizations –
to find innovative ways to be faster and nimbler, and to
create the services and products that grow their businesses,
delight their customers and serve citizens. PA has
developed world-leading innovations, for example
with Virgin Hyperloop to reinvent
transport, with Ori
Biotech to revolutionize cell and gene therapy
manufacturing, and with iPredict™, the world's
first AI and machine learning system to predict
failures in critical underground electricity distribution
assets.
The new strategic partnership
with Jacobs will enable PA to build on this success and
to accelerate its growth plan through geographic expansion,
particularly in the US,
and additional acquisitions. The partnership will
see PA further enhance its market-leading
capabilities in innovation, design, digital
and technology. The private equity
style investment from Jacobs will allow PA to retain
its independence, alongside current culture, brand and values.
The continued share ownership by PA employees is a key feature of
the transaction.
John Alexander, Chair of PA,
said: "We have undertaken a thorough process to screen and
select potential new external investors that align with PA's
culture, independence and ambition. Jacobs stood out
during the selection process because of the close affinity between
our respective values and their reputation as one of the leading
global providers of technical and professional services to clients
across the public and private sectors. We were hugely
impressed with Jacobs' commitment to a
PE style investment to support our values and
purpose and accelerate our growth trajectory."
Ken Toombs, CEO of PA
Consulting, said: "We would like to thank Carlyle for the
excellent partnership over five years. Together we have
significantly grown the business and we are proud of what we have
accomplished. We see Jacobs as the ideal partner for PA
because of their market leading reputation, the
alignment with our respective ambition and the
opportunities to better serve clients through access
to Jacobs' global platform and client base,
positioning us for the next phase of growth. Their purpose of
creating a more connected, sustainable world and commitment to
an inclusive future for all aligns with our own purpose
– Bringing Ingenuity to Life – and
our commitment to innovate towards a positive human
future. We look forward to continuing to deliver ingenious
solutions for our clients, supported
by Jacobs' investment and complementary capability."
Jacobs Chair and CEO Steve
Demetriou said: "We are excited by this partnership
and the opportunity to set a new industry benchmark together for
technically-driven solutions that drive value for our clients,
employees and investors – and changing the shape of our
industry. We look forward to working together to deliver PA's
ambitious growth plans and strengthening their reputation as the
leading provider of end-to-end innovation capability."
Fraser Robson, a Managing
Director in the Carlyle Europe Partners advisory team,
said: "It has been a great pleasure working with the PA
team. Together we have invested in people, technical capabilities,
and expanded the PA platform through strategic acquisitions. This
has delivered strong growth and we are delighted with the role we
have played in establishing PA as a global industry leader in its
field."
Carlyle invested in PA Consulting in December 2015 through Carlyle Europe Partners IV
(CEP IV), a European-focused, upper-mid market buyout fund. The
exit of CEP IV's stake in PA is another example of Carlyle's
strategy of working in partnership with management teams to execute
value creation initiatives.
Transaction Terms and Financing
The transaction is structured as a private equity style investment,
with Jacobs acquiring a 65% stake in the form of preferred and
common equity, with PA employee rollover constituting the remaining
approximately 35% ownership stake at closing. Preferred equity
holders receive a 12% compounded annual coupon accrual. A sweet
equity incentive pool of 25% of the common equity is available for
issuance to current and future partners and employees of PA
Consulting. The sweet equity pool will be funded after satisfying
the coupon on the preferred equity. In addition, Jacobs will
provide debt financing to PA in the form of a £650 million
($845 million) term loan and a
revolving credit facility of up to £100 million ($130 million) to fund future growth. Jacobs
intends to fund the acquisition through a combination of
cash-on-hand and existing and incremental debt
facilities.
The transaction will be implemented by way of a U.K. Scheme of
Arrangement and is subject to the satisfaction of customary closing
conditions, including the approval of the current shareholders of
PA and the U.K. Court (pursuant to the Scheme), as well as the U.K.
Financial Conduct Authority. Jacobs expects the transaction to
close by the end of its fiscal 2021 second quarter.
Advisors
J.P. Morgan and HSBC are serving as financial advisors to The
Carlyle Group and PA Consulting. Linklaters is serving as legal
counsel to The Carlyle Group and PA Consulting, and Dickson Minto is serving as legal counsel to
PA regarding its new partnership with
Jacobs.
About PA
We believe in the power of ingenuity to build a positive human
future in a technology-driven world. As strategies,
technologies and innovation collide, we create opportunity from
complexity. Our diverse teams of experts combine innovative
thinking and breakthrough use of technologies to progress further,
faster. Our clients adapt and transform, and together we achieve
enduring results. An innovation and transformation
consultancy, we are over 3,200 specialists in consumer and
manufacturing, defense and security, energy and
utilities, financial services, government, health and life
sciences, and transport. Our people are strategists, innovators,
designers, consultants, digital experts, scientists, engineers and
technologists. We operate globally from offices across the UK, US,
Europe, and the
Nordics. PA. Bringing Ingenuity to Life.
www.paconsulting.com
About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global investment firm with
deep industry expertise that deploys private capital across four
business segments: Corporate Private Equity, Real Assets, Global
Credit and Investment Solutions. With $230
billion of assets under management as of September 30, 2020, Carlyle's purpose is to
invest wisely and create value on behalf of its investors,
portfolio companies and the communities in which we live and
invest. Carlyle employs more than 1,800 people in 30 offices across
six continents. Further information is available at
www.carlyle.com. Follow Carlyle on Twitter @OneCarlyle.
About Jacobs
At Jacobs (NYSE: J), we're challenging today to reinvent tomorrow
by solving the world's most critical problems for thriving cities,
resilient environments, mission-critical outcomes, operational
advancement, scientific discovery and cutting-edge manufacturing,
turning abstract ideas into realities that transform the world for
good. With approximately $14 billion
in revenue and a talent force of more than 55,000, Jacobs provides
a full spectrum of professional services including consulting,
technical, scientific and project delivery for the government and
private sector. Visit Jacobs.com and connect
with Jacobs
on Facebook, Instagram, LinkedIn and Twitter.
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SOURCE PA Consulting