The latest data reveals rising firm values, stable key metrics, and the impact of market forces on AEC valuations.
Valuation is a crucial indicator of a firm’s financial health, and in the architecture, engineering, and construction industry, it serves as a benchmark for ownership transitions, acquisitions, and long-term strategic planning. Zweig Group’s 2025 Valuation Report of AEC Firms reveals key trends that are shaping firm valuations and how companies are navigating the evolving market landscape.
The latest data shows that firm values are continuing to rise, with internal transition pricing and pro-rata valuations beginning to align more closely. This suggests that firm leaders are becoming more disciplined in how they approach valuation, ensuring that their businesses remain competitive and attractive to both internal successors and external buyers.
Key metrics in AEC firm valuations. The 2025 Valuation Report provides a snapshot of the median AEC firm, which consists of 45 full-time equivalents, six owners, and holds a book value of $2.6 million. Financially, these firms reported a net service revenue of $7.7 million, pre-bonus profit of $1,204,104, EBITDA of $1,357,946, and a backlog of $7.6 million. These figures indicate not only growth in human capital but also in overall firm value compared to last year’s data.
One of the most watched valuation metrics, the value/EBITDA ratio, saw a slight increase from 4.23 to 4.28, while the value/NSR ratio remained relatively stable, shifting marginally from 0.64 to 0.63. These ratios underscore the long-term consistency of valuation trends in the AEC industry, despite fluctuations in market conditions. Similarly, the value/backlog ratio held steady, moving from 0.65 in 2024 to 0.63 in 2025.
This data suggests that while firms are navigating higher interest rates and tighter lending conditions, the overall financial health of the AEC industry remains robust. Engineering firms, in particular, have experienced significant backlog growth, while architectural firms continue to see stability in institutional and healthcare-related projects, which have remained reliable revenue drivers.
How the market is shaping valuation expectations. The report highlights a shift in how firms are evaluating their valuation methodologies. Outside investment in the AEC industry is influencing owners to reassess internal pricing methods alongside external market demands. As a result, there is a growing emphasis on revenue recognition, contract profitability, and risk management in M&A and transition planning.
One of the key valuation drivers in today’s market is hard backlog – the portion of contracted work that is guaranteed. Buyers are increasingly scrutinizing work-in-progress and backlog when evaluating a firm’s value, reinforcing the importance of strong contract management, effective cash flow strategies, and precise project execution. Firms that can demonstrate stability in these areas are positioning themselves more favorably for both internal ownership transitions and external acquisitions.
Industry growth and the role of public sector investments. Another factor supporting firm valuations is continued investment in infrastructure and energy-related projects. The equity value/profit ratio stabilized at 3.8 after peaking at 3.91, reflecting a more sustainable pace of growth for the industry. Even with challenges such as rising material costs, workforce shortages, and increased borrowing costs, the expansion of public sector investments is keeping AEC firms on solid footing.
The demand for infrastructure improvements, energy projects, and alternative energy developments continues to be a major catalyst for firm growth. In response, firms are focusing on financial discipline, leveraging automation, and adopting alternative project delivery methods to maintain profitability and efficiency in an uncertain economic environment. These strategies are proving essential for firms looking to safeguard their valuations while remaining competitive in an evolving marketplace.
Understanding firm value in a shifting market. With firm valuations remaining strong but market conditions shifting, AEC leaders need reliable data to navigate ownership transitions, strategic acquisitions, and long-term growth planning. Zweig Group’s 2025 Valuation Report provides a comprehensive analysis of the financial metrics that matter most, offering insights into trends that influence firm valuation and the factors shaping future growth.
For firm leaders, investors, and stakeholders looking to benchmark their business against industry standards, understanding these valuation trends is essential. Whether planning for an internal transition, considering external investment, or simply assessing financial health, having a data-driven approach is key. Firms that prioritize financial discipline, risk management, and strategic growth initiatives will be best positioned to sustain and enhance their value in the years ahead.
Zweig Group’s 2025 Valuation Report of AEC Firms is a vital resource for anyone seeking to stay informed on industry trends and make informed decisions about firm value. To learn more or purchase the full report, click here.
Kyle Ahern is manager of Awards and Analytics at Zweig Group. Contact him at kahern@zweiggroup.com.
