It’s development business

    An Australian consultancy enters the U.S. development aid business after teaming up with a domestic firm.

    Sounds familiar.

    GRM International and Futures Group this week announced their merger: a newly created holding company that will have combined revenue of $225 million. GRM is the third of Australia’s big international development implementers acquiring or merging with a U.S. counterpart — after Coffey and Cardno, which bought the Emerging Markets Group in 2007.

    But Australian firms are not the only ones exploring new markets that way.

    Firms from the U.K. and elsewhere have had an eye on funding from the U.S. Agency for International Development and other donors abroad. Defense contractors such as L-3 and DynCorp (which bought Casals & Associates in 2010) and general contractors like Deloitte (which bought BearingPoint’s North Africa public services unit in 2009) are expanding their international portfolios across the U.S. government. Infrastructure firms such as Tetra Tech are merging with development firms, often to get a better grip on the full aid delivery process.

    Granted, the number of new major acquisitions and mergers has gone down lately. But earlier this year, FHI’s purchase of AED created FHI 360, which now ranks as USAID’s top implementing partner based on total funding. Those two companies had similar expertise and donor bases: GRM has had little business with USAID and in global health, one strength of the Futures Group.

    >> FHI Acquires AED: A Conversation With CEOs Albert Siemens and Gregory Niblett>> Top Bilateral Donors: A Primer

    The business of development cooperation is shifting. Cash-strapped governments are clamoring to partner with the private sector to reduce poverty and increase economic opportunity. But an influx of new players has made navigating the development landscape more complex and competitive, and mergers and acquisitions are meant to boost value for money and grow business.

    Take the Futures Group: It was bought in 2005 by the Constella Group; SRA International bought Constella Futures in 2007 before spinning it off a year later. GRM and the Futures Group had been in talks for 18 months before the merger was finalized this week.

    The clear impetus for both companies is growth, GRM Managing Director Kim Bredhauer and Futures Group CEO Chris LeGrand told me prior to the merger announcement. They spoke about plans to expand business in the health sector and with donors such as USAID and the U.K., Swedish and Swiss aid agencies.

    >> Why GRM and Futures Group are Merging

    Granted, there are other types of business decisions as well. Lockheed Martin, for instance, sold Pacific Architects and Engineers earlier this year. But the restructuring continues as development organizations diversify and broaden their donor bases. Stay tuned.

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    About the author

    • Rolf rosenkranz 400x400

      Rolf Rosenkranz

      Rolf Rosenkranz oversees a talented team of in-house journalists, correspondents and guest contributors located around the globe. Since joining Devex in early 2008, Rolf has been instrumental in growing its fledgling news operation into the leading online source for global development news and analysis. Previously, Rolf was managing editor at Inside Health Policy, a subscription-based news service in Washington. He has reported from Africa for the Johannesburg-based Star and its publisher, Independent News & Media, as well as the Westdeutsche Allgemeine Zeitung, a German daily.