Tuesday, September 29, 2015

Carlyle Group: Employee Owned PA Consulting Goes PEU

NASDAQ reported:

PA Consulting Group and The Carlyle Group (CG) announced they have signed an agreement for Carlyle to invest in PA for a 51 percent shareholding of the company. The investment values PA at $1 billion and is expected to close in December 2015.
That means Carlyle is the majority shareholder and can make decisions without regard to the other 49%. PA's press release described the firm as follows:

PA is an employee-owned firm of over 2,500 people, operating globally from offices across North America, Europe, the Nordics, the Gulf and Asia Pacific. Our specific expertise is in energy and utilities, financial services, health, life sciences, consumer and manufacturing, government, defence and security, transport and logistics.

Our deep industry knowledge together with skills in management consulting, technology and innovation allows us to challenge conventional thinking and deliver exceptional results with lasting impact.

Ask the 2,500 PA employees in two years how they like Carlyle ownership.  I'd love to hear their assessment of Carlyle's culture and values on their once employee owned company.  Will they see Carlyle's vulture culture and callous values?  That would be my wager.

PA Consulting is in a unique position to chronicle the impact of private equity ownership on a company.  However PA is in a double bind.  They cannot be honest and keep Carlyle's good name, a longstanding prime objective.  When all else fails throw out the measure or the messenger.  It's the PEU way.

Update 2-20-20:  Carlyle is ready to cash in on PA Consulting and prefers to sell the company to another private equity firm.  That way the public doesn't see how much cash Carlyle pulled out of PA during five years of ownership.