Allied Universal pursues M&A ahead of possible IPO consideration in 2026 - CEO
Mergermarket
Allied Universal pursues M&A ahead of possible IPO consideration in 2026 - CEO
by Deborah Balshem
June 28, 2024
Allied Universal, the world’s largest security and facility services company, continues to seek acquisitions worldwide, with additional deals likely to be announced this year, said Chairman and CEO Steve Jones.
Irvine, California-based Allied is flush with cash, generating revenue of more than USD 21bn in 2023 and recently refinancing its debt package, Jones said. The company could easily fund deals valued up to USD 10bn, he added.
“Size does not really matter. Price and terms are most important in today’s environment,” the CEO said
Backed by Warburg Pincus, Caisse de dépôt et placement du Québec (CDPQ), Partners Group and The SAFRA Group, Allied completed six acquisitions last year with combined revenue of approximately USD 150m, according to Jones. So far this year, it has purchased three companies with combined revenue of USD 15m, he said.
Ideal acquisition targets moving forward could fit into any of Allied's core services or geographic markets, the CEO added.
Allied provides uniformed guards, K9 security services, electronic security and advanced technology solutions, janitorial and disinfecting services, risk advisory and consulting, and executive protection and intelligence services. The company operates in more than 100 countries and has approximately 800,000 employees working at more than 127,000 client sites, Jones said.
New geographic regions of interest include Spain, Italy and Germany, the CEO noted, pointing to video surveillance as among fast-growing sectors.
According to Jones, multiples in the space range from 6x to 12x EBITDA, while average EBITDA margins are between 4% and 10%, with tech-focused players on the higher end of both ranges.
Allied’s recent acquisitions have been funded primarily through cash and a credit facility, according to Jones. They include Star Protection Agency and Nordic Security Services, security and facility services providers based in Seattle and Orange County, California, respectively, as well as J E Security Systems & Services, a guarding and technology provider based in St. Thomas, Barbados. In December, Allied announced its first South American acquisitions of guarding services and security technology solutions providers Siete24 LTDA and Infotec SAS, both based in Colombia.
Waiting for IPO window
Jones told this news service last June that Allied was more selectively looking at acquisitions prior to an anticipated IPO. For this report, Jones said Allied “likely would have been a public company by now if not for a tumultuous market the last 18 months.”
And while Jones said the public markets have come “roaring back,” Allied is waiting to complete its “artificial-intelligence transformation” around scheduling, recruiting and overall workforce management before considering a public debut.
“A big part of our story now is our internal technology transformation,” Jones said, adding it should be complete in late 2025, making 2026 the earliest Allied would likely seriously consider going public.
The closest public comparables to Allied, according to Jones, are ABM Industries [NYSE:ABM], Terminix Global Holdings [NYSE:TMX], Cintas [NASDAQ:CTAS] and Aramark [NYSE:ARMK].
It also is possible that Allied may raise a crossover funding round prior to an IPO to bring “anchor” investors onto the cap table, Jones noted.
Allied was formed in 2016 by the merger of Universal Services of America and AlliedBarton Security Services. In 2021, it merged with UK-based G4S Monitoring Technologies in a GBP 3.8bn deal.
The company uses law firms Cleary Gottlieb; Paul, Weiss; and Sheppard Mullin, and accounting firms PwC, EY and Deloitte. Its financial advisors include Morgan Stanley, Credit Suisse, Citi, JPMorgan, Goldman Sachs and Evercore.
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