UPDATE 3-CVC Capital to take over AlixPartners

Tue Apr 24, 2012 12:04pm EDT

* CVC acquires majority ownership through recapitalization

* Deal comes 6 years after Hellman & Friedman investment

* AlixPartners valued at more than $1 bln-sources

By Soyoung Kim and Greg Roumeliotis

NEW YORK, April 24 (Reuters) - Buyout group CVC Capital Partners Ltd has agreed to buy the majority of restructuring advisory firm AlixPartners, betting that the firm can grow in turnarounds, where it made its name, and also in wider consulting.

CVC did not disclose a purchase price for the asset it has agreed to acquire from peer Hellman & Friedman, but people familiar the matter told Reuters last week the deal would value AlixPartners at more than $1 billion.

AlixPartners CEO Fred Crawford said the deal ensures that the company, which has advised on corporate restructurings, will remain a stand-alone firm instead of merging into another consulting firm looking to expand its footprint.

"A lot of our brand is pegged to restructuring because that's the stuff that lands on the news and in the front page of newspapers -- General Motors, Kodak, things like that. But this is only one third of our business," Crawford said in an interview.

"The rest is made up of operational consulting and what we call financial advisory services which includes litigation consulting and corporate investigations work. The disproportionate growth trajectory in our business is really in non-restructuring areas," he added.

AlixPartners' 125 managing directors, as well as founder Jay Alix, will maintain a minority equity stake in the company.

Southfield, Michigan-based AlixPartners competes in the restructuring and bankruptcy space with specialists such as FTI Consulting and Alvarez and Marsal, as well as the turnaround practices of major consulting firms including McKinsey & Company, Boston Consulting Group and Bain & Co.

AlixPartners' recent high-profile assignments have included advising General Motors Co on its ongoing restructuring of its money-losing European Opel unit.

Since 2006, AlixPartners has grown from 550 professionals to more than 950, expanded from 12 to 17 offices globally and expanded into China, Hong Kong and the Middle East.

CVC said the deal would help further expand the geographic footprint of AlixPartners, which derives one-third of its revenue from outside of the United States.

CVC managing director David Tayeh said there was plenty of value in AlixPartners left even after six years of private equity ownership, with scope for the firm to expand in the $80 billion-plus consulting services market.

"While what the firm has accomplished thus far is impressive, they're just scratching the surface. The notion that a 30-year-old firm that had another financial sponsor as partner is tapped out, or there is not much left to do, we just don't believe at all," Tayeh said.

Hellman & Friedman led a leveraged recapitalization of AlixPartners about six years ago, and acquired a majority stake together with the company's employees.

The San Francisco-based private equity firm did not disclose financial terms at that time, but said the transaction puts the total enterprise value of the firm in excess of $800 million.

According to ratings agency Moody's, the 2006 leveraged recapitalization transferred an 80 percent equity stake in AlixPartners to a group led by Hellman & Friedman.

That transaction valued AlixPartners at $872 million, and was funded with $296 million of cash equity from the private equity firm, a $385 million term loan, and $218 of rollover equity from the founder and management, according to Moody's at that time.

A person familiar with the matter said the CVC would be acquiring a stake similar in size to what Hellman & Friedman owned.

Goldman Sachs Group and Bank of America Merrill Lynch advised AlixPartners and Hellman & Friedman on the transaction. Goldman, Bank of America have also provided committed financing for the transaction along with Deutsche Bank , Jefferies and UBS.

Morgan Stanley served as financial adviser to CVC Capital.

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