February 12, 2025

The Architecture & Engineering (“A/E”) industry has experienced a rapid transformation in the past three-years, primarily driven by public sector infrastructure investment through the Infrastructure Investment and Jobs Act (“IIJA”). With $1.2 trillion in funds allocated from 2022 through 2026, projects are anticipated to extend through 2030, fueling continued growth, particularly within the public sector. This increased federal funding has brought with it a wave of consolidation and an increase in investment from private equity (“PE”) firms. We estimate that approximately 20% of the ENR top 250 design firms and 12% of the overall ENR 500 have some form of PE investment. These trends have altered the competitive landscape, inflated valuation multiples in recent years and made existing firms more attractive to new entrants looking to make acquisitions.

Now in its twelfth edition, the A/E Business Valuation and M&A Transaction Study highlights valuation multiples from minority interest (internal) and controlling interest (external) merger & acquisition transactions of 257 distinct transactions. The tables below illustrate the enterprise values as a multiple of earnings before interest and taxes, depreciation, and amortization (EBITDA).

Key Findings

EBITDA Multiples: The column labeled "All Firms" summarizes EBITDA multiples presented in the twelfth edition released in January of this year. These multiples reflect transactions from our database consisting of a variety of engineering, architecture and environmental consulting firms. Overall valuation multiples remained consistent with the eleventh edition results and reveal the strong M&A market for the A/E industry.

Impact of the IIJA: The column labeled "All Firms Post IIJA" represents transactions occurring since 2022, shortly after the passage of the IIJA on November 5^th, 2021. As you can see the median EBITDA multiple increased slightly while the upper and lower quartiles increased significantly. Although there are many factors which affect transaction multiples, such as earnings, backlog, forecasts, etc., it is apparent that since the passage of IIJA, acquirers have become more comfortable with higher multiples. This is likely due to better visibility into future revenue and higher expectations for growth.

Engineering Firms Demand: When concentrating specifically on engineering firms, the post IIJA period shows a continued rise in multiples. Despite the A/E industry being so closely entwined, a majority of the firms ROG + Partners has represented in merger and acquisition transactions in the past three years have been E/a firms. With median EBITDA multiples of 5.52x and an upper quartile of 7.50x, it is clear that E/a firms are in greater demand, with buyers willing to pay greater premiums than in previous years. 

For more details on valuation multiples for both internal minority interest transactions, controlling interest merger & acquisition transactions, deal structures and forms of consideration, and financial performance statistics, the latest edition of the A/E Business Valuation and M&A Transactions Study is available at https://www.rog-partners.com/aestudy.

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