WASHINGTON (Reuters) – Global auditing and financial advisory firm PricewaterhouseCoopers LLP is considering the sale of its government consulting firm, which could fetch about $500 million, four people familiar with the matter said this week.
The sale would give PWC a freer hand to pursue the growing business of auditing government agencies. Professional standards restrict the type of advisory services audit firms can offer to government clients, who are discouraged by even the appearance of conflict.
Morgan Stanley, Wall Street investment bank MS.N is leading the sale process, said the sources, who requested anonymity because details of the talks were not public.
Bidders received financial information about the consulting firm, which provides business process improvement and operations streamlining services for various government entities, including the US Agency for International Development and the Department of Defense.
The unit’s pretax profit is expected to rise to more than $60 million next year from about $50 million this year, the sources said.
Private equity firms including New York-based Veritas and Chicago-based Madison Dearborn Partners are potential bidders for the unit, the sources said.
Representatives for PWC, Morgan Stanley, Veritas and Madison Dearborn declined to comment.
One of the largest audits in history, the US Department of Defense audit, began this month and is expected at the end of the government’s 2018 fiscal year.
According to Pentagon records, PWC, one of the world’s largest audit firms, was contracted to provide “audit readiness” services to the department.
“The Department engages auditors to perform more than 24 individual audits of the financial statements of its largest components, as well as a Department-wide consolidated audit to summarize all DoD-wide findings and conclusions,” said said a Pentagon spokesperson.
Other companies in the government services sector have struck deals this year, including DXC Technology Co. DXC.Nwhich combined its US public sector operations with Vencore Holding Corp and KeyPoint Government Solutions to create an independent, publicly traded company serving US government clients.
Reporting by Mike Stone in Washington; Editing by Lisa Von Ahn