Environmental M&A is where sustainability and strategy meet, driving growth across the AEC industry.
If you’ve been around the AEC industry for a while, you might have noticed a trend recently. The environmental sector is on fire. So far, we’ve recorded 319 M&A transactions this year and 65 of those are tied directly to the environmental sector. That’s about one in every five deals, or, in other words, a big slice of the pie. It tells us a lot about where the AEC industry is headed. From climate resilience to regulatory compliance, buyers aren’t just dabbling in environmental expertise anymore. They’re making it a central part of their growth strategies.
An environmental boom.
The environmental sector has become both a strategic necessity and an investment magnet. Strategic buyers account for most of these environmental sector deals, scooping up specialized expertise in areas like water resources, remediation, and sustainability consulting. Still, private equity has made its presence felt, being involved in 18 deals so far this year. For many of these private equity firms, they see environmental services as a safe bet: compliance-driven, resilient in downturns, and increasingly essential for clients across every part of the AEC industry.
Another major part of the story is told through geography. More than 70 percent of the environmental sector transactions have taken place in the United States. With seven transactions so far this year, Colorado stands out as the current hotspot for environmental M&A activity. Certainly, this makes sense given its mix of water resource challenges, natural resource management needs, and strong base of environmental consulting talent. Florida is the next most active state with four transactions, reflecting an ongoing focus on stormwater, coastal resilience, and development pressures. New York, Texas, California, and Minnesota are also active with four transactions each.
This isn’t just a story about the United States. Elsewhere in the world, there have been 27 environmental sector transactions. The U.K. is leading the way internationally with 11 transactions while Canada follows up with six. Moreover, countries like Switzerland, Ireland, Belgium, Austria, France, Sweden, and Australia are each playing a role. Simply put, environmental M&A activity isn’t confined to one marker. It’s a global play, with firms everywhere trying to build the expertise and scale they need to meet fast-growing demand.
What's fueling these trends?
Upon closer inspection, a few themes jump out as to why environmental firms are such hot targets right now. ESG and sustainability pressures are no longer optional. Clients across industries need help hitting carbon goals, navigating new regulations, and planning for climate resilience. And, buyers want to be the ones offering those services. Additionally, water has been a huge driver. Whether it’s wastewater treatment, stormwater management, or water resource planning, firms with deep expertise in this space are in high demand.
Private equity has also played a major role. Environmental services are seen as a steady, compliance-driven investment, which makes them especially appealing in a market that can be unpredictable. We’ve also seen deals that are just as much about talent as they are about services. Firms with specialists in PFAS testing, ecological restoration, or renewable energy integration are especially attractive as those skills become more valuable year-to-year. And, finally, geography plays a major role. Clients are global, which means firms are looking for cross-border acquisitions that can support multinational needs.
Where are things heading?
If the first eight months of 2025 are any indication, the environmental sector won’t be slowing down any time soon. Expect to see more private equity roll-ups as investors look to build platforms that can scale quickly across multiple geographies and service lines. Strategic buyers will also continue to chase niche expertise in areas like climate modeling, resilience planning, and carbon accounting as those capabilities are only going to become more critical.
Internationally, the U.K. and Canada will likely remain major hotspots, but don’t be surprised if activity picks up in other regions where climate regulations are tightening. In the United States, places like Colorado and Florida may continue to lead, but the demand for environmental services is so widespread that deal activity will remain geographically diverse. The bottom line is this: the environmental sector is now firmly at the center of AEC deal-making, and 2025 is shaping up to be a defining year for how firms position themselves for the future.
Environmental firms aren’t just along for the ride in today’s M&A market. They’re driving it. They’ve carved out a solid 20 percent of all AEC deal activity, and the momentum shows no signs of slowing. Strategic buyers see them as essential for staying competitive, private equity sees them as resilient investments, and clients see them as indispensable partners in tackling today’s toughest challenges.
From Colorado to the U.K., the message is the same. Environmental expertise is in demand, and firms that have it are hot commodities. If 2025 has taught us anything so far, it’s that the environmental sector is no longer a side part of the AEC industry. It’s the headline. And with the pressures of climate change, regulatory shifts, and sustainability only increasing, expect this trend to keep building.
As environmental M&A activity continues to surge, positioning your firm the right way has never been more important. Whether you’re considering buying to expand expertise and scale or selling to capture the value you’ve built, Zweig Group’s full-scale mergers and acquisitions consulting team can help you navigate the process with confidence. From sourcing exclusive opportunities to structuring, negotiating, and closing transactions, our industry-leading team blends deep AEC knowledge with decades of deal experience. We’ve built a proven track record of helping firms maximize value on the sell-side and identify the right targets on the buy-side. Learn more about Zweig Group’s M&A consulting services here.
Will Swearingen is senior director of Transition consulting at Zweig Group. Contact him at wswearingen@zweiggroup.com.
