2025 AEC M&A Outlook Report
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FINDING A PATH FORWARD While much of this valuation data reflects internal ownership transition pricing, it still highlights a notable trend—firms demonstrating sustained growth and profitability are commanding higher pricing outcomes, often 10%-20% above slower-growing peers. In today’s market, growth has become both the engine and the reward of M&A activity, signaling confidence in the industry’s capacity to deliver lasting value. 5 Profitability Narrative Profitability continues to strengthen across AEC firms, supported by strong balance sheets and sustained operational discipline. Most firms reported pre-tax, pre-bonus profit margins in the 10%-20% range, with a growing share achieving margins above 20%. Only a small minority operate at minimal profits or losses, which confirms that healthy margins have become the norm rather than the exception. 6 PROFITABILITY DRIVES ACTIVITY Firms in the top profitability quartile remain the most active participants in M&A, both as acquirers and as sought-after targets. Strong margins continue to correlate with greater strategic mobility, as high-performing firms possess the capital capacity to fund expansion and attract investor attention as lower-risk, higher-return opportunities. Mid-sized firms (50-249 employees) stand out as particularly well positioned. Their blend of operational efficiency and organizational scale enables them to achieve premium pricing relative to both smaller and larger peers. 7 These firms strike the balance that buyers and investors increasingly favor—big enough to diversify risk, yet agile enough to integrate effectively—reinforcing their strategic appeal in ongoing consolidation.
5 “Value/EBITDA (By 3-Year Profit Growth).” Zweig Group’s 2025 Valuation Report. Page 77. 6 “Key Financial Statistics (Overall).” Zweig Group’s 2025 Financial Performance Report. Page 30. 7 “EBITDA Margins on NSR (By Staff Size).” Zweig Group’s 2025 Financial Performance Report. Page. 41.
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