Aecom sells Management Services business for $2.4 billion
Design and engineering firm Aecom has sold its Management Services business – which provides consulting services to the government sector – to private equity firms American Security and Lindsay Goldberg. The $2.4 billion transaction is expected to close in in the first half of fiscal 2020.
According to Aecom, the company made the strategic divestiture to de-risk the business and increase margins – streamlining the company into a higher-returning professional services firm focused on design, planning, architecture, engineering, program management, and construction management.
Aecom plans to use the capital to substantially reduce its debt and to repurchase stock.
“Today’s announcement follows an extensive portfolio review focused on value creation and is among the largest opportunities we have been pursuing,” Michael S. Burke, Aecom’s chairman and CEO, said on October 14.
Troy Rudd, Aecom’s CFO, added, “With this transaction and expected record fourth quarter free cash flow, our balance sheet will be strengthened and we will have greater flexibility to deploy capital in the future.”
Aecom spun off Management Services earlier this year, in June. The Germantown, Maryland–based business is a prominent contractor to the US government and allied governments (including the UK), and provides program and facility management, environmental management, logistics, IT, training, and consulting services. The firm has 25,000 employees and operations across 28 countries. Managed Services delivered revenues of $3.69 billion in 2018, or approximately 18% of Aecom’s $20 billion in revenues last year.
John Vollmer, president of Management Services, will continue to lead the business. “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,” Vollmer said. “American Securities and Lindsay Goldberg have impressive track records of building lasting value for their portfolio companies, particularly in the government services sector.”
American Securities and Lindsay Goldberg are both based in New York. American Securities invests in North American companies with annual revenues ranging from $200 to $2 billion, and has approximately $23 billion under management. Lindsay Goldberg focuses on mid-market firms in industrials, consumer, healthcare, and financial/business/government services, and has approximately $13 billion under management.
“We are pleased to be acquiring the Management Services business in partnership with its President, John Vollmer, and the rest of its outstanding management team,” Ben Dickson, managing director at American Securities, said. “It is a unique platform in government services with deep sector experience and expertise, and an unparalleled reputation and commitment to its customers. We look forward to growing the business alongside management and Lindsay Goldberg by continuing to provide its customers with the best capabilities and service available in the market.”
Goldman Sachs and DBO Partners served as financial advisors to Aecom, while Wachtell, Lipton, Rosen and Katz served as legal advisors. Cravath, Swaine and Moore served as legal advisors to American Securities and Lindsay Goldberg.
