Guidehouse to get a more global private equity owner / Berkah

The consulting firm has been held by one of the government market's most notable private equity owners in Veritas Capital, but the incoming new owner Bain Capital is in a different category of size and reach.

The movement of companies in the government market going from one private equity owner to another happens so frequently that we can essentially consider it standard operating procedure.

Pick your own word or phrase to describe the opposite of modus operandi for Bain Capital's Monday announcement of its plan to acquire Guidehouse in a transaction valued at $5.3 billion including debt.

The purchase also will represent an exit by Veritas Capital, which acquired the then-U.S. public sector business of PricewaterhouseCoopers in 2018 and rebranded it to Guidehouse.

The transaction also means Guidehouse is going to a much larger and more globally minded owner that is entering the GovCon market with this transaction.

Veritas is a GovCon investing stalwart that touts having $40 billion in assets under its management that cover companies at the intersection of government and technology. On the other end, Bain Capital's holdings are four-to-five times that at $180 billion across many more verticals and geographies.

Bain Capital does currently hold one member of the overall government technology ecosystem in Nutanix, a cloud software provider who is a key partner to many of the market's most notable systems integrators.

But the pending purchase of Guidehouse appears to be the first such of a prime contractor, even when considering this particular company's wider strategy that includes comercial work.

Under Veritas' ownership and chief executive Scott McIntyre's leadership, Guidehouse has looked to fast-track its growth and evolution into a much larger consulting firm across both government and commercial markets.

The firm touts itself today as an estimated $3 billion-annual revenue business with 17,000 employees worldwide. When Veritas acquired the Guidehouse business, those figures respectively were closer to $600 million in annual sales and 1,500 staffers.

That pathway has included three major acquisitions, including the purchase of fellow consultancy Navigant in 2019 to roughly triple Guidehouse in size and more evenly balance the portfolio between government and commercial markets.

For practical purposes, that meant Guidehouse wanted (and wants) to be just as present among the regulators as they are with those that follow the regulations. Customers in category two include those in verticals such as health care, financial services, energy and infrastructure.

In 2021, Guidehouse acquired Dovel Technologies to bring in more IT-centric services and programs in health and life sciences. Guidehouse's most recent buy was of the then-Grant Thornton public sector practice, which it completed in the fall of 2022.

McIntyre and the current Guidehouse executive team will continue in their roles after Bain Capital closes the transaction, according to their release. No details given yet on the anticipated timing of closure.

Bain Capital touts having made more than 1,100 primary and add-on investments since its inception in 1984, so Guidehouse will at least start out with a larger pool of resources and networks to tap into with its incoming owner.

"We look forward to an impactful partnership with the Bain Capital team leveraging their resources and operational expertise as we work towards building our next generation consultancy with an unwavering commitment to creating the scalable, innovative solutions our clients need to succeed in this increasingly digital and complex environment," McIntyre said in the release.

As for where Veritas goes from here: they own Arcfield, Cubic Corp. and Peraton. That is more than enough in the government market to focus on.

Baird is acting as financial adviser to Bain Capital, which also is looking to PwC (Guidehouse's former parent) as accounting adviser and Kirkland & Ellis as legal counsel.

Guggenheim Jefferies and Goldman Sachs are working as financial advisers to Guidehouse and Veritas, both of which are also looking to Milbank and Covington as legal counsel.

The transaction involving Guidehouse is also poised to be the second in less than two years involving these two private equity firms.

Bain Capital and Hellman & Friedman acquired the health care technology company Athenahealth for $17 billion in 2022 from Veritas, which worked with Elliot Investment Management to take that business private in the fall of 2018 through a $5.7 billion transaction.

Veritas and Elliott then combined Athenahealth with an organization that Veritas acquired from GE Healthcare in the spring of that year.