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support the growth and management of AEC companies by providing mentorship, resources, and strategic guidance. ■ International market expansion. There has been a noticeable increase in international deals, with the proportion rising from 32.4 percent in Q2 2023 to 34.3 percent year-to-date. This shift highlights the growing importance of global market expansion for larger AEC firms as they seek to diversify their portfolios and tap into emerging markets. Expanding internationally helps firms mitigate regional market risks and capitalize on cross- border opportunities. The outlook for M&A activity in the AEC industry remains positive, despite external challenges such as regulatory shifts, economic policy changes, and political uncertainties. Business leaders must stay current with industry trends and proactively navigate the dynamic landscape. Developing a robust strategic plan that aligns M&A activities with overall business objectives is essential for leveraging acquisitions as a critical tool for growth, especially in turbulent market conditions. Alec Russell, MBA is a senior analyst within Zweig Group’s mergers and acquisitions advisory group. Contact him at arussell@zweiggroup.com. Sara Karstetter, MBA is a mergers and acquisitions advisor with Zweig Group. Contact her at skarstetter@zweiggroup.com.
ALEC RUSSELL & SARA KARSTETTER, from page 3
increased infrastructure spending have significantly influenced M&A activity. The Infrastructure Investment and Jobs Act and the Inflation Reduction Act have created substantial opportunities for firms to position themselves strategically in the market. These legislative measures have spurred demand for engineering services, particularly in sectors such as water/wastewater, transportation, and infrastructure projects. ■ High demand for engineering services. The demand for engineering services remains strong, particularly in civil and environmental engineering. Single-discipline engineering firms have been highly sought after, with civil engineering and environmental services accounting for 24 percent and 17 percent of all deals through Q2, respectively. This high demand is driven by ongoing needs in critical infrastructure projects and regulatory initiatives, such as the newly established national drinking water standards for PFAs and the substantial funding allocated for PFA detection and treatment systems. ■ Private equity’s growing role. Private equity firms continue to play a crucial role in the AEC industry’s M&A landscape. In Q2 2024, PE-backed firms or buyers accounted for 36 percent of all deals, indicating strong interest in direct investment within the sector. Unlike the traditional view of PE as focused solely on profits, many PE firms now
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THE ZWEIG LETTER JULY 29, 2024, ISSUE 1547
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