The AEC industry is facing uncertainty, but leaders remain optimistic, practical, and focused on adapting to what comes next.
There’s an interesting vibe in Washington right now. You could feel it walking the halls during the ACEC Annual Convention & Legislative Summit. A little uncertainty. A little frustration. A lot of noise. Questions around infrastructure funding, workforce shortages, AI disruption, tariffs, interest rates, and whether younger professionals even want to build careers the same way prior generations did.
Underneath all of that, the AEC industry still feels surprisingly optimistic. Not fake optimistic. Not “everything is awesome” optimistic. More like a room full of people saying, “This may get bumpy, but we’ll figure it out.” That mindset has always been one of the defining characteristics of this business. Engineers, architects, planners, and contractors tend to be practical people. They solve problems for a living. Panic is usually reserved for everyone else.
The conversations this year felt more honest than they have in a while. Less polished talking points. More open discussion about what’s actually happening inside firms right now.
How M&A is reshaping the AEC industry
One of the more interesting sessions focused on the current M&A environment in AEC, and the numbers alone should get everyone’s attention. Ten years ago, the industry averaged roughly 200-250 transactions annually. Last year, the industry crossed the 500-deal mark for the first time.
That is not a trend anymore. That is a structural shift in how the industry operates.
According to the 2025 AEC M&A Outlook Report from Zweig Group and Stambaugh Ness, more than 2,700 transactions have taken place across the AEC industry since the start of 2021. The report describes M&A as no longer simply a growth lever, but “the operating system of the modern firm.”
The reasons are not complicated. Ownership transition is getting harder. Internal buyouts are more difficult to finance. Private equity continues pouring into the space. Valuations remain historically strong in many sectors. Firms are now building dedicated M&A teams instead of asking the CFO to look at acquisitions after dinner.
The report also noted that private equity is now involved in roughly half of all AEC transactions, which would have sounded unbelievable to much of the industry even five or six years ago.
The most important point, however, is that most of these deals are not giant headline-grabbing mergers. The median seller in AEC M&A remains under $10 million in revenue. These are founder-led firms with deep client relationships, strong reputations in local markets, and decades of institutional knowledge tied to a handful of people.
Most acquisitions do not fail because someone missed a number in Excel. They fail because culture, expectations, leadership styles, and operational systems collide the second the excitement of the transaction wears off. Plenty of firms are learning that growth alone does not solve problems. In many cases, growth simply magnifies them.
Interestingly, the biggest concern firms reported around acquisitions was not valuation or financing. It was culture. Nearly 58% of firms surveyed ranked cultural alignment as their single greatest concern in a transaction.
What firms are watching in the economy right now
The economic conversations were equally revealing because nobody seems entirely certain where things are heading next. Depending on who you talked to, the market is either slowing down, stabilizing, or about to accelerate again. Truthfully, all three are probably happening at once depending on geography and market sector.
Some firms are seeing manufacturing work cool off after a massive run. Others cannot hire fast enough to keep up with water, transportation, energy, and utility work. Public-sector delays continue creating headaches. Multiple leaders talked about contract awards that used to happen in January now dragging into summer.
Most firms, however, are still busy. That says something important about where the AEC industry sits in the broader economy. Politicians can debate. Economists can argue. Markets can swing wildly every afternoon. Eventually somebody still has to design the road, expand the airport, upgrade the treatment plant, modernize the power grid, or support the next wave of manufacturing growth. At some point, reality shows up and somebody has to engineer it.
Why workforce development remains a pressing challenge
The workforce discussions may have been the most important conversations of the entire conference. Not because the topic is new, but because the tone around it is changing. There is finally more honesty around the issue.
Leaders openly discussed seeing younger professionals arrive with gaps in math fundamentals, communication skills, collaboration habits, and critical thinking. COVID disrupted part of the educational pipeline, and firms are now trying to rebuild some of those foundational skills in real time while still delivering projects and managing growth.
AI only complicates the issue further. Several leaders expressed legitimate concern that younger professionals may begin relying on AI tools before fully understanding the underlying fundamentals themselves. That is a dangerous combination in a profession where mistakes carry real-world consequences. The concern is not whether AI will become part of the future. It already is. The concern is whether the industry allows technology to replace judgment instead of enhancing it.
How AI, mentorship, and workplace expectations are changing
The remote work conversation remains equally unsettled. Some organizations are fully back in-office. Others remain hybrid. Others are highly flexible. Nearly everyone, however, agreed on one thing: mentorship still matters.
You can train someone on software remotely. Teaching judgment, leadership, client instincts, and problem-solving through a screen is far more difficult. Younger professionals still need exposure to conversations, decision-making, conflict resolution, and the random unscheduled moments that happen naturally inside an office environment. Those things are difficult to replicate digitally.
The AEC industry also needs to do a much better job telling its story. Most young people have no idea how impactful this profession can be. They do not realize the AEC industry shapes nearly every aspect of daily life. Infrastructure. Water. Schools. Hospitals. Energy. Transportation. Housing. Communities. Most people only notice engineering when something breaks.
Ironically, the firms attracting the most interest right now also tell an interesting story about where the market believes the future is headed. Environmental, infrastructure, water, resiliency, and energy-transition firms continue outperforming broader industry averages and commanding premium valuations.
What this moment demands from AEC leaders
One of the most impactful moments of the conference came from historian and presidential biographer Jon Meacham, who delivered a keynote that felt surprisingly relevant to the business conversations happening throughout the week.
Meacham talked about how dangerous it becomes when people start viewing every disagreement as warfare instead of debate. He spoke about democracy requiring people to both win and lose gracefully. One line that really stuck with me was his description of politics at its best being “an arena of contention” rather than a battlefield where opponents become enemies. The message was political on the surface, but it translated directly to leadership inside organizations as well.
That idea of an “arena of contention” honestly feels pretty relevant to the AEC industry right now. Firms are navigating generational change, technology disruption, leadership transition, economic uncertainty, and culture shifts all at the same time. Leaders are trying to modernize without losing what made their firms successful in the first place. That balancing act is not easy, especially in an industry built on relationships, trust, and long-term reputation.
Walking out of the conference, though, I did not leave pessimistic about the future of the AEC industry. If anything, I left thinking the industry finally understands the size of the challenges in front of it. One thing the Zweig Group and Stambaugh Ness report made clear is that today’s market is no longer being driven by distress. It is being driven by firms pursuing “growth by design rather than necessity.”
None of those ideas are particularly revolutionary. Hire good people. Develop leaders. Protect your culture. Embrace new technology without abandoning common sense. Stay close to clients. Communicate clearly. Keep adapting.
The funny thing is those ideas are probably timeless because they still work.
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Chad Coldiron is a principal and director of client relations and development at Zweig Group. Contact him at ccoldiron@zweiggroup.com. |
