Jacobs buys majority stake in PA Consulting

01 December 2020 Consulting.us 3 min. read
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Jacobs, a Dallas-based, global design and engineering consultancy, has acquired a majority stake in PA Consulting, a London-based global innovation and transformation consulting firm.

Jacobs’ private equity-style 65% ownership stake in PA Consulting will see The Carlyle Group exit its stake in the UK consultancy.

Carlyle in 2015 acquired a 51% stake in PA, giving it a value of $1 billion. In the next five years, PA would grow rapidly via organic and inorganic additions, including seven acquisitions. The M&A drive included a sizable expansion in the US, where the firm bought product design and innovation consultancies Essential Design, 4iNNO, Astro Studios, and Cooper Perkins.

During the Carlyle ownership, PA saw EBITDA more than double and registered compound annual revenue growth of 12% since 2016. PA is now valued at $2.432 billion.

Jacobs’ investment will take the form of a 65% stake via preferred and common equity, with PA employee rollover constituting a 35% ownership stake. Jacobs will additionally provide debt financing to PA with a $845 million term loan and a revolving credit facility of up to $130 million to fund future growth.

Jacobs buys majority stake in PA Consulting

Jacobs will fund the acquisition through cash-on-hand and existing and incremental debt facilities. The transaction is slated to close by the end of the firm’s fiscal 2021 second quarter.

The acquisition will allow PA to continue building on the last five years of growth via further geographic expansion and additional acquisitions, particularly in the US. The London-based firm has 3,200 consultants, designers, innovators, and scientists across offices in Europe and the US.

“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,” said Ken Toombs, who was named global CEO of PA in October. “We look forward to continuing to deliver ingenious solutions for our clients, supported by Jacobs’ investment and complementary capability.”

Jacobs is one of the largest engineering, design, and construction services firms, alongside competitors Aecom, SNC-Lavalin, and WSP. The expansion of its consulting capabilities will follow the wider trend of its peers to a shifting focus on higher-margin advisory work instead of riskier, fixed-cost construction contracts.

Jacobs has approximately 55,000 employees and $14 billion in annual revenue.

Steve Demetriou, chair and CEO of Jacobs, 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.”