ArchitectureConstructionProfessional Services
Author: Eduardo Niebles August 13, 2026 6 min read

What Buyers See When They Look at Your Firm

What Buyers See When They Look at Your Firm

Deal prices in architecture and engineering climbed through 2025 and are wobbling now. The firms that hold their value are not always the best run. They are the ones that can prove it.
 

KEY TAKEAWAYS

  • Average deal multiples in the sector reached 13.2 times EV/EBITDA in 2025, up from 11.1 times in 2024.

  • Do not apply that number to your firm. It describes large, disclosed deals; 88 percent of recent acquisitions were far smaller.

  • A buyer does not price how well you run the firm. A buyer prices how well you can prove it.

  • Your EBITDA rests on an estimate of costs not yet incurred. A buyer will rebuild that estimate, and price the difference.

Keep reading:

The money moved. Here is by how much.

In 2025, buyers paid an average of 13.2 times EV/EBITDA across architecture, engineering, and construction, up from 11.1 times in 2024. Median deal value nearly doubled, from $59.5 million to $110 million (Capstone Partners, AEC Services Sector M&A Update, March 2026).

Private equity explains most of the shift. Sponsor-backed buyers closed 138 deals in 2025, up from 49 in 2018, lifting their share of sector transactions from 22.3 percent to 38.3 percent. Count the strategics that are themselves PE-owned, and more than half of 2025 sector deals had a sponsor behind them (EFCG, Winter 2026).

Now the part nobody puts in the headline

Do not apply 13.2 times to your firm.

That figure describes large, disclosed transactions. ROG+ Partners tracks a different population — 257 mostly private A/E deals — and reports a median EBITDA multiple of 5.52 times for engineering firms, with an upper quartile of 7.50 times (ROG+ Partners, A/E Business Valuation and M&A Transaction Study, 12th edition).

Both numbers are correct; they describe different firms, and most firms are small. In EFCG's tally of first-quarter 2026 sector deals, 88 percent of targets had under $50 million in revenue (EFCG, Spring 2026). A practice earning $4 million in EBITDA sits in the lower range — the only range most owners can move.

What the gap is worth 

The distance between a median engineering firm and an upper quartile one is 1.98 turns of EBITDA (7.50 minus 5.52). On $4 million EBITDA, that spread equals $7.92 million in enterprise value. 

Nothing about the work changes across that gap — same buildings, same clients. What differs is what the firm can prove under scrutiny.

 

 

Why buyers are shopping now 

Engineering and architecture are not in the same market. 

ACEC's Q4 2025 sentiment report found 48 percent of engineering firms holding a pipeline of a year or more, and 43 percent expecting backlogs to grow further. Broader construction has stalled: the U.S. Census Bureau put May 2026 construction spending at $2,210.2 billion, 1.5 percent below a year earlier Underneath both sits federal money — the Infrastructure Investment and Jobs Act allocated $1.2 trillion through 2026  

48%

of engineering firms

holding a pipeline of a year or more

A fragmented sector, uneven pricing, and visible public funding. Buyers read that as opportunity, and they are reading it about you. 

A warning in the latest numbers 

Through 2025 the direction was up. The most recent quarter points the other way. Public engineering firms — the listed acquirers that set the top of the market — saw their trading multiples slip in the first quarter of 2026, to about 12.5 times EV/EBITDA from about 14 times a year earlier, every major name now below 16. EFCG ties the slide to market anxiety about AI, not to weaker project work. 

This reaches private firms through a simple chain. Public companies are the backstop bidders; their strong trading funds a premium bid. When their multiples compress, the top bid compresses with them — and EFCG warns private-equity buyers may follow 

You cannot control any of that. You can control one thing: whether your firm is the one that holds its value when the tide goes out. That comes down to what you can prove.

What a buyer is actually pricing 

Picture two firms with the same revenue and margins. One produces three years of margin history by project type in an afternoon; the other needs six weeks, and the numbers still do not reconcile. The second is not worse. It is unprovable, and a buyer prices the risk. 

A buyer does not price how well you run your firm. A buyer prices how well you can prove it.

None of this is new. ROG+ Partners found that after the Infrastructure Investment and Jobs Act, acquirers paid more for two reasons: clearer visibility into future revenue, and higher growth expectations. Hold on to the first. Visibility is not performance — it is the ability to prove performance, and the market pays for it on its own. Here is the mechanism. 

Why your EBITDA is an estimate 

Under the revenue recognition standard, a firm working a long-term contract recognizes revenue as it makes progress toward finishing the work, and it must measure that progress. Most measure it with an input method: costs to date divided by total estimated costs. 

Read that again: your reported revenue depends on an estimate of costs not yet incurred, and your EBITDA rests on it. Change the estimate, and the earnings change. 

A buyer knows this. Their accountants rebuild your percent-complete from your ledger and test your estimates-to-complete against how past projects actually finished. If you assemble it manual each month in spreadsheets, the rebuild will not match — and when it does not, EBITDA moves. EBITDA is the number the multiple multiplies. 

A firm that cannot reconstruct its own percent-complete does not have a valuation problem. It has an earnings problem it cannot see.

Click to read Driving Growth through Digital Investment (Gated)

Three records that decide the number 

Strip away the deal language and a buyer asks three questions. A system answers each one. A story answers none of them.

  • Will the backlog convert? Signed work with schedules and funding behind it, measured against how much your firm has historically turned into revenue. A pipeline number does not answer this. 

  • Do the margins repeat? Margin by project type, across three years, showing the pattern is structural rather than lucky. 

  • Does the firm run without you? Utilization measured the same way in every office, every month. Change orders captured in a system rather than an inbox. 

None requires an investment banker; all three describe how a firm should already run. 

What to do this quarter 

  1. Adopt one definition of utilization and apply it across the firm. Not per office. Not per principal. 
  2. Move work-in-progress out of spreadsheets. If percent-complete requires manual assembly each month, you hold an estimate, not a measurement. 
  3. Produce three years of project margin history by project type. If that takes more than a day, you have found your gap. 

The question to ask your CFO 

Ask it, then time the answer. 

If a buyer asked today for three years of project margin history, funded backlog schedules, and utilization by person, how long would we need?

Under a week means your systems talk to each other. Six weeks means they do not. A buyer will discover that before you do. 

The bottom line 

Buyers are active. Prices climbed through 2025 and are wobbling now. Through it all, one lever stays in your hands: whether your firm can prove what it earns. 

None of this obligates you to sell. It obligates you to know what your firm is worth, and to be able to show your work. 

The firms that command a premium do not have the best story. They have the shortest distance between a question and an answer. 

Most firms discover their reporting gaps during diligence. That is the worst possible time. If your project data, work-in-progress, and utilization live in separate systems, the fix is not another spreadsheet. 

See how Unit4 ERPx connects project delivery and finance in one system

Sources 

  • Capstone Partners, AEC Services Sector MA Update, March 2026 
  • ROG+Partners, A/E Business Valuation and M&A Transaction Study 
  • ACEC Q4 2025 Sentiment report 
  • U.S. Census Bureau, Monthly Construction Spending, July 2026 
  • EFCG, Industry Brief, Winter 2026 
  • EFCG, Industry Brief, Spring 2026 
  • FASB Accounting Standards, ASC 606-10-25-27, ASC 606-10-25-31 

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