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Leonard Green and Partners is nearing a deal to buy a $3bn construction project consultancy firm from New Mountain Capital, according to people familiar with the matter, even as private equity dealmaking lags behind a wider boom in mergers and acquisitions.
The Los Angeles-based private equity group is closing in on an acquisition of Cumming Group, a consultancy firm which has advised on building projects in more than 35 countries worldwide, from New Mountain, valuing the business at $3bn including debt, the people said.
The deal, which is set to be announced in the coming weeks, comes amid a slow stretch for midsized deals involving private equity groups as stubbornly high interest rates continue to hold back the main engine of deal activity.
The timeline could still shift and talks could still falter, the people warned. Jefferies advised New Mountain on the sale.
The first three months of the year delivered the third consecutive $1tn quarter, with a total of $314bn of private equity deals announced globally, according to LSEG data. But the number of private equity-backed deals was down 12 per cent year on year to a six-year low.
Business services and consultancy firms have proved to be fertile ground for private equity groups because of their steady cash flows and reliable customer base. Last December, Warburg Pincus generated $3.3bn from its sale of engineering consultancy firm TRC to $30bn-listed professional services group WSP Global.
Cumming Group, which has roughly 3,000 employees worldwide, has advised on large infrastructure projects such as the $9bn redevelopment of JFK airport’s terminal one.
Leonard Green, which has $75bn of assets under management, focuses on investing in services businesses in sectors as varied as hospitality and healthcare. Earlier this year, Leonard Green bought a majority stake in the Topgolf unit, which operates popular driving ranges, from Callaway Golf, valuing the business at $1.1bn.
A potential sale of Cumming Group would be among New Mountain’s biggest exits in recent years. New Mountain had been considering offloading five of its healthcare technology companies to a new investment vehicle set up by former partner Matt Holt in what would have been a $30bn deal, but called off the plans earlier this year.
Leonard Green and New Mountain did not immediately respond to requests for comment. Jefferies declined to comment.
