Private equity firms buys G4S Government Solutions

Company rebranded as Centerra Group

Paul Donahue is president and CEO of Centerra Group, LLC. The company, formerly known as G4S Government Solutions, was sold last week to private equity firm Alvarez & Marsal Capital Partners for $135 million.
Paul Donahue is president and CEO of Centerra Group, LLC. The company, formerly known as G4S Government Solutions, was sold last week to private equity firm Alvarez & Marsal Capital Partners for $135 million.
(Photo courtesy Centerra Group)

G4S Government Solutions, Inc. (G4S GS), which provides a wide range of security services to U.S. government-owned and operated facilities including guard services and systems integration, announced last week that it has been acquired by private equity firm Alvarez & Marsal Capital Partners for $135 million.

With the acquisition, G4S GS also announced that the company would be rebranding itself as Centerra Group, LLC. According to Paul Donahue, president and CEO of Centerra, changing the name of the company, which previously operated under the well-known Wackenhut Services brand from 1960 to 2011, was done for several reasons: First and foremost, to differentiate themselves and avoid any market confusion that could be caused by retaining the name of G4S, their former parent company, or Wackenhut, which is still used in parts of Latin American and South America.

“Our belief was that it made perfect sense to get a new name that hasn’t been used and was something that was like Wackenhut which was one name rather than three names cobbled together,” explained Donahue.

Donahue added that the acquisition will provide Centerra with tremendous flexibility as it seeks to garner new business and branch out into different vertical markets.

“We are about a $500 million company in revenue and we were owned by a $10 billion company, so we were roughly five percent (of the company’s revenues). And as any conglomerate in any business knows, you have to have certain lane restrictions for each of your companies so there is not overlapping lanes of competition,” said Donahue. “We have always been since our founding in 1960, the government group. Today, we have as many lanes as we want because I’m not in a conglomerate so I’m not competing with anybody (in my own company). In the conglomerate, commercial banks were in one company and the countries in Central and South America were in multiple companies, so various lines of commerce and regions of service were delineated by the parent.”

Additionally, Donahue said that in the same way he faced certain lane restrictions within G4S, he also had to compete against other companies within the conglomerate if he wanted acquire another firm. However, that’s no longer an issue Centerra faces with the backing of their new private equity owners, which are already engaged in talks with two companies to move forward with proposed acquisitions during the first quarter of 2015.  

“Their plans are to build a deep penetration into our existing markets by taking advantage of the government market today. It’s relatively flat and fragmented and ripe for a rollup, so the time couldn’t be better given there’s no budgets and there’s lots of market confusion with respect to overseas and the reductions that are occurring,” Donahue said.

Although they have extensive expertise in securing some of the nation’s most tightly-guarded critical infrastructure installations, Donahue said their “thought process” is that they can take the lessons they’ve learned as company in the government sector and apply them to other markets, such as higher education and healthcare campuses.

“The government is fantastic in certain areas and one of them is security orders and security directives because they put a greater emphasis on safety and security due to the weapons systems that we protect and the critical infrastructure that we protect. You can’t have somebody get into NASA and damage the space shuttle and you can’t have somebody break into the nuclear stockpile, so the security is traditionally much better than the civilian counterparts because it needs to be,” he said. “Can we carry those directives and those orders into a college campus and provide a secure (facilities management) concept where we bundle security along with facility management, security technology and design, smart systems, integrated systems, and do the same with a medical campus? Those are two areas we never could touch because of our lane restrictions.” 

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