2025 AEC M&A Outlook Report
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Environmental and infrastructure-focused firms also outperform design-centric firms in valuation terms, with median value/Net Service Revenue (NSR) ratios ranging from 0.58-0.78, compared to 0.58 or lower for architecture and interiors practices. This reflects stronger funding pipelines and consistent demand in infrastructure and environmental markets, while commercial design work continues to face tighter margins. 8 THE RESULT OF RISING PROFITABILITY Firms reporting above-average profitability are not just earning more. They’re commanding higher valuations. The 2025 Valuation Report shows equity value-to-profit ratios averaging 3.9x. Top performers exceeded 5.0x, particularly among firms with sustained profit growth above 25%. 9 Buyers are increasingly willing to pay EBITDA multiples of 6x or more for firms with profit margins above 20%, recognizing their stability and predictability. Conversely, firms operating below 10% profitability continue to face valuation pressure, often trading closer to 4x EBITDA. The relationship between profitability and valuation has become one of the most consistent predictors of M&A outcomes. Profitability is more than a financial metric. It’s a signal of operational health and cultural resilience that drives buyer confidence and strengthens seller leverage. In today’s AEC market, strong margins, coupled with consistent growth in top line revenue, don’t just sustain firms—they power the deals that reshape the industry’s future. Work Mix & Client Mix Project composition continues to provide stability across the AEC industry. Most firms in the 2025 AEC M&A Outlook Survey report performing the majority of their work as Prime Consultants, underscoring strong client relationships and control over project delivery.
8 “Value by Firm Type.” Zweig Group’s 2025 Valuation Report. Page 92. 9 “Value by 3-Year Profit Growth.” Zweig Group’s 2025 Valuation Report. Page 106.
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