Xe Services Acquired By PE-led Consortium

Xe Services, the security firm formerly known as Blackwater, has been acquired by an investor consortium led by private equity firms Forte Capital Advisors and Manhattan Partners. Xe, which has been criticized for its activities in Iraq and Afghanistan, provides training and domestic and international security services. Financial terms of the deal were not disclosed.

USTC Holdings, LLC, an investor consortium led by private equity firms Forte Capital Advisors (“Forte”) and Manhattan Partners (“Manhattan”), announced today that it has acquired Xe Services, LLC (“Xe” or the “Company”) and its core operating subsidiaries. Xe is a leading provider of training and technical services focused on worldwide diplomatic security operations. The terms of the agreement were not disclosed.

As part of the transaction, USTC Holdings, LLC will acquire the Xe companies that provide domestic and international training, as well as security services. This will include the Company’s state-of-the-art training facility in Moyock, N.C., which is widely regarded as the preeminent training facility in the world and is unmatched in the quality and scope of the training services provided. Over 50,000 U.S. government personnel have been trained at the facility as well as numerous allied forces.

Jason DeYonker, Managing Partner of Forte, said, “Xe provides indispensible training and expertise to government and commercial entities around the world. I have a deep appreciation and respect for the quality of Xe’s employees and the valuable services they provide our country. We look forward to partnering with management to realize our collective vision for Xe’s future.”

DeYonker has unique experience with the Company that dates back to its founding in the late 1990s. He advised the Company through development of its early business plan and expansion of the Moyock training facility as well as supporting negotiations of its first training contracts with U.S. government agencies. Between 1998 and 2002, Mr. DeYonker co-managed Xe founder, Erik Prince’s family office which included management of Mr. Prince’s portfolio companies. Mr. Prince, the sole selling owner and member, will divest the entirety of his equity stake through the transaction and will not be involved in the management or operation of the Company. The Company going forward will be managed by a Board appointed by the equity owners which will include independent, unaffiliated directors.

DeYonker added, “The future of this industry belongs to those companies with the highest standards of governance, transparency, and performance. Our vision for Xe is to set the bar against which all other companies in our industry are measured.”

Dean Bosacki, Managing Partner of Manhattan, said, “Xe is an absolutely unique asset, and is recognized as ‘best in class’ by many of the Company’s elite customers. We are excited to complement the Company’s management team who are committed to professionalism and ethical conduct wherever the Company operates.”

This change of ownership does not affect the previously announced Consent Agreement between Xe and the U.S. Department of State’s Directorate of Defense Trade Controls. As part of the agreement, Wendy Wysong, a partner at Clifford Chance LLP, will continue to serve as Special Compliance Officer for the Company and will oversee the export compliance program at Xe.

Bingham McCutchen acted as legal counsel to USTC Holdings and the Chertoff Group in collaboration with Avascent Group performed strategic due diligence on USTC Holdings’ behalf.

Financing for the transaction was led by Bank of America Merrill Lynch.

About Xe
Xe is a leading global stability services provider. Founded in 1997, the Company has grown from a basic training facility to support the needs of local and regional law enforcement personnel to a world-class provider of training and security services to public and private entities the world over. Xe’s headquarters in Moyock, N.C. house the largest private training center in the U.S.

About USTC Holdings, LLC
USTC Holdings, LLC is an investment holding company led by Forte Capital Advisors and Manhattan Partners formed for the sole purpose of facilitating the acquisition of Xe and its core operating subsidiaries. Forte Capital Advisors combines private equity with experienced and active management in the investments in which the firm participates. In addition to a select portfolio of investments, Forte provides transaction and financial advisory services to growing middle market companies.

Manhattan Partners is a progressive thinking private equity firm focused on control equity investments in high growth and transitional businesses. The firm has global experience across private equity, corporate finance, M&A, entrepreneurship, and operations. The firm’s Managing Partners are entrepreneurs as well as investors, with an expectation to be intensely engaged in the management and growth of each portfolio company.