2025 AEC M&A Outlook Report
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Valuation benchmarks EXPECTATIONS IN CONTEXT
The 2025 AEC M&A Outlook Survey shows a market that’s confident selective. Valuation expectations appear steady overall, yet the gap between what some sellers hope to achieve and what the market will actually bear remains wide in many segments. Deal structures such as earn-out, rollover equity, and growth incentives continue to play a key role in closing that gap and aligning price with performance. Findings from the 2025 Valuation Report highlight how precise buyers have become in identifying value drivers. In competitive processes, top- line offers can very significantly as buyers weigh different assumptions around growth, risk, and taxes—each of which can materially change the outcome for the seller. So while headline valuations may look stable, the real determinant of value is the buyer’s perspective: how they assess risk, how they model future performance, and how they structure the deal to reflect both. EVOLVING DEAL STRUCTURES How value is paid continues to evolve. Cash still anchors most deals, but the 2025 AEC M&A Outlook Survey shows that roughly three- quarters of recent transactions included a contingent or deferred components such as earn-outs, seller notes, or equity rollovers. PE-backed buyers drive much of this activity. More than 60% of their deals tie a portion of value to future performance. ESOP structures look different. Full ESOPs rely more on cash and promissory notes because of regulatory limits and rigid deal mechanics, while minority ESOPs have more flexibility. Taxes also shape these transactions. Section 1042 exchanges remain an important tool for owners, especially in S-corps navigating current tax outlooks. Multiple arbitrage add another layer. Larger firms typically trade a higher multiples, so when an 8x platform acquires a 4x firm, that earning stream is immediately valued at the higher multiple. This built-in lift helps explain why certain deal structures and buyer types dominate the market.
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