A Subtle Shift Is Taking Place in Large-Firm Deal-Making

A Subtle Shift Is Taking Place in Large-Firm Deal-Making

The M&A market for large ($100 million-plus in revenues) AE and environmental consulting firms has seen a subtle but definite shift over the past 18 months. This change is characterized by (a) a slowdown in deal-making of scale, (b) an increase in the activity of strategic buyers, and (c) a concurrent decline in private equity (PE) recapitalizations. This change in composition begs the question: “Is PE involvement in the industry reaching maturity?”

1. A closer look at 2024: Last year saw 25 U.S. $100 million-plus design and environmental consulting firms sold or recapitalized. Financial sponsors dominated the scene, involved in 72% of those transactions. The deal-makers read like a who’s who of the PE world—Wind Point Partners, The Blackstone Group, H.I.G. Capital, CIVC Partners, Sentinel Capital Partners, Godspeed Capital, Sterling Investment Partners, New Mountain Capital. You get the picture. Only seven of these large firm transactions involved strategic buyers (domestic and overseas). This deal mix highlighted the continued momentum of financial sponsors pursuing large-scale “platform” acquisitions in the design and environmental consulting sectors. 
2. The shift in 2025: Now, almost halfway through 2025, the large firm M&A landscape has altered in a subtle but noticeable manner. Year-to-date, only six acquisitions of large U.S. design and environmental firms have taken place. This is way off the pace of last calendar year. In addition, there’s a complete absence of financial buyers in the mix thus far in 2025. Instead, all six deals of $100 million-plus firms were executed by strategic buyers. And to add another interesting wrinkle, five of these buyers are headquartered overseas.
3. Reasons? What’s behind this year’s shift from financial to strategic buyers in the large firm M&A segment? While financial buyers typically seek to enhance returns through operational efficiencies and eventual exits, strategic buyers are often more focused on long-term growth and integration synergies. This could imply a more sustainable approach to acquisitions as strategic buyers may be more willing to invest in firms that align with their core business objectives in the AE and environmental consulting industries.
4. Maturing private equity activity? The overall activity of PE firms in the industry has also eased over the last 18 months. Year-to-date, financial sponsors have completed just 13 deals. They will need to step up their game big time over the next six months to equal the thirty-four deals they made in 2024. Additionally, the median PE-recap transaction size has declined notably, from around $100 million in 2024 to just $30 million this year. This decrease in deal size may indicate a tightening of capital availability or a shift in investment strategies among the PE cohort.
5. PE-to-PE deal metric down: Moreover, the closely watched number of PE-to-PE transactions has dwindled from fourteen deals last year (with a median seller size of $230 million) to just four in the first half of this year. All four of these involved smaller design firms, with none being listed among the ENR Top 250. This reduction in large-scale PE transactions may signal a cautious approach from financial buyers as they reassess their investment strategies amid changing economic conditions and/or a maturing of the PE investment in the design and environmental consulting industry. 

We’ll be keeping a close eye on the large firm segment of the market over the balance of the year to see if this rebalancing between PE recapitalizations and strategic acquisitions continues and if so, what implications it may have for the wider industry. 

Contact Mick Morrissey at [email protected] or 508-380-1868.