Posts Tagged mergers and acquisitions

Industry Talk: GardaWorld Buys Aegis Group For Expansion Into Africa And ME

This is some big news. Both GardaWorld and Aegis are big companies, and this is more sign of consolidation in the industry as the market compresses. The Iraq and Afghanistan wars have drawn down significantly since the hey day of contracting, and moves like this signal the latest strategies of the major companies–if they want to survive.

I first found out about Aegis shopping around for buyers from Intelligence Online. It has a paywall, but what little they said in the brief description is all I needed to know. As for GardaWorld, here is a snap shot from Wikipedia as to their size and status. Pretty big..

GardaWorld Security Corporation is a Canadian private security firm, based in Montreal, Quebec, Canada, with 45,000 employees (by November 2013). Though GardaWorld International Protective Services, now the international division of the company, began its operations in 1984, Garda World Security Corporation was established by its Quebecer owner Stéphan Crétier in 1995, who initially invested $25,000 in the company, then named Trans-Quebec Security Inc. The company is the fifth largest consulting and security services firm in the world, with operations in North America, Latin America, Europe, Africa, Asia and the Middle East. The company today runs heavily on physical security guard services as well as armoured car services in select countries and cities throughout the world. The firm has over 200 offices worldwide.

And then here is the size of Aegis and what they do, based on their Who We Are page on their site. The CEO is Tim Spicer by the way, who used to own Sandline International.

Aegis is today a diverse and comprehensive organisation operating in countries spread across several continents in a variety of service streams.
Founded in 2002, Aegis was established as a US government security provider from 2004, when it was awarded the ground-breaking Reconstruction Security Support Services Iraq (RSSS-I) contract with the US Department of Defense. The $1.3 billion lifetime value of this contract made it one of the largest security contracts ever awarded.
The experience and ethos built during the RSSS-I contract, and a range of other government and commercial contracts in Iraq, allowed Aegis to transition to the Security Support Services Iraq (SSS-I) contract, and to secure and successfully mobilise the security for the US Embassy Kabul, a project which currently employs over 1000 people.
The definition and requirements of security are ever changing. In recent years, we have grown a successful security service business in support of the extractives industry, focused initially on the Oil and Gas sectors in Iraq, but expanding into East and North Africa. We have also been in the vanguard of developing comprehensive business practices and ethical codes of conduct for the security industry and as such we are one of the first companies to become accredited to the industry standard (PSC 1).
Aegis now provides a wide breadth of complementary service streams including Kidnap for Ransom Response, technology integration, advisory and intelligence, training, consultancy, strategic communications and protective services. Across these areas we employ over 3500 people at any one time and run a fleet of over 300 vehicles.

That is 48,500 plus or minus employees and contractors!… Quite the army. lol

As to the details of this acquisition, I will post what the companies have sent out for PR. The news release mentioned a couple of interesting things. First is the fact that both companies are the first to be PSC-1 certified. The second interesting tidbit is that the new company wants to hit the African and Middle Eastern markets hard with their services. Aegis will definitely bring a lot to the table when it comes to those regions.

I have written in the past about GardaWorld and their goals in the middle east, and I view this as further proof of those plans drawn up by CEO Stephan Crétier. Although they have had some hiccups and the whole Daniel Menard episode in Afghanistan was one example. I also found an article that talked about how the draw down of the wars in Iraq and Afghanistan, and the fierce competition between those that were still on the scene, has resulted in companies like GardaWorld to ‘be competitive’. In other words, lowering salaries and hiring cheaper labor–something we have seen in the maritime security market as well. 

One final note. I have no idea if everyone that is working for Aegis now, will have to change t-shirts and wear the GardaWorld crest?…  Or if all the benefits and pay scales will change, now that Aegis has a new owner. We will see how that goes and that process can be kind of crappy for the employees and contractors of said company.

Sometimes with these things, the parent company likes to keep the newly acquired company intact with the same name and everything. Just different owners with a little crossover of upper and mid- management. But who knows, and we will see how the acquisition goes? I will leave it to those employees, contractors, upper management, etc. in the comments below to explain how things are going. –Matt

 

 

GardaWorld Announces Strategic Expansion to Become the Premier Security Provider in Africa and the Middle East

As part of its expansion, the company signs a binding agreement for the acquisition of Aegis Group

MONTREAL, QUEBEC–(July 13, 2015) – GardaWorld, the world’s largest privately owned security and cash services provider, announces today the strategic expansion of its protective services platform in Africa and the Middle East.

Over the past decade GardaWorld has continuously expanded its operational capacity as demand for specialized and professional services to protect high profile diplomatic staff, development projects and leading oil & gas companies dramatically increased in Africa and the Middle East. In the current geopolitical context, such comprehensive security services offering remains critical for companies and governments operating in the region and GardaWorld has committed to become a premier security provider globally. The company expects to complete this phase of its strategic expansion plan before the end of the year.

As the first phase of its strategic expansion, GardaWorld is pleased to announce that it has entered into a binding agreement for the acquisition of Aegis Group, a leading provider of highly specialized protective services with annual run-rate revenues of over CAN$450 million with a presence across 10 African and Middle East emerging markets.

“Aegis Group’s operational platform will complement GardaWorld’s offering and geographic footprint as we continue to build our protective services capabilities throughout Africa and the Middle East,” said Stephan Crétier, Founding President and CEO, GardaWorld. “Aegis Group and GardaWorld have both been truly committed to setting the highest professional and ethical standards in the industry. We are the first two private security providers in the world to obtain the PSC.1 certification, offering our clients a complete peace of mind service solution in emerging markets. Once we have completed the integration, we will become a clear market leader, providing premier professional security services with the unsurpassed depth of our offering and strength of our global platform.”

