Tuesday, November 3, 2015

Carlyle's Booz News

MarketWatch reported:

Booz Allen Hamilton Holding Corporation (“Booz Allen”) BAH, +0.44% the parent company of management consulting, technology, and engineering services firm Booz Allen Hamilton Inc., today announced the sale of an aggregate of 13,000,000 shares of Class A common stock (“common stock”) on an underwritten basis by an affiliate of The Carlyle Group (“Carlyle”) to Credit Suisse Securities (USA) LLC.

Upon completion of the offering, Carlyle will own just under 20.0% of the outstanding common stock of Booz Allen. The offering is expected to close and settle on November 9, 2015. Booz Allen is not selling any shares of common stock in the offering and will not receive any of the proceeds 
It's a Carlyle partial cash-in of a giant government contractor.  The prospectus stated:

Major government clients include the Department of Defense, all branches of the U.S. military, the U.S. Intelligence Community, and civil agencies such as the Department of Homeland Security, the Department of Health and Human Services, and the Department of the Treasury. We support these clients in addressing complex and pressing challenges such as combating global terrorism and improving cyber capabilities, transforming the healthcare system, improving efficiency and managing change within the government.  

Over 78% of our revenue in our fiscal year 2015 was derived from over 3,300 active task orders under indefinite delivery, indefinite quantity (ID/IQ) contract vehicles.
Booz drains more than the U.S. Treasury for revenue:

Our international clients are primarily in the Middle East and south-east Asia.  
How might Booz's work in those arenas drive more domestic business?  It's all about leverage in the PEU world.  Booz will likely leverage relationships of its newest board member, Melody Barnes 

Reuters reported:

Booz Allen Hamilton Holding Corporation (NYSE:BAH), the parent company of consulting firm Booz Allen Hamilton Inc., has appointed Melody Barnes to its Board of Directors, effective immediately. Ms. Barnes, who is currently a domestic policy strategist and a Vice Provost and Senior Fellow at New York University, formerly served President Barack Obama as an Assistant to the President and as the Director of the Domestic Policy Council, which coordinates the domestic policy-making process in the White House.
Booz added a board seat for Mrs. Barnes, just as Tenet Healthcare did for Jeb Bush roughly one year after the White House omitted Tenet's ten deaths in Hurricane Katrina's aftermath from its Lessons Learned report.

Some board appointments grease the skids for new revenue sources, while others are a payback.  I'll speculate Melody Barnes is bit of both.  Booz's SEC filing on her appointment stated:

Ms. Barnes will receive a pro rata portion of the standard compensation for service on the Board. For the period beginning on August 1, 2015 through July 31, 2016, the standard compensation for the Company’s unaffiliated directors is equal to $200,000, to be paid $110,000 in restricted shares of Class A Common Stock of the Company, par value $0.01 (the "Restricted Common Stock"), granted under our Equity Incentive Plan, and $90,000 in either cash, Restricted Common Stock, or a combination thereof as elected by the director. 
Not bad for a few days work for a company owned 20% by The Carlyle Group.