AEC firm leadership insights

May 05, 2024

Will Swearingen

Explore the latest data on compensation, perks, and key challenges shaping the industry’s ownership landscape.

Zweig Group’s 2024 Principals, Partners & Owners Report of AEC Firms is a comprehensive study of owners and top managers of U.S. AEC firms. This eye-opening report covers ownership, stock appreciation rights, buy/sell agreements, non-compete agreements, voting rights, roles, responsibilities, perks, compensation, and more.

In addition to this hard data, the 2024 Principals, Partners & Owners Report contains survey responses about the attitudes, responsibilities, and difficulties associated with these roles. Top findings include:

  • Ownership dynamics and firm stability. The survey sheds light on shifts in ownership dynamics and firm stability within the AEC industry. Despite a slight decrease in the median number of years respondents have been owners in their firms, from 20 years in 2022 to 15 years in 2024, AEC firms continue to navigate evolving business models and strategies. Additionally, there’s a noticeable trend of promoting younger individuals earlier in their careers into management and leadership roles, injecting fresh perspectives into decision-making processes. These trends may signify changes in generational ownership, mergers and acquisitions, or succession planning strategies among AEC firms, underscoring the need for adaptability and forward-thinking leadership.
  • Investment and risk. With continued consolidation and the overall transition of ownership in the AEC industry, the dynamics of internal transition seem to be changing too. We have seen an increase in the percentage of owners who have borrowed money to purchase the equity in their firm (up to 43 percent from just 32 percent five years ago). Funding sources with the largest increases over the last five years were from the selling shareholder and the firm respectively. The data this year suggest that personal guarantees on firms’ debt has decreased from five years ago to around 45 percent, down from nearly 60 percent of owners signing personal guarantees on firms’ debt.  This is likely due to a shift in the percentage of equity help by this year’s respondents, with more respondents owning less than 10 percent of their firm.
  • Political donation trends reflect shifting priorities. Analysis of the survey data unveils a notable decline in the percentage of AEC firm leaders making political donations, particularly at the state and national levels. While 20 percent of respondents made contributions to local candidates, only 19 percent and 14 percent donated to state and national candidates, respectively. This shift suggests a reevaluation of priorities on spending and investment in the political process.
  • Economic impact on severance packages. Amidst economic uncertainties, the survey indicates adjustments in compensation structures, particularly concerning severance packages. While a small percentage (10 percent) of respondents have employment agreements specifying severance pay, there has been a decrease in the median and mean number of weeks specified, from 14 to 8 weeks and 21 to 15 weeks, respectively. This trend reflects a strategic response to economic pressures and changing labor market conditions, highlighting the need for firms to manage costs and remain competitive.

    Unlock unparalleled insights into the world of AEC firm leadership with the Principals, Partners & Owners Report. Explore the latest data on compensation, perks, key challenges, and qualifications shaping the industry’s ownership landscape. Click here to learn more.

    Will Swearingen is vice president and director of research and advisory services at Zweig Group. He can be reached at wswearingen@zweiggroup.com.

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    About Zweig Group

    Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.