Architecture Engineering & Environmental Services

January 2018

SECTORWATCH

2017 was yet another active year for AEC industry M&A. Some of the highlights included Jacobs' acquisition of CH2M, SNC-Lavalin's acquisition of Atkins, TRC's deal to go private with New Mountain Capital, and Wood's deal to acquire Amec Foster Wheeler, among many smaller, yet strategic, transactions. The pace of dealmaking is likely to continue in 2018 as long as market and economic strength maintain, including continued interest in the sector among private equity groups.

 

Industry Trends:

  • Current revenue growth rate is less than the average of the last 3 years, indicating that the market may be flattening or declining
  • Current gross profit margin is less than the average of the last 3 years gross profit margins, indicating customer pricing power
  • Current EBITDA margin exceeds the average of the last 3 years EBITDA margin, a condition that may attract new entrants