Bain Capital said it would acquire Guidehouse, a consulting firm that advises government organizations and businesses, in a deal valuing it at $5.3 billion including debt.
The firms announced the agreement on Monday in the latest move by private equity to scoop up professional services providers as consulting growth in certain areas slows. It is also a rare deal for an asset class that is struggling to find exits and to return capital to awaiting limited partners.
In 2018, Veritas Capital, which invests in businesses at the intersection of government and technology, carved out PwC's U.S. public-sector consulting business for an undisclosed price and rebranded it as Guidehouse.
Guidehouse provides management and technology consulting and other services to federal government agencies, including the Departments of Defense, Homeland Security, and Veterans Affairs, and to state and local governments, as well as businesses.
Based in McLean, Virginia, Guidehouse completed a series of add-on acquisitions under Veritas, including Navigant Consulting in 2019, Dovel Technologies in 2021, and Grant Thornton’s public-sector advisory practice last year. Alongside strong organic growth, the business has jumped from around $600 million of revenue in 2018 to expected 2023 revenue of more than $3 billion.
Under Veritas, Guidehouse increased its emphasis on national defense and cybersecurity services, taking advantage of both Veritas' expertise in the space (with prior defense-focused investments) and increased geopolitical tensions. As part of that effort, last year, the business consolidated its defense and national security units into a single uniform division.
Guidehouse's existing management team will stay with the business, including leadership from CEO Scott McIntyre.
“We’ve been operating the business for half a decade under their ownership and sponsorship, planning on an exit to another private equity firm for most of that time,” McIntyre said, referring to Veritas. Part of that vision includes a continued focus on inorganic growth, with expectation that there's continued opportunity in scooping up smaller players.
Per Dealogic, there have been 31 private equity-led management consulting deals so far in 2023, down slightly from 37 deals in the prior period
“It’s a very big market where there’s real runway growth,” said Joseph Robbins, a partner at Bain.
Baird served as financial advisor to Bain Capital. PricewaterhouseCoopers LLP served as accounting advisor and Kirkland & Ellis LLP served as legal counsel to Bain Capital. Guggenheim Securities LLC, Jefferies LLC, and Goldman Sachs & Co. LLC served as financial advisors to Guidehouse and Veritas. Milbank LLP and Covington & Burling LLP served as legal counsel to Guidehouse and Veritas.