$135M Sale of G4S Gov’t Solutions to Private Equity Firm Completed Nov. 24
Todd Jacobson
WC Monitor
12/5/2014
After being acquired by private equity firm Alvarez & Marsal Capital Security Holdings, security firm G4S Government Solutions has a new name, the Centerra Group, and new plans for expansion under its new owners, President and CEO Paul Donahue told WC Monitor. Speaking a day after the $135 million sale of the company—once known as Wackenhut—was completed Nov. 24, Donahue said Centerra is planning to broaden its offerings and expand its customer base around the world beyond security and fire support services.
Such expansion wasn’t possible under its previous parent company, United Kingdom-based G4S. “Day to day, G4S was great; they never got in our britches on anything. But new markets, acquisitions, we were the tail wagging the dog,” said Donahue, who served as the president of G4S Government Solutions since 2010, when it was still known by its original name, Wackenhut Services. “We were a half billion company in a $14 billion conglomerate. They treated us fine but we never were going to be treated like their first son.”
Top Management to Remain at Company
The sale from U.K.-based parent company G4S included $80 million in cash and $55 million in receivables that will be paid over 18 months after the sale is complete. Top management for G4S Government Solutions is expected to remain in place under the deal, including Donahue. Retired Adm. Robert Natter is also expected to remain the chairman of the company’s Board, and James Long III will remain the vice chairman of the Board.
The company manages protective force operations at a host of Department of Energy and National Nuclear Security Administration sites including Hanford, Savannah River, the Nevada National Security Site, and Sandia’s California campus. It also has security contracts around the world for the Pentagon, including an operational support contract at the Navy’s base in Guantanamo Bay, Cuba.
Alvarez and Marsal has dozens of offices around the world, and is best known for its corporate restructuring work and its work with distressed companies, having played a major role in the Lehman Brothers bankruptcy as well as with other restructurings, like HealthSouth, Arthur Andersen and Tribune Company. Its affiliate, Alvarez & Marsal Capital Partners, “invests in middle-market companies that can benefit from access to world class operational expertise, are undergoing management transition or are seeking capital for growth or acquisitions,” according to its website. Alvarez & Marsal Capital Partners and Alvarez & Marsal Capital Security Holdings, LLC, are not believed to own any other security companies.
Donahue: DOE Work to Remain Priority
Donahue promised that DOE security work would remain the company’s top priority, and he said the company would be hiring additional “bench strength” to shore up its DOE work and is pursuing its first acquisition involving a company with DOE experience. “We’re going to invest more into DOE because that’s still our primary customer, always has been and always will be,” Donahue said.
Beyond DOE work, Centerra divisions will focus on federal and commercial security, fire and emergency services, base operations support and training, facilities maintenance, and fleet maintenance and construction services. “We will be able to expand at our board’s direction and we’re not going to change everything overnight because we still are traditional and security service oriented, but slowly it will start to emerge into a bigger offering. We have all the freedom to choose on our own any lane we want to expand into, knowing we can’t be everything to everybody but we can be more than what we are today,” Donahue said.
That could mean expanding beyond DOE and DoD into medical campuses and college campuses, Donahue suggested. “If you take a picture of a college campus from 10,000 feet and look at it, it looks no different than Guantanamo or Fort Dix,” Donahue said. “A base is a base. One is just college students; one is just army personnel.”
Donahue said the goal is to leverage the company’s government work to allow it to expand more into the commercial sector. “The government is not efficient but boy they’re great with standards,” Donahue said. “DOE is the best when it comes to directives, standards and orders. So can we take those best practices and share those? Take DoD best practices at military bases and share those, and try to bring the community standards on the civilian side up where the government standards are.”