“In the next phase of our growth strategy, planned for later this year, we expect to further expand GardaWorld’s regional infrastructure and to double our physical footprint by reinforcing our presence on the ground in nearly 20 countries in Africa and the Middle East. Our goal is to offer a specialized and distinctive protective services offering, to more clients, including governments, diplomatic organizations, large critical infrastructures, mining, oil & gas companies, NGOs and Fortune 500 corporates, in more places and where they need us most than any other company in our market,” continued Mr. Crétier.

GardaWorld’s acquisition of Aegis Group is subject to customary closing conditions, including regulatory approvals and is expected to close within the next 90 days.

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Industry Talk: What Investors Are Attracted To, And Why Companies Should Take Care Of Their People

    Private equity investors are attracted to companies as target platform acquisitions that have the sufficient size, management talent, and infrastructure to support the critical mass necessary to achieve arbitrage available through increased scale. In addition, the rate of growth, profitability and customer base and how they are perceived by investors are important factors to consider. Finally, the capabilities of the management team and its commitment to the execution of plan which will enhance the growth of the firm are other important considerations.

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   “In my opinion, DynCorp has always been a tough public stock,” says Joseph Vafi, a stock analyst covering defense contractors at Jeffries & Co. “A lot of what they do carries a lot of headline risk with it.   

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   I don’t usually talk about the money stuff in this industry, because it is out of my lane.  But I want to understand it, and emphasize what matters to our industry. If in fact a company wants to be attractive to investors, they need to pay attention to what those investors are looking for in a company. With our industry, headline risk is a factor that can make or break a company.  Customer service and satisfaction can make a or break a company as well. To me, it is the guy on the ground, and his leadership, who matters most when it comes to preventing headline worthy incidents or preventing poor customer service. So in this case, taking care of your people is pretty damned important–if you want to be attractive to investors.

   The guy on the ground is what I like to focus on here at the blog, and any time I can convince a company to make the necessary investments into their people, I am happy. The individual on the ground, with the gun in his hand and fulfilling that contract in a war zone, can make or break that company. It is so important that a company do all they can to insure that contractor is happy and has guidance. Because the opposite of that, is an individual that can sabotage your company purely because they feel the company has wronged them or could care less about them.  Worse yet, if the company has not done the necessary things to insure quality management at all levels, and sound policy implementation at all levels, then that can further erode the desire of an employee/contractor to do well.

   In other words, customer service and satisfaction is highly dependent on how your people perform out there and how they feel they are being treated.

   Your leadership needs to be treated well too. They should be well compensated, well supported, and given plenty of guidance.  Because those are the guys who will either work hard to make their team shine, or fail miserably by not really caring what his people are doing.  So with both cases, a company must care for both the management and work force out in the field.

   Here is a metaphor for what I am talking about.  In this war, there is a lot of effort and talk about not creating more insurgents in a village through violent or repulsive actions.  When we accidently bomb a village and kill innocents, or go back on promises made to that village, or do actions that are offensive to that local population, we create people that hate us.  They will work against us in all manner, either by joining the insurgency or helping the insurgency in little ways.  We could create a hatred in someone that lasts a life time, and that someone will tell everyone about how they were wronged–for a life time. Some of these folks will even recruit people into their hatred campaign, and the damage will just keep perpetuating. Is your company creating insurgents in the work place?  That is the point.

  If a contractor felt they were wronged by a company, they could become like the villager turned insurgent.  These folks will not care to do a good job, they will tell others how terrible the company is, and they will not care about the property of the company.  And because most guys need to work in order to feed a family and pay bills, they will do just enough to stay with the company, but not care to do well for the company. Oh, and any guesses about how this individual will impact customer service and satisfaction?

   Worse yet, their drive to not care could translate into an incident that actually requires them to care.  Incidents where if that individual who has a gun, is tasked with a critical job in a convoy operation or static security, and now they are pissed off–will this askew their decision making ability for shoot/no shoot situations?  War zones are stressful enough, and companies should do all they can to minimize undo stress upon their contractors/employees.  Companies should ask, ‘will our actions and policies, create insurgents within my company’? Something to ponder if you want to make your company more appealing to investors. –Matt

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Private Equity – The Fuel of Industry Consolidation

Philip McMann

Thursday, May 6, 2010

Private equity firms have left an indelible mark on the Defense and Government Technology Services (GTS) markets. The investments made by private equity funds in the industry have spawned many of the premier public companies, including Anteon, SI International and Veridian. Once dominated by the activity of a few giants such as the Carlyle Group, Frontenac, and GTCR Golder Rauner, the number of private equity firms that are active acquirers today has increased dramatically. Private equity funds now account for a significant share of the M&A transactions. In 2005, approximately 20% of the 85 M&A transactions in the GTS market were completed by either private equity funds directly or the platform companies within their portfolios. A wide array of private equity players have emerged as buyers including Arlington Capital, Veritas Capital, The Edgewater Funds, New Mountain Capital, Littlejohn and Company, and Riordan, Lewis and Hayden. While Veritas Capital has been an active acquirer of defense hardware companies since the early 1990’s, they recently turned their attention to the large and rapidly growing technical and professional services markets with their recent acquisitions of DynCorp International, McNeil Technologies, The Wornick Company and the assets of MZM, Inc, which they renamed Athena Innovative Solutions.

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