It's official!

On Friday, The Carlyle Group and Booz Allen reached a formal agreement, in which Carlyle agreed to buy up the firm's government business. With its deeply entrenched roots in the defense sector, Carlyle saw in Booz an opportunity to get in even deeper. Under the $2.54 billion deal that's expected to close later this month, current Chief Executive Ralph Shrader will remain in his role on the government side of the business. Carlyle will have a seat on Booz Allen's board, but will have no operational role. As for the commercial and international side of the business, it will be split off into a separate entity, and will be the bearer of a new name, to be announced next Wednesday. (Some speculate that the commercial business will adopt the name of Booz & Co.) The commercial business will continue to be run by London-based Shumeet Banerji.

As Shrader stated, "This separation of our core businesses marks a dynamic new chapter in our history. For 94 years, Booz Allen has adapted and evolved as market realities have changed and our areas of expertise have grown. We continually evaluate whether we have in place the best strategy and structure to succeed and deliver the highest quality service to our government and commercial clients, which is our top priority."

The acquisition will, no doubt, give Booz Allen a leg up on the competition, as there are now just a few defense firms competing for the same government contracts. Among those competitors are Lockheed Martin, SAIC and Northrop Grumman.