PricewaterhouseCoopers signed an agreement Wednesday to sell its U.S. Public Sector business to the private equity firm Veritas Capital.

When the deal closes, PwC’s U.S. Public Sector business will be renamed and will operate as an independent company. Veritas Capital plans to retain the current leadership and employees from the PwC unit. The business has approximately 1,500 partners and staff members who offer consulting services to federal, state and local governments, along with multilateral government agencies. PwC and Veritas intend to continue any work they have in progress for their public sector clients during the transition.

The business provides services for major federal government agencies such as the Departments of Defense, Homeland Security, Veterans Affairs, Health and Human Services, along with the State Department, plus a number of state and local governments.

Financial terms were not disclosed. PwC ranked 2nd on Accounting Today’s 2017 list of the Top 100 Firms, with $14.9 billion in annual revenue. Worldwide, PwC’s total revenues were $37.7 billion for the fiscal year ending June 30, 2017.

“Our U.S. Public Sector business has an excellent brand and client base with a strong record of growth, and this transaction will provide the partners and staff with an opportunity for continued development for both their business and careers,” said PwC US chairman and senior partner Tim Ryan in a statement. “Furthermore, today’s announcement enables our US firm the opportunity for continued growth and investment to best provide ongoing quality and value to our clients.”

The transaction has been agreed upon and both PwC and Veritas are working on closing the deal.

Morgan Stanley advised PwC on the deal, while Davis Polk & Wardwell served as legal counsel. Schulte Roth & Zabel LLP provided legal counsel to Veritas Capital.

Veritas is planning on expanding the business further. “We look forward to partnering with the management team and assisting with our government sector expertise to continue delivering value to the clients and embark on the next stage of expansion,” said Veritas Capital CEO and managing partner Ramzi Musallam in a statement.

PricewaterhouseCoopers LLP's building stands in the financial district of Toronto, Ontario, Canada
Brent Lewin/Bloomberg

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.