Carlyle Group Goes Back to its Roots in D.C.

The Carlyle Group, one of the largest private equity firms and probably one of the most criticized, is purchasing the government consulting arm of Booz Allen Hamilton in a deal worth $2.5 billion. With its history as a Washington insider, this may represent a move back to what it knows in light of tighter credit and fewer LBO deals available for its managers to stay occupied.

Known for placing politicians on the boards of its companies and having the likes of former President George Bush on its payroll have made The Carlyle Group a favorite target for many who undercut its financial prowess to make good deals favoring, instead, to use its influence to be in the right place at the right time. Whether admitting to this or not, it certainly seemed as though they took note of their image and made strides to polish-it-up.

In the past few years it has asked the Bin-Laden family to divest from its firm (yes, those Bin-Ladens), has removed both former President Bush and former Prime Minister John Major of the UK from its payroll as well as reduced its stake in military and aerospace projects from a high of 20% to a current 6% of its total portfolio. So what does its purchase of a government consulting firm mean for its future?

Based on its spokesperson, the deal just makes business sense - pure and simple - and has nothing to do with its prior or current corporate image. On a more down-to-earth note, however, it's likely going back to its roots in light of a drought in the capital markets making new leveraged buyout deals more difficult to come by - at least the 'leveraged' part, anyway.