Carlyle Group has agreed its biggest buyout since the credit crunch took hold after directors of Booz Allen Hamilton, the consultancy group, recommended a $2.54 billion sale of its US government business to the private equity firm.

Under the deal, Booz Allen will split in two. Carlyle will take the unit that offers consultancy services to clients such as the US military, the Department of Homeland Security and the World Bank. The operation has about 18,000 staff and annual revenues of $2.7 billion.

The remaining business of Booz Allen, which is headquartered in McLean, Virginia, will become standalone company specialising in commercial consultancy on management, technology and engineering.

The deal raised hopes that the market for leveraged buyouts may be starting to pick up, since it is Carlyle’s biggest deal since July last year. In that transaction, the US buyout firm acquired Manor Care, the nursing home operator, for $6.3 billion.

Times Recommends

• Darling under pressure on record public debt
• Mortgage drought deepens on 32% lending fall
• Oil prices firm after 10% drop to below $130