We’re seeing increasing M&A activity in the AEC industry, rising private equity involvement, and growing demand for infrastructure-related sectors.
Mergers and acquisitions activity in the architecture, engineering, and construction industry has experienced significant shifts in recent times. To gain a comprehensive understanding of the current and “next” practices in the world of M&A, industry professionals and thought leaders are invited to join Zweig Group’s M&A Next Symposium.
This interactive event, featuring expert panelists and roundtable discussions, aims to provide valuable insights into the latest trends shaping the M&A landscape. By attending this symposium, participants will enhance their knowledge about M&A opportunities as a growth strategy. The event will take place September 13 at the PGA Omni Resort in Frisco, Texas, offering a unique and modern venue for industry leaders to connect and exchange ideas.
Let’s take a looks at some of the key trends we’re seeing in M&A to shed light on the current state of the industry:
- Increased transaction activity. The second quarter of this year witnessed a notable increase in closed transactions, with 311 deals completed. This represents an 8 percent rise compared to the same period last year. However, transaction volume decreased from the previous quarter, highlighting the dynamic nature of the market. Engineering firms represent the largest proportion of the total closings at 37 percent, with architecture (13 percent) and environmental firms (12 percent) in second and third place respectively.
- Focus on engineering firms. Among the single discipline engineering firms acquired this year, civil engineering firms accounted for the majority (67 percent). This was followed by MEP engineering (20 percent) and structural firms (13 percent). This trend indicates a strong interest in firms specializing in civil engineering expertise.
- Sector distribution of sellers. The commercial/retail sector has seen the highest number of completed projects, accounting for 38 percent of the transactions in 2023 so far. Other prominent sectors include public infrastructure (26 percent), municipal government (24 percent), higher education (24 percent), and residential (23 percent). The buyer demand is particularly strong in sectors directly benefiting from the Infrastructure Investment and Jobs Act, such as water/wastewater, roads and bridges, power/energy, and public transit.
- Private equity’s growing role. Private equity groups have significantly increased their participation in M&A deals, representing 37 percent of reported transactions in 2023. This surge demonstrates a substantial rise compared to the 16 percent share they held in 2022. Their increased involvement suggests a growing interest in AEC businesses and the potential for value creation within the industry.
- State-level activity. The United States accounted for 210 out of the 311 closings in the first half of 2023. The transaction volume across states closely aligns with the amount of funding allocated from the Infrastructure Bill. These active states were also prominent buyers and sellers in the previous fiscal year and Q1 of 2023.
As the M&A landscape evolves, AEC firms are adopting M&A as a growth strategy to enhance their capabilities and expand into new sectors. The M&A Next Symposium offers a prime opportunity for industry leaders to gain insights into the most effective strategies employed by successful firms to achieve growth, improve profitability, and acquire talent. With private equity playing a larger role in the market, it becomes crucial for AEC firms to understand the changing dynamics and leverage potential opportunities for value creation.
By attending the M&A Next Symposium, participants can connect with industry experts, thought leaders, and potential partners, fostering an environment of knowledge exchange and networking. The event promises a deep learning experience, with interactive discussions, roundtables, and thought-provoking insights. Join the symposium this fall at the PGA Omni Resort in Frisco, Texas, where M&A thought leaders will converge to explore the trends, strategies, and opportunities in the ever-evolving world of M&A in the AEC industry. Secure your seat at the table and be part of this transformative event.
Andy Chavez, CM&AA is an advisor within Zweig Group’s M&A advisory services team. Contact him at achavez@zweiggroup.com.
